Nexstar touts ATSC 3.0 expansion, rebuffs Netflix claims that linear TV is dying

Nexstar Media Group, a major proponent of ATSC 3.0 (NextGen TV), has deployed the broadcasting technology in four additional markets in the second quarter, CEO Perry Sook said Thursday.

Back in January, Nexstar predicted ATSC 3.0 could reel in up to $15 billion in revenue for the broadcast industry by 2030. Sook added on the earnings call that Nexstar is “accelerating” behind-the-scenes discussions with potential technology and business partners for the service.

As Nexstar continues to make moves in the linear TV space, Sook called out Netflix co-CEO Reed Hastings, who last month forecast “the end of linear TV over the next five to 10 years.”

“The CEO of a streamer that is now facing new competition is wrongfully predicting the demise of our sector…while at the same time now copying our business model,” stated Sook, referring to Netflix’s plans for an ad-supported tier. “We will intend to just keep doing what we do best.”

Nexstar touted “all-time high” Q2 net revenue of $1.25 billion, while net income totaled $226.5 million. Most of Nexstar's revenue came from distribution, which contributed $646.1 million. Digital revenue totaled $88.2 million.Core advertising brought in revenue of $413 million.

Sook also nodded to Nexstar’s revenue from political ad spend – about $86.7 million – which contributed to nearly 16% growth in the company’s total TV ad revenue.

“In addition, we have the benefit of the 2022 midterm election cycle, which by all accounts will be another record year for political ad spend,” he said.

Sook’s comments echoed those made this week by Sinclair CEO Chris Ripley, who boasted Sinclair reached “all-time record levels” for Q2 political ad revenue.  

Sook also pointed out several TV advertising categories that are “pacing up” for the third quarter, such as attorneys, home repair manufacturing, telecom and entertainment.

Though adoption of AVOD streaming continues to grow in the U.S., Nexstar doesn’t expect that growth to damper its ad dollars. Sook believes Nexstar’s unique selling proposition is local marketing activation at scale, which better increases brand awareness for consumers.

“We feel very confident about our place in the ecosystem,” he said. “But we’re also fully aware that there are other folks looking to get into the advertising business potentially.”

Sook went on to say Nexstar’s streaming capabilities are targeted for niche markets. The company last quarter stood up a FAST channel for The Hill, a political digital news platform Nexstar acquired last year.

Nexstar is also in the works of creating a FAST channel for its cable news channel NewsNation, Sook continued, with a target launch date either later this year or early 2023.

Sook also stated on the call that he doesn’t expect macroeconomic headwinds to have a “material impact” on Nexstar’s business. National advertising is Nexstar’s smallest revenue line, and the company is seeing “resiliency” in local advertising.

“The more exposed you are to national advertising, maybe the bumpier the road here over the near term,” he said. “But quite frankly, that’s not a huge area of exposure for us.”

Rumors floated around a few weeks ago about Nexstar possibly acquiring a majority stake in the CW Network – currently co-owned by Warner Bros. Discovery and Paramount.

While Nexstar didn’t corroborate those reports, COO Tom Carter noted the company’s been “pretty linear” with its interest in content.

“Content that can be used and digested across the number of distribution platforms we have,” he explained, regardless if the content is hosted on the cable, broadcast or digital level.