Nexstar automotive ad sales booth; broadcaster considering options for Food Network involvement
With ongoing supply chain issues leading to vehicle inventory shortages and higher prices, Nexstar Media Inc. sees no real progress with what has historically been the largest advertising category for TV channel groups.
Nexstar president and chief operating officer Thomas Carter said at this point the company doesn’t see any kind of recovery with the automotive sector, which has been constrained by a shortage of chips and wire harnesses. While it didn’t have a material impact on the business, Carter said there had been “a little more downside,” which was disappointing as a modest rebound in demand was expected. category in the middle of this year.
speaking to Credit Suisse Communications Conference on June 15, Carter said he expects the automotive category to eventually rebound. However, it’s unclear if he’ll return to previous levels of accounting for 25% to 26% of the company’s ad revenue.
Currently, Carter said, the industry’s advertising contribution is parked in the 1920s, but Nexstar has been able to offset some of that downturn through government advertising spending and the revival of tourism and in-person entertainment.
Sports betting takes off
Allocations against sports betting have been strong and Nexstar expects continued growth. Chief Financial Officer Lee Ann Gliha said the company has seen many benefits from sports betting in states such as New York, Illinois and Louisiana, where the practice has recently been adopted.
“We hope to continue to see that,” Gliha said, while also spotlighting Ohio, which will go live in January. The company, she said, has a presence in every state market except Cincinnati.
Gliha noted that three of Nexstar’s top five marketplaces with the category have been live for over a year.
“There is a certain level of ongoing maintenance,” she said while acknowledging that some sports betting operators have shifted to network spending from local purchases. “We’ll kind of have to look at this on a quarterly basis. But for now, it’s still a good sized category for us.”
Potential digital station offerings
As for mergers and acquisitions, Gliha said the company would be interested in deals in the digital realm. Digital contributes up to 7% of the company’s overall turnover and 15% of advertising. “It’s a segment that continues to grow a little faster organically, and we’d like to be more exposed to that,” Gliha said.
She also pointed to the additional station deals as deals that would be “closest to our hearts,” saying the company has the ability to do so in some of the markets where it has The CW (US) or others where there are regulatory opportunities.
Asked about Nexstar’s 31% stake in Food Network (US) through its acquisition of Tribune Media Co. in September 2019, Carter said that with the creation of Warner Bros. Discovery Inc., the stake is less likely to continue in its current form.
Participation in the food network
Carter noted that there are plenty of assets inside Warner Bros. Discovery that Nexstar might be interested in, and that there might be a tax-efficient way to move some of those assets in exchange for the company’s Food Network stock position.
However, he doesn’t see that happening anytime soon, given the current focus of Warner Bros. Discovery on merger-related job cuts. “But we don’t lose sight of the fact that they have a lot of assets and will be rationalizing their own portfolio here in the not too distant future,” Carter said.
Several reports have identified Nexstar as the primary candidate for The CW’s purchase. Launched in September 2006, the young adult broadcast network is a joint venture of the companies now known as Warner Bros. Discovery and Paramount Global.