Nexstar Media Gr (NASDAQ:NXST) reported second-quarter financial results on Thursday. The transcript from the company's second-quarter earnings call has been provided below.

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Full Transcript

OPERATOR

Good day and welcome to Nexstar Media Gr's second quarter 2026 conference call. Today's call is being recorded. I will now turn the conference over to Joe Jeffroni, Investor Relations. Please go ahead.

Joe Jeffroni, Investor Relations

Thank you, Sachi, and good morning, everyone. I'll read the safe harbor language and then we'll get right into the call. All statements and comments made by management during this conference call, other than statements of historical fact, may be deemed forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995. Nexstar Media Gr cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those reflected by the forward-looking statements made during this call.

For additional details on these risks and uncertainties, please see Nexstar Media Gr's Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the Securities and Exchange Commission, and Nexstar Media Gr's subsequent public filings with the SEC. Nexstar Media Gr undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. It's now my pleasure to turn the conference over to your host, Nexstar Media Gr Founder, Chairman and Chief Executive Officer Perry Sook.

Perry, please go ahead.

Perry Sook, Founder, Chairman and Chief Executive Officer

Thank you, Joseph, and good morning, everyone. We appreciate you all joining us today. You'll be hearing from Mike Beard, our Chief Operating Officer, and Leanne Gliha, our Chief Financial Officer, after my opening remarks this morning. Nexstar Media Gr delivered record second quarter results, including an all-time high quarterly revenue number of $2 billion, adjusted EBITDA of $633 million, and year-over-year free cash flow more than doubling to $238 million for the quarter.

Our outstanding performance was driven by the TEGNA acquisition, advertising revenue growth, and disciplined operating execution that has long been a hallmark of this company. Advertising revenue benefited from strong midterm election political advertising, incremental FIFA World Cup sports advertising, and continued growth in legacy local streaming advertising. On the cost side, we continue to drive efficiencies and improve profitability by centralizing station marketing, automating content production, and realigning our sales incentives.

I'll briefly review a few of the operating highlights, after which I'll provide a brief update on our litigation matters. Starting with NewsNation. The network continues to distinguish itself through its commitment to objective, fact-based reporting and balanced perspectives, maintaining its position as the fastest growing cable news network in primetime and total day, with total viewers in June 2026 growing 44% over the comparable prior-year period.

The CW also achieved impressive results, ranking as the ninth most-watched ad-supported television network in total day, with CW Sports achieving its strongest quarter ever. In addition, the CW accelerated its growth strategy by entering into new distribution partnerships with both ESPN and Roku, expanding our reach to new streaming services. In July, we launched ATSC 3.0 in Cleveland, Ohio, completing the deployment of the next-generation broadcast standard now across the top 20 industry DMAs.

This most important milestone was made possible by Nexstar Media Gr's acquisition of WBNX-TV, which removed the structural constraints that had previously hindered deployment in that market. In addition to delivering superior picture quality and immersive audio, ATSC 3.0 leverages broadcast spectrum more efficiently to support high-speed data transmission and enhanced services, providing meaningful benefits for both viewers and local communities in terms of local programming and community engagement.

During the quarter, our owned and operated stations earned 34 regional Edward R. Murrow Awards for outstanding journalism and exceptional locally produced news programming. These awards represent and reflect the hard work of our teams and the crucial impact of quality local journalism on the communities that we serve nationwide. We also celebrated Nexstar Media Gr's 30th anniversary on June 17 by giving back to our local communities through our annual Founders Day of Caring, which provides employees with paid time off to volunteer locally.

This year, we expanded our commitment through the Nexstar Media Charitable Foundation's 30 Days of Giving initiative, which awarded grants to 60 employee-nominated nonprofit organizations across our local television markets. On the capital allocation side, Nexstar Media Gr returned $57 million, or $1.86 per share, to shareholders in the form of dividends, representing an annualized yield of just under 4%. In addition, during the quarter we made significant progress toward our debt reduction goals by repaying $409 million in debt, which equates to a little bit more than $13 per share of equity value.

Looking ahead, we are well positioned for strong free cash flow generation in the second half of 2026, and we remain committed to defending our acquisition of TEGNA against baseless attacks. To that end, we continue to focus on defending our position in the ongoing litigation and continuing our full compliance with the preliminary injunction issued last April. Now I'll spend a few minutes bringing you up to speed on where we are today. In May, TEGNA appointed experienced broadcast executive Patrick Paolini to CEO, where he is responsible for leading the company and overseeing all aspects of its business, including operations, local journalism, revenue growth, and strategic initiatives. Since then, Patrick has promoted or hired several executives to serve in various leadership roles spanning legal, finance, human resources, technology, and programming, affirming TEGNA's independent operations under Nexstar Media Gr ownership. Nexstar Media Gr remains resolute that a complete factual record will demonstrate that the DirecTV and States Attorneys General lawsuit is without merit, and the company is committed to resolving the matter as expeditiously as the legal process will allow.

With that, I'll briefly review the key milestones in the litigation to date, along with related regulatory developments. On May 20, 2026, Nexstar Media Gr filed its opening brief with the U.S. Court of Appeals for the Ninth Circuit, seeking an expedited appellate review to narrow the scope of the preliminary injunction and to dismiss the state plaintiffs, with oral arguments now anticipated in the fourth quarter of 2026. On July 9, 2026, the U.S. Court of Appeals for the D.C. Circuit rejected all challenges to the Media Bureau's order approving Nexstar Media Gr's acquisition of TEGNA, concluding that the appellants have not met their burden to show irreparable harm. Today, the FCC is scheduled to vote on a proposal to eliminate the national broadcast station ownership cap and replace it with a case-by-case review process for M&A in the future. Finally, on July 6, 2027, the bench trial for the U.S. District Court for the Eastern District of California is scheduled to begin. The court has allocated approximately 15 days for trial to consider the merits of the antitrust claims, with equal time provided for each side. We recognize that several claims have been made about the TEGNA acquisition by the State's Attorney General and others. However, the facts tell a very different story. That's why we posted a new presentation on our website, Nexstar TV, to clarify the details for our investors and the public at large.

While we encourage you to review this presentation on your own, I'll spend a few minutes just touching on the main points. First, this transaction underwent extensive review by both the FCC and the Department of Justice before receiving regulatory approval, with the FCC concluding that the acquisition serves the public interest. Second, Nexstar Media Gr remains a relatively small participant in the broader media landscape. Some pundits have confused the reach of our television stations with our market share.

The signals of Nexstar Media Gr's television stations and those of our partner stations now reach 80% of the U.S. population, compared with 70% before the TEGNA acquisition. However, our stations account for less than 5% of the total viewing, and we increasingly compete against significantly larger technology, media, and distribution companies. In terms of ownership, Nexstar Media Gr owns less than 15% of full-power U.S. television stations. Third, the free universal access afforded by local broadcast television is not just a convenience; it is an essential public service and central to Nexstar Media Gr's mission. Our stations have always been available to consumers for free over the air, and they remain so today. Prices paid for pay-TV subscriptions are determined by the satellite, cable, and streaming television providers, and not by Nexstar Media Gr. Fourth, our commitment to independent, fact-based journalism—local journalism in particular—has not changed, and our local newsrooms continue to retain editorial independence, as always.

Underscoring this fact is the analysis from independent watchdog group Ad Fontes, which confirms time and again that Nexstar Media Gr provides unbiased and reliable news. Finally, this acquisition strengthens—and not weakens—local journalism. Nexstar Media Gr has a long track record of expanding local news following acquisitions, increasing local news hours by 18% since the Tribune acquisition, and we have plans to do so with the TEGNA stations as well.

Most recently, we announced the launch of new daily primetime local newscasts in Dallas and in Phoenix. Greater scale enables us to invest more in local journalism, create differentiated programming, and better serve the communities in which we operate. In summary, as these various processes play out, we remain committed to maintaining the same level of professionalism and integrity and respect that has defined Nexstar Media Gr and earned us the trust of our viewers, our partners, and our stakeholders for more than three decades.

Taking the high road does not mean remaining silent in the face of commercial and politically motivated attacks. We will continue to respond appropriately and decisively with transparency and the facts in a manner that is consistent with the values that we have upheld since our founding. We have a depth of executive leadership and legal expertise to help address these matters while continuing to operate the business at a high level. As our results prove today, our focus remains on executing our strategy, serving our communities, and meeting or exceeding our financial targets.

With all of that said, let me now turn the call over to Mike Baird.

Lee Ann Gliha, EVP and Chief Financial Officer

Thank you, Mike, and good morning, everyone. Mike gave you most of the details on the revenue side and the CW, so I'll provide a review of expenses, adjusted EBITDA, adjusted free cash flow, along with a review of our capital allocation activities. Combined second quarter direct operating and SG&A expenses excluding depreciation and amortization and corporate expenses increased by $500 million, driven primarily by the acquisition of TEGNA, $11 million in one-time expenses related to the TEGNA transaction, and offset in part by a slight reduction in recurring legacy Nexstar Media Gr operating expenses excluding one-time expenses.

Second quarter recurring cash operating expenses on a combined basis were lower by $10 million, driven by expense initiatives at legacy Nexstar Media Gr that Perry mentioned and lower digital cost of goods sold and programming expenses. At TEGNA Q2 2026, total corporate expense was $131 million, including non-cash compensation expense of $40 million, compared to $64 million and including non-cash compensation expense of $21 million in the second quarter of 2025.

The $67 million increase is primarily due to the acquisition of TEGNA, including a year-over-year increase of $50 million of one-time costs, of which $32 million of the increase was from cash, primarily related to change in control, severance and accelerated stock vesting, and legal and other professional fees associated with the TEGNA transaction, as well as increased legal fees at Nexstar Media Gr. Q2 2026 amortization of broadcast rights included in our definition of adjusted EBITDA was $87 million, an increase of $8 million from $79 million in the second quarter of 2025, primarily due to the TEGNA acquisition.

On a combined basis, amortization of broadcast rights was down approximately $2 million year over year. Q2 2026 income from equity method investments was $3 million, which primarily reflects our 31% ownership in TV Food Network. This compares to $11 million last year, with the reduction primarily due to TV Food Network's declining advertising revenue. Putting it all together, on a consolidated basis, second quarter adjusted EBITDA was $633 million, representing a 31.8% margin, an increase of $244 million from the 2025 second quarter of $389 million.

TEGNA operations accounted for $187 million of this gain, with the remainder due primarily to the political cycle. On a combined basis, Q2 2025 adjusted EBITDA including TEGNA would have been $545 million. Moving to the components of free cash flow and adjusted free cash flow, second quarter CapEx was $45 million, an increase of $16 million from $29 million in the second quarter last year, primarily due to the TEGNA acquisition. On a combined basis, second quarter CapEx in 2025 was $36 million.

Second quarter net interest expense was $190 million, an increase of $93 million from second quarter of 2025 due primarily to the increased interest expense associated with the debt incurred to facilitate the TEGNA acquisition. On a recurring cash basis, this compares to $185 million in Q2 2026 versus $94 million in Q2 2025. Second quarter operating cash taxes were $151 million. Payments for capitalized software obligations net of proceeds from disposal of assets and insurance recoveries were $8 million.

Cash programming amortization costs were higher than cash payments by $2 million as certain programming payments were deferred, and we received an $11 million distribution from Food Network. Putting this all together, consolidated second quarter 2026 adjusted free cash flow was $238 million, more than double last year's $101 million. Looking ahead, we are projecting CapEx in the $50 million range in Q3. Third quarter cash taxes are estimated to be in the $65 million range.

From an interest perspective, our run-rate quarterly interest expense based on our current balances outstanding as of June 30 is about $185 million. That amount will fluctuate with SOFR rates, which are expected to increase and reduce as we pay debt. Affecting our cash in the quarter will be our first interest payment on our new $3.39 billion senior secured notes in Q3 2026. Payments for programming are expected to be in excess of amortization by $9 million.

Now turning to capital allocation, on our balance sheet, together with the cash from operations generated in the quarter and cash on hand, we returned $57 million to shareholders in the form of dividends. Consistent with past commentary, we made no repurchases, instead using excess cash to repay $409 million of debt. Nexstar Media Gr's outstanding debt as of June 30, 2026 was $11.7 billion, an increase from $6.3 billion at year end, reflecting the impact of the TEGNA acquisition.

During the quarter, we also closed on the refinancing of our 2027 senior notes with new $1.725 billion of 7 1/4% senior notes due 2034. Our cash balance at quarter end was $218 million. Because we designated the CW as a non-restricted subsidiary, the losses associated with the CW are not accounted for in our calculation for purposes of our credit agreement. In addition, our credit agreement allows us to include the adjusted EBITDA of TEGNA as if we acquired the business on the first day of the period presented, and to add back one-time expenses related to the deal and any operational restructuring, and to include the impact of any synergies we expect to realize within 18 months of the close of the transaction, which would be September 2027. In early July we learned that the trial on the merits of the plaintiffs' claims is set for July 16, 2027. Given the limited time between the resolution of the trial and the September 2027 date, we removed the synergies from the leverage calculation. If conditions change, we can revisit this assessment and calculation. As such, our first lien covenant ratio as of June 30, 2026 for the last eight quarters annualized was 3.21 times, well below our first lien and only covenant of 4.75 times.

Our total net leverage for Nexstar Media Gr was 4.22. At quarter end, our Q3 2026 cash flow will be deployed first to fulfill our mandatory obligations, including debt repayments, pension and defined benefit plan contributions, our dividend, and then to optionally repay any additional debt with excess cash flow. Despite the delay in our ability to execute on the synergies we expected from our acquisition of TEGNA, we continue to benefit from the combined strong political-year cash flow of the company.

From the date of acquisition through the end of the year, we currently anticipate repaying over a billion dollars of total debt, creating over $33 per share of equity value. With that, I'll open up the call for questions. Operator, can you go to our first question?

OPERATOR

Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please. While we poll for questions, the first question is from Dan Kernos from StoneX.

Please go ahead.

Dan Kernos, Analyst at StoneX

Great, thanks. Good morning. I guess first for Perry. I guess I'll call it housekeeping. I think I asked you this last quarter, but assuming the FCC repeals the cap today and then it's subsequently probably upheld in the D.C. Court of Appeals, do you think that has any bearing on your trial process? And then operationally, I guess, could you guys give us updated views on overall political? We see everybody raising numbers. I know you guys have given us what you think your take will be of the total, but would be helpful to get color there.

And Mike, just maybe some more granularity on the Nielsen change that's planned in August. That would be super helpful.

Perry Sook, Founder, Chairman and Chief Executive Officer

Thank you. I would say first, as it relates to the elimination of the cap, which I believe that vote has occurred while we were speaking this morning. So I think it will remove a certain level of uncertainty in future M&A. I do think there'll be probably a judicial review of the FCC's decision. But we believe, we at Nexstar Media Gr, believe that they are on very firm legal footing to make this declaration. And we support and applaud the Chairman for his leadership in this issue to allow broadcasting to compete on the same playing field in the domestic U.S. with every other purveyor of advertising and every other provider of video that we compete with that has access to 100% of U.S. households. As it relates to our legal process, I think on balance there could be marginal benefit because it makes the unknown known from a regulatory perspective. But I don't know that it will have a ton of effect as we go through our process. It's more about antitrust than the national ownership cap. As it relates to political, you know, we, as I always say internally here, I'm betting the over.

You know, we've raised our internal political targets a couple of times in the last quarter here and continue to believe that political will be very robust through the balance of the year. And our current pacings would validate that. But I don't think we're prepared to give new guidance on that point. But suffice it to say, political is performing ahead of our internal expectations and likely ahead of yours. Mike, I'll turn it over to you.

Mike Biard, President and Chief Operating Officer

Sure. Yeah. Very simply, Dan, historically Nielsen has credited cable network viewing after one minute of viewing within a quarter-hour, while local television historically required five minutes of minimum viewing. So the change that they're planning is to equalize those, bringing the one-minute threshold to apply to local as well, which we think should portend good things for us.

Dan Kernos, Analyst at StoneX

Got it. Super helpful. Thanks, guys.

OPERATOR

The next question is from Benjamin Soft from Deutsche Bank. Please go ahead.

Benjamin Soft, Analyst at Deutsche Bank

Good morning. Thanks for the question. Appreciate the color you gave us on the timeline for the case. I wanted to get your thoughts on the potential for smaller market-by-market M&A, whether it could make sense to pursue that in the meantime just because the window to do so may not be open forever. Thanks.

Perry Sook, Founder, Chairman and Chief Executive Officer

I might challenge your hypothesis that the window would not be open forever. You know, the FCC last year actually removed the prohibition against owning two top-four stations in a marketplace, and you've seen a number of one-off or smaller transactions with other operators take place in our space during the pendency of our transaction. So I don't know that there'll be necessarily a change in that. I do think that we will turn our attention at some point to portfolio optimization once we are fully able to operate and integrate all of the stations that, you know, we have bought so far.

I do think there is merit in that and I think there'll be some. And we get approached on a regular basis for, you know, swaps and things of that sort. I think we want to clear the decks of the, you know, of the legal situation that we're in and have certainty on that. And then I think that will be kind of tab two of some of the things we'll do in addition to looking at other M&A in the broadcast space and elsewhere.

Benjamin Soft, Analyst at Deutsche Bank

Got it. And then, even though you haven't been able to integrate as planned, I wanted to ask what your early impressions have been of the TEGNA operations. What's impressed you and what, if anything, has been surprising? Thanks.

Perry Sook, Founder, Chairman and Chief Executive Officer

Well, you know, our impressions of the Tegna operations were formed during diligence because we haven't been able to have any direct conversations with any of the local operators. You know, the CEO of Tegna reports to a board and reports on the overall financial health of the company, which is where we are able to be involved. But beyond that, and, you know, wherever things have required board-level approval, it's been sought and delivered without change.

But we've not had any ability to have any additional interaction or impressions from the Tegna stations. But you heard Lee Ann report and Mike report on their operations. They're performing pretty much at the level of Nexstar Media Gr. The one area where they are slightly behind in terms of showing growth year over year is in distribution revenue. And that's because they're operating under their contracts and not ours.

OPERATOR

Thank you. The next question is from Patrick Scholl from Barrington Research. Please go ahead.

Patrick Scholl, Analyst at Barrington Research

Sorry. Hi. Thanks for taking the question. Maybe a question on advertising trends. I realize it's hard to break out from the, or a little bit hard to break out from the political displacement, but could you maybe discuss, like, the differing trends between, like, the local news side versus some of the sports investments that you've made?

Mike Biard, President and Chief Operating Officer

Maybe. I'll take that. You know, I think what you're talking about is really kind of the difference between our local business and kind of our national network business, and what we've seen is a little bit of a difference there because, as you rightly point out, on the television side, on our national networks, we've been doing very well both at The CW—excuse me, both at The CW and NewsNation. In terms of our incremental ratings, we've really—excuse me—done very well in terms of growing ratings because of our sports investments and just because of the traction we're getting on the NewsNation side.

So that's been strong. I think on the local side, on the TV side, we've been, you know, subject to, you know, the competitive environment that's out there with respect to the CTV inventory and other digital advertising that has somewhat impacted the TV side of things, but that's had a, you know, offsetting impact when you kind of look at our local digital business. Our local digital business continues to really just grow very strongly at, you know, double-digit rates because we are able to, as I have mentioned on prior calls, really kind of bundle together our local television business with CTV inventory, audience extension plans, and other types of digital advertising. I think our team has done, you know, a phenomenal job of really kind of leveraging the local sales force that we have and kind of grabbing that and growing it. So there is a little bit of a difference just in terms of the way the overall revenue lines up. But, you know, I think on a total basis, you know, it ends up getting to where we have reported.

Patrick Scholl, Analyst at Barrington Research

Okay. And then maybe just sticking with the local side. If you're able to complete the acquisition, I guess, within your markets, how do you kind of view just the competitive environment for local news?

Perry Sook, Founder, Chairman and Chief Executive Officer

Competitive in terms of pricing, competitive in terms of product or talent. What area of competition are you?

Patrick Scholl, Analyst at Barrington Research

I guess, like, on product and talent, I guess, is probably more.

Perry Sook, Founder, Chairman and Chief Executive Officer

Well, you know, I think that if you look at our track record in markets where we operate, you know, and have put two newsrooms under the same, you know, physical address, what I think you've seen is, despite what people like to claim, a differentiation of product where, you know, we now have the ability to deliver local news in time periods that aren't necessarily competitive, but maybe complementary and maybe stylistically different from one another.

And certainly where we've inherited stations and acquired stations that have a strong local news brand, we've done nothing to tamper with that because that is the station's calling card. In San Diego, the station that we owned and the station we recently acquired from an independent operator out there had decidedly different editorial points of view, which we have allowed to, you know, to continue under our ownership, even though the stations are in the same physical location.

And people get hung up on that, but it's really the product that goes out over the air and goes home. And, you know, we don't have a very good business if we're, you know, selling the same product—trying to sell the same product to everybody across different streams and channels. So, you know, this is a local service business, and it works best when the individual streams are allowed to individually serve the communities and constituencies where they have been able to find the most traction.

OPERATOR

Okay, thank you. The next question is from Craig Hubber from Hubber Research Partners. Please, go ahead.

Craig Hubber, Analyst at Hubber Research Partners

Great. Thank you. On The CW side of things, you guys have obviously been pretty aggressive in recent quarters moving affiliations over to The CW. Can you talk about the obvious benefits to Nexstar Media Gr doing that, but also the not-so-obvious benefits that you're willing to share with us? We start there, please?

Mike Biard, President and Chief Operating Officer

Sure, I'll take that one, Craig. I think let me start with the fundamental distinction between intellectual property that you own versus intellectual property that you rent, right? With respect to The CW, we have, you know, continued to sort of mine benefits from the fact that we, you know, own the programming from top to bottom. You know, in a world where intellectual property is kind of the, you know, coin of the realm and allows you to take that content to every platform and every device, the flexibility to be able to control our own destiny in terms of the rights that we acquire, what we pay for those rights, what we pay to the network for those rights, and then furthermore, the distribution flexibility where we can monetize that across every platform, whether it's mobile or streaming or what have you. You're aware of the complexities we have trying to do that with respect to the Big Four–affiliated networks. None of that noise, none of those restrictions, none of the impairments that we encounter with Big Four do we have with The CW. So at a fundamental level, it's just sort of, you know, ability to control our entire destiny and then be able to distribute it where we need to.

As it relates to, you know, other benefits, we've talked in the past that as we talk about The CW, that really doesn't capture the entire benefits that flow to our broadcast business as a result of an affiliation on a CW, where we have found that the benefits there from a distribution perspective have been quite healthy, both from an offensive and defensive perspective.

Craig Hubber, Analyst at Hubber Research Partners

Great. Thank you on that. And then the uses of your free cash flow here—is sort of the game plan here maybe for, like, the next 18 months to just continue to focus on paying down the debt related to the Tegna transaction and then maybe flip the switch over to start being aggressive again, buying back stock? Or is it sort of dependent on your stock price, frankly, as you think out over the next 18 months, if you start going back into the market to buy stock?

Just want to get a sense of how long you think you might be in debt pay-down mode for.

Lee Ann Gliha, EVP and Chief Financial Officer

Yeah, thanks, Craig. You know, you're absolutely right. Our first priority right now is to deleverage the company and to pay down debt. And, you know, when we did the acquisition, we mentioned that we thought we would be back to the pre-transaction leverage level kind of by 2028. We're going to, you know, continue to work to pay down debt as quickly as we can. In terms of repurchases, we'll just have to kind of look at what the stock price is at the time when our balance sheet is in the right position to execute on that and see how we're valued.

Hopefully we'll see some improvement in the stock price and some improvement in our multiple.

Craig Hubber, Analyst at Hubber Research Partners

And then my last question, if I could—just a housekeeping question. Lee Ann, your corporate expense nitpick questionnaire was higher than I was expecting, if you take out the transaction one-time items that you called out in your press release there. But what are you sort of expecting for that line over the rest of the year, please—corporate?

Lee Ann Gliha, EVP and Chief Financial Officer

Oh yeah, we don't provide line-item guidance for the year, but I would look at, you know, what we did last year and add Tegna in. We've got all of those numbers presented on the website, and I would just assume that we have, you know, a slightly higher number as a result of increased legal fees.

Craig Hubber, Analyst at Hubber Research Partners

Okay, great. Thank you guys.

OPERATOR

The next question is from Aaron Watts from Deutsche Bank. Please go ahead.

Aaron Watts, Analyst at Deutsche Bank

Hi, thanks for having me on. Just two questions from me, and I apologize if I missed this, but how is core advertising trending in the third quarter relative to the down 5.8% for Q2? And I appreciate some crowd-out is starting to creep in, but just trying to get a sense of the cadence and core strength sequentially.

Lee Ann Gliha, EVP and Chief Financial Officer

Yeah. So we don't report core separately; we just report non-political advertising. And what we have said in the third quarter is our non-political advertising is going to be down mid–single digits but slightly better than what we saw in this quarter, which was down 5.8 on an as-combined basis.

Aaron Watts, Analyst at Deutsche Bank

Okay, perfect. And then, Perry, I appreciate your comments around the Tegna process, and clearly you see the merits of the case as being on your side. How do you balance that and your confidence in a positive outcome in the courts with the time and the costs, both real time and opportunity costs, to ultimately get to that end? Do you see an out-of-court solution that could help reach a palatable conclusion to this sooner than is currently laid out for the court process?

Perry Sook, Founder, Chairman and Chief Executive Officer

It's hard to comment on that because obviously we don't want to open our playbook to the world here. I think that we are extremely confident that when one looks at the facts of the case and applies the law that we will prevail. We've already closed the transaction but are not able to fully integrate the stations, as has been said multiple times on this call. But we do get the financial benefit of them and we can use that cash flow to pay down debt, which is obviously work worth doing.

I think that, you know, anything could be possible to, you know, we'll see how our appeal on the hold separate order plays out. We'll see how, you know, our discussions and negotiations go along the way. Is it possible there could be an out-of-court settlement? I suppose so, but we feel supremely confident in our legal position. So I've got to balance that outcome with, you know, anything else. Obviously, you know, when we talk about potential portfolio optimization and swapping stations and doing things of that sort and additional M&A, you know, we kind of want to clear the decks here before we, before we do other, other, other things because we don't want those to be similarly delayed. This, this new second layer of approval is something that I think all industry is going to have to grapple with. In addition to telecommunications, certainly utility, medical, others are being scrutinized under this as well. And I think that has a profound impact just for M&A and business. And I think it's something that will have to be reckoned with as time goes on. And you know, if that becomes the new normal, then I think we all have to think about how that affects our business and our ability to grow our business and balance that against the risk of deploying additional capital.

But I think that's not a Nexstar Media Gr issue. That's not necessarily, necessarily an issue just for media. But I think that, you know, whether you're a power company, medical company, food company, an airline company, you're hearing these, these kinds of issues being raised out of quarters that have not raised them before. I also, you know, you've got states that are now investing in or talking about investing in growing their antitrust legal team at the state level.

And I guess my fundamental question would be certainly in some states, is that the best use of the taxpayers' dollars and resources, given that you have a federal overlay that is charged specifically with looking at antitrust and public interest and those kinds of things. Seems the duplication of efforts to me. But again, all of this will play out, I think, over time. And I would say anything is possible. But, but you know, we don't have a particular lean at this point.

I mean, obviously if the litigation, if we can settle the litigation prior to going to trial next year, that has a benefit to us. But we're not necessarily under the same pressures that other people are in terms of drop-dead dates or ticking fees or whatever, because we've already closed on the acquisition.

OPERATOR

There are no further questions at this time. I would like to turn the floor back over to Perry Sook for closing comments.

Perry Sook, Founder, Chairman and Chief Executive Officer

Thank you, Operator. I appreciate everyone joining us today. I want to reiterate my confidence in Nexstar Media Gr's long-term outlook and the enduring strength of the local business model. While we will address the matters before us with professionalism, transparency and resolve, our focus remains on executing our strategy, serving our communities, investing in high-quality journalism, and in creating long-term value for our shareholders, including what we expect will be another record year of financial performance here in 2026.

Thank you. Thank you all for your continued support and confidence in Nexstar Media Gr, and we look forward to updating you on our progress during our next earnings call in November. Have a great day. You can now disconnect.

OPERATOR

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

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