Wednesday, March 14, 2007

Nexstar picks up $13.7 million in retransmission payments in 2006

Nexstar Broadcasting's gamble to force cable companies to pay for retransmission rights appears to have paid off in a big way.

As Joplin residents will remember, Nexstar's KSNF and KODE were kept off Cable One for almost a year until the two companies reached an agreement in December 2005.

Nexstar Broadcasting earned $13.7 million from its new revenue stream, according to its annual report. filed today with the Securities and Exchange Commission.
That total includes $8.7 million in retransmission payments and $5 million in new advertising revenue that stemmed from the agreements, according to the report. That $13.7 million compares to $2.9 million from retransmission payments during the previous year.

The company reported increased revenue in 2006:

Our net revenue increased 15.8% to $265.2 million for the year ended December 31, 2006, compared to $228.9 million for the year ended December 31, 2005. Our net revenue was higher in 2006 than in 2005 due to several factors, including advertising revenue generated during the coverage of the Olympic Games and an increased demand for political advertising that was favorably affected by the volume of advertising time purchased by campaigns for elective offices and for political issues.

Political revenue was $27.0 million for the year ended December 31, 2006, a significant increase over the $2.2 million for the year ended December 31, 2005. The demand for political advertising is generally higher in even-numbered years, when congressional and presidential elections occur, than in odd-numbered years. During an election year, political revenue makes up a significant portion of the increase in revenue in that year. Since 2006 was an election year, a significant percentage of the Company’s revenue growth in 2006 was attributable to political revenue. However, even during an election year, political revenue is influenced by geography and the competitiveness of the election races. Conversely, given that 2007 is a non-election year, we expect nominal political advertising revenue to be reported in 2007 in relation to the amount of political advertising reported in 2006.

Automotive-related advertising, our largest advertising category, represented approximately 24% and 26% of our core local and national advertising revenue for the year ended December 31, 2006 and 2005, respectively. Our automotive-related advertising decreased approximately 4.3% for the year ended December 31, 2006 as compared to the same period in 2005, primarily due to a decline in demand for advertising from this business category. A significant change in this advertising revenue source could materially affect our future results of operations.

1 comment:

Anonymous said...

Like their decision or not you have to credit the business practice behind Nexstar's decision to pull KSN & KODE off cable. In the long run it will pay off handsomely...already is. It took guts to do what they did.