The next battle between Nexstar and cable officials will take place in Amarillo, Texas.
Nexstar CEO Perry Sook told those attending the Bear Stearns Media Conference in Palm Beach earlier today that Nexstar will pull its Amarillo station off the cable provider there at the end of this month.
That will make five markets in which Nexstar has refused to grant retransmission rights to cable providers unless they pay 30 cents per customer per month. In addition to KODE and KSNF being removed from Cable One in Joplin, the company has taken its stations in Shreveport, La., San Angelo, Texas, and Abilene, Texas, off the cable providers in those cities.
"This is a fight we have to fight as an industry and we need to win," Sook said, adding that he has had "a dozen and a half (broadcasters) behind us."
Nexstar had been anticipating this battle for quite a while, Sook said, noting that the company had only negotiated two-year deals, instead of the more typical three-year deals with cable companies during the last negotiating sessions.
Sook insisted that the strategy is paying dividends for Nexstar and the company has only lost about a third as much advertising as it had anticipated, saying that it was a "low six-figure number."
Sook said the cable companies in Joplin, Shreveport, Abilene and San Angelo have lost 15 to 20 percent of their customers and that Echostar's Dish Network has done extremely well in Joplin, Shreveport and Abilene. Abilene turned out to be a fortuitous situation for Nexstar as Echostar pushed up its timetable to coincide with Nexstar's battle with Cox Communications. Dish Network had not been scheduled to begin transmitting local signals in Abilene until the end of 2006.
Not only have some advertisers stayed right with Nexstar during these confrontations, but the company has even brought in new advertising, Sook said, citing Grandy's, a fried chicken restaurant in San Angelo. Grandy's started advertising after the San Angelo station was removed from Cox, Sook said.
"Their business is up 38 percent. People are finding a way to get our signal."
Sook was challenged by one of the investor-types in attendance who noted that Nexstar is leveraged seven and a half times and is confronting the cable systems and losing advertisers. "This is scary stuff," the questioner said, adding, that he could see a possibility of Nexstar filing for Chapter 11 bankruptcy in two years.
Sook suggested that his questioner keep his eye on the prize, which is the extra stream of revenue which could come if the cable systems give in. That would mean an additional $20 million a year for the company, he said. "We are fully backed by our board. Our advertising losses have not been catastrophic."
If the Nexstar strategy is not working, Sook said, then why is Cox Communications offering its customers in Bossier City, La., 20 percent off their cable bills if they stick with Cox despite the loss of Nexstar's local station. Sook said he had talked to a Cox customer there who could not understand why Cox was paying $20 a month to its customers to avoid paying $30 a month to Nexstar.
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Nexstar CEO Perry Sook emphasized his company's dedication to its local news product during his presentation at the Bear Stearns Company's annual Media Conference today. "Our strength has been our local news franchise," he said. The news franchises, the company's duopolies (markets in which it owns and operates more than one station such as Joplin and Springfield) and its dedication to cost control will make it successful, Sook said.
Nexstar offers more news programming than anyone other than the 24-hour news stations, Sook said. The company has 529 1/2 hours of local news, more than any TV company out there."
Sixty-eight percent of Nexstar's money comes from local advertising, Sook said, saying that the company, on average, gets 63 percent of the ad revenue in the communities in which it has duopolies.
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The decision by the National Democratic Committee to write off Missouri in the 2004 presidential election, cost Nexstar $750,000, Sook said. The Democrats elected to put their money into other battleground states.
The decision not only damaged Nexstar, but probably enabled Matt Blunt to defeat State Auditor Claire McCaskill for governor.
The lack of a competitive U. S. Senate race in Arkansas also hurt the company, Sook said.