Nexstar Media Group is in talks to bring more National Basketball Association games to its stations.
Nexstar made a deal with the NBA’s Los Angeles Clippers to exclusively broadcast 15 games on its L.A. station KTLA this season. The games are also being aired on other Nexstar stations in California. (The Clippers’ other games appear on regional sports network Bally Sports SoCal.)
On Nexstar’s third-quarter earnings call with analysts, chairman and CEO Perry Sook said the broadcast group was in talks with at least two other NBA owners about carving out a similar package for its stations.
“I think you’ll see more of this as times go on,” Sook said.
Any deal would be done in consultation with the incumbent regional sports network and could benefit the RSN by whetting the appetite of sports fans and turning the growing number of non-subscribers into subscribers, he said. The big over-the-air reach could also help teams sell tickets, he added.
Sook was also asked about the potential financial impact of NBC shortening its primetime and turning the 10 p.m. ET/PT hour over to affiliates, which network officials have said they are considering.
“It would be good,” Sook said. “We’ll make more money with an hour of news at 10 than we do with an hour of network programming.” The affiliates would be able to sell all of the ad inventory in a local newscast, compared to just a minute or two in a primetime network show.
“Listen, we have a number of Fox and CW and MyNetwork TV stations that program news in that last hour of prime, and they are extremely profitable,” Sook said.
If the networks cut back the number of hours of programming provided each week, stations would pay them less in reverse retransmission programming fees, he added.
Nexstar now owns a network of its own, having acquired at 75% stake in The CW.
CFO Lee Ann Gilha said Nexstar still expected to make the money-losing network profitable by 2025.
The CW will have revenue of about $70 million in the fourth quarter and run up a negative EBITDA of about the same amount. There will also be an eight-figure restructuring charge related to The CW. Nexstar will be able to offset a portion of the losses against taxes payable, Gilha said.
By next season, The CW’s commitment to most of the programming produced by former owners Paramount Global and Warner Bros. Discovery will be “minimal,” she said.
“Warner Bros. and Paramount are not precluded from selling us programming,” Sook added. “It’s just going to have to be a financial deal that we like, and there may be a couple of shows that distinguish themselves this year that we want to roll over into next year.”
During the call, Sook also tried to persuade analysts and investors that Nexstar was likely to perform better than other media companies if the economy goes south.
Sook said that more than 50% of Nexstar revenue comes from distribution fees, “a contractual and recurring revenue source that has historically been resistant to periods of economic slowdown.”
Less than one-third of Nexstar’s third-quarter revenue came from core television advertising, making the company less dependent on ad revenue than ever before, he said. And political advertising will continue to grow, with local TV getting the lions share because, like other marketers, candidates have found that broadcast is best for reaching mass audiences.
Local advertising has also been more resilient than national advertising he said and Nexstar’s 1,500 member sales forces will be difficult to compete with.
“There is no one in the TV industry with greater sales resources and consumer reach than Nexstar,” Sook said. “This isn’t something the larger AVOD or streaming companies can easily replicate. While some pure-play streaming companies are now embarking on an effort to replicate our business model, ours is proven and consistent and currently delivering today.” ■
