Nexstar Media Group Inc (NXST) 2007 Q2 法說會逐字稿

Good day everyone. Welcome to the NEXSTAR 2007 second quarter earnings release conference call. Today's call is being recorded. All statements and comments made by management during this conference call other than statements of historical fact may be deemed forward-looking statements within the meaning of Section 21 of the of the Securities Act of 1933 and Section 21A of the Securities and Exchange Act of 1934.

The Company's future financial conditions as a result of operations as well as forward-looking statements and comments made during this conference call are made only as of the date of this conference call. Management will also be discussing non-GAAP information during this call. In compliance with Regulation G, reconciliation of this non-GAAP information to GAAP measurements are included in today's news announcement. The Company does not undertake any obligation to update forward-looking statements reflective of changes in circumstances.

At this time, I would like to turn the call over to your host, NEXSTAR Chairman, President, and Chief Executive Officer Perry Sook. Please go ahead, Sir.

Thank you, operator, and good morning, everyone. I'd like to thank all of you for joining us today as we review and discuss our record 2007 second quarter operating results and our expectations for the second half of 2007. Matt Devine, our Chief Financial Officer, is also with me here this morning.

The second quarter 2007 marked another period of over performance by NEXSTAR. We exceeded our guidance and our street expectations and posted gains in every reported metric despite comparisons with the year ago period which benefited from higher levels of political advertising. Our strategy to focus on markets where we can be the top rated station or duopoly continues to benefit NEXSTAR with high revenue share and price leadership, strong margins and high shares of in market political revenue which, of course, will be a tremendous asset as we head into 2008.

We've also been successful in developing new and recurring ancillary revenue streams that complement our traditional and supported model and the contributions from both retransmission consent agreements and new media initiatives were significant drivers in second quarter of 2007.

Once again NEXSTAR generated record setting operating results exceeding our street guidance and we continued our platform building in a strategic and accretive way. Let me review some the highlights of our strong Q2 results.

Net revenue rose 6.5% which compares well with the high end of our guidance [of up] 2.9% during the period. Gross local and national advertising revenue was up 5.1%. New local direct billings totaled $3.7 million for the quarter and on a dollar basis our top five performing markets in terms of bringing new advertisers to television and on our air during the period were Lubbock, Texas; Springville, Missouri; Rockford, Illinois; Shreveport, Louisiana; and Little Rock, Arkansas. Our gross political advertising was $1.2 million versus $2.2 million in 2Q of '06. Our same station net revenue rose 1.8%.

Our mix of second quarter core revenue was 32% to our NBC stations; 29% to our CBS affiliates; 24% on Fox and 15% to our ABC affiliates which again demonstrates our network affiliation diversity.

Our retransmission consent revenues were up 31% in the second quarter compared with 2Q 2006.

New media revenue rose 244% on a quarterly sequential basis when compared with our retransmission consent -- and I am sorry -- when combined with our retransmission consent revenue, these new revenue streams surpassed the $5 million mark, accounting for 7.4% of the Company's total net revenue in second quarter.

Bcf was up 5%. EBITDA increased 8.5% over the 2Q '06 levels while same station EBITDA rose 2.5%. Our free cash flow increased an impressive 47% when compared with the second quarter of 2006. With year-over-year revenue gains, our platform building and our revenue diversification strategies, we are also delivering growing success toward our goal of overcoming the odd-year, even-year revenue disparity caused by political advertising.

One of our long-term goals is for new media and retransmission consent agreements to contribute 30% of our EBITDA. With over $5 million of high margin review generated in 2Q '07, we are on our way to achieving this goal.

During the second quarter, retransmission consent agreements contributed cash revenues of $2.9 million and approximately $1.3 million of ad spends compared with cash revenues of $2 million and $1.2 million in ad spends in the second quarter of 2006. In addition, new media revenue during the second part of 2007 amounted to approximately $900,000 or almost 3.5 times what we reported during 1Q of '07.

With the launch of fully half of our local market sites in the second quarter of '07 the transition of our TV station websites into market community portals has been completed ahead of schedule.

As far as category results our No. 1 category, automotive, was down a slight 2.5% in the quarter. Interestingly our factory and dealer group spending was down approximately 8% while our local dealership advertising was actually up over 9%, again reflecting our continued focus on marketing partnerships and account management at the local level.

Categories showing increases in the quarter were furniture, entertainment, telecom, financial services, legal, home improvement, consumer electronics and health care. Categories that showed declines were fast food, department stores, insurance, and packaged goods.

As indicated by the guidance in this morning's release, NEXSTAR's momentum extends into the second half of the year with continued outperformance versus the industry, despite the tougher comps relative to political contributions and 3Q and 4Q of 2006.

Just after our last earnings call, NEXSTAR's Board of Directors engaged Goldman Sachs & Co. to assist the Company in reviewing strategic alternatives intending to enhance shareholder value, including but not limited to the potential sale of the Company. Last Friday we announced that in light of the difficult conditions in the current financing markets the Company's Board of Directors and consultation with its financial adviser Goldman Sachs has decided to suspend discussions with prospective acquirers of the Company.

I'd like to say at the outset that we will not be taking Q&A on this subject as the process is currently suspended; however the Company as always will continue to review all strategic corporate options to enhance shareholder value as we continue to successfully execute on our long-term strategies for growth.

With that said I will turned the call over to Matt Devine to provide deeper detail on our financials and guidance. Matt.

Thanks, Perry. I think you can see from this morning's release that NEXSTAR continues to outperform our guidance, street estimates and our industry as we again generated record operating results and solid year-over-year gains in every reported metric. As Perry indicated Q3 will be more of the same for NEXSTAR.

I would like to first review some of the income statement items and follow with the key balance sheet accounts.

Net revenue for the quarter ended June 30, 2007 grew 6.5% to $68.7 million, up from $64.6 million in the second quarter of last year. Broadcast cash flow rose 5% to $26.8 million in the second quarter of 2007 compared with $25.5 million in the second quarter of 2006. Income from operations for the three months ended June 30, '07 was $13.4 million compared with $11.1 million in the quarter ended June 30, '06.

The Company generated a 38.9% bcf margin in the second quarter of this year. $4.2 million of retransmission consent revenue was generated in the second quarter of 2007 versus $3.2 million in the second quarter of 2006.

NEXSTAR's second quarter '07 corporate overhead costs were $3.2 million which includes $0.5 million of non-cash employee stock option expense. In the second quarter of last year corporate overhead totaled $3.8 million and included $400,000 in employee stock option expense.

Second quarter 2007 EBITDA was a record $23.6 million compared with $21.8 million in last year's second quarter. Free cash flow was $9.6 million for the second quarter of '07 compared to $6.6 million in the year ago quarter.

The Company incurred $4.2 million of CapEx spending in the second quarter of '07, of which $1.7 million related to our HDTV buildout in Q2 of '07 compared with a total of $5.9 million of CapEx spending in last year's quarter. We project CapEx spending to total approximately $15 million this year compared with $24.4 million of cap expenditures incurred last year.

On a same station basis, NEXSTAR's 2007 second quarter net revenue was $65.7 million, up almost 2% compared with $64.6 million in the second quarter of 2006, while EBITDA was $22.3 million compared with $21.8 million in the same period of 2006. Same station results exclude the operating results from WTAJ, the CBS affiliate serving the Johnstown/Altoona PA market and WLYH, the CW affiliate serving the Harrisburg/Lancaster, Pennsylvania market which were acquired on December 29th of last year. WLYH is programmed by a third party under a time brokerage agreement that extends until 2015.

With record results in the first half of 2007 and guidance for third quarter net revenue to exceed that of the third quarter of last year, 2007 is shaping up nicely for NEXSTAR. For the first six months ended June 30, 2007, net revenues rose 5.1% to $130.8 million.

In addition gross local and national advertising revenues increased by 4.6% in the first half of 2007 compared with last year. Retransmission consent revenues which consisted of cash subscription payments of $5.6 million and ad spend of $2.5 million totaled $8.1 million in the 2007 period, compared to $6.1 million in the first half of last year.

Income from operations in the 2007 first half totaled $19.5 million compared with $17.2 million in the same period of 2006. The Company recorded a basic and diluted net loss per share of $0.36 and $0.34 for the six-month period ended June 30, 2007 and 2006, respectively. For the first six months ended June 30, 2007, broadcast cash flow rose 4.8% to $47.5 million. EBITDA totaled $41.3 million for the 2007 six-month period, a 7.6% increase over the same period in 2006, while free cash flow rose 1.1% to $11.6 million in the six months ended June 30, 2007.

As far as the balance sheet goes, cash on hand at June 30, 2007 was $8.8 million compared with $11.2 million at year-end 2006. Reflecting bank debt payments of approximately $5 million during the second quarter, our outstanding bank debt was $364.4 million at June 30, '07, compared with $370.1 million at year-end '06 and reflects the borrowings at the end of '06 to complete the accretive acquisition of WTAJ and WLYH.

Our 7% notes totaled $197.9 million, resulting in operating company net debt of $553.5 million at June 30, 2007. Leverage at June 30, 2007, as defined in our October 2005 amended senior credit facilities, is 5.7 times the same as it was at 12/31/06 and March 31, '07. The October 2005 amended senior credit facility covenants provide for a total leverage covenant of 7 times through 12/31/07.

While 2007 is a nonpolitical year, our same station growth, the addition of WTAJ and growing retrans and new media contributions will position NEXSTAR to end 2007 with leverage below 6 times. Again against our covenant for leverage of 7 times at 12/31/07.

At the holding company level our 11 3/8% notes totaled $119.7 million at June 30, '07, compared with $113.2 million at year end '06. Thus total debt at the holding country was $682 million at June 30, '07 compared with $681.1 million at year end '06. This represents leverage of 7 times at the hold co. level. We project that we will end 2007 with hold co. leverage of about 7.3 times which will position us well for further deleveraging as we enter the active 2008 political year.

We project that at year-end 2008 our hold co. leverage will be below 5 times.

Our guidance for the third quarter is net revenue of between $64 million and $65 million compared with $63.6 million in the third quarter of last year. Station operating expenses of between $41.5 million and $42 million will compare to $39.8 million last year and corporate overhead ranging between $3.2 million and $3.4 million compares with our $3.2 million number in the third quarter of last year.

That concludes the financial review. I will turn the call back to Perry for some final remarks before Q&A.

All right. Thank you very much, Matt.

NEXSTAR is consistently achieving record operating results and outperforming our industry by adhering to our core strategies for growth, including building our midsize market platform, producing leading local news and developing new revenue streams. During the most recent quarter we entered into two additional agreements that are consistent with our successful approach to growth and leveraging our platform.

First in June, NEXSTAR reached a multiyear agreement with Verizon for retransmission services through Verizon's fiber optic-powered FiOS TV service. This agreement grants Verizon the non-exclusive right to distribute NEXSTAR's locally produced content including market leading local newscasts and to carry both the analog and digital signal, including our high-definition signal, of all NEXSTAR stations located within FiOS TV markets.

This agreement extends our track record of successful retransmission negotiations and, again, I believe highlights the value of our local broadcast programming. We believe that this agreement will reflect the evolving importance of locally produced video content to platform distributors in negotiations going forward.

The majority of our current retransmission agreements were three years in length and were completed late in 2005. As such we will be again in negotiations regarding the value of our local broadcast station programming, carried on cable channels and satellite distributors in our markets in the very near future once again.

In addition, it is probably safe to say that we are ahead of schedule with our initiative to transition our TV station websites into community portals. The goal here was to get all markets relaunched by the end of third quarter of this year and we accomplished this by the end of second quarter of this year.

Of equal importance we projected a low to mid seven figure new media revenue contribution and we have met that goal in the first half of 2007 with total revenue of just over $1 million, which was essentially generated from just half of our platform as half of our markets launched in the second quarter of 2007. Obviously our ability to build from here will be evident in our results in the latter half of '07 and beyond.

Second, late in 2Q we announced that we would enter into a local service agreement with Mission Broadcasting for KTVE, the NBC affiliate serving Monroe, Louisiana,/El Dorado, Arkansas. Mission Broadcasting is buying the assets of KTVE for approximately $7.7 million and NEXSTAR already owns KARD, the Fox affiliate in the Monroe/El Dorado market.

The purchase price represents a multiple of less than 8 times LTM bcf so it will be another accretive transaction for our shareholders. And under the LSA, KTVE will receive additional retransmission consent revenues to further improve the station's bcf out of the box.

The new local service agreement represents the 50th television station that NEXSTAR will own, operate, program or provide sales and other services to. In addition, reflecting the KTVE LSA, NEXSTAR will be doubled up in 18 of the 29 markets in which we operate.

We remain confident that our ongoing approach of actively managing our station portfolio, appointing leading local market managers, developing new media revenue streams and other new revenue streams, as well as focusing on our balance sheet and capital structure, will all continue to build value for our shareholders going forward. Our success by driving industry innovation is serving us well and the outlook for the remainder of '07 and '08 are positive.

On '08, it is worth noting some stats that I think underscore just how robust the political spending might be. The Federal Election Commission reported last month that Presidential candidates raised $139 million in the second quarter of '07, bringing total contributions to $296 million. The amount raised in the first half of '07 already eclipses the total political dollars raised in all of 2003 which was $272 million in the Presidential race.

Estimates are that the 2008 Presidential campaign will result in total advertising expenditures of approximately $3 billion. With television historically receiving the majority of such spending, we could see stronger than anticipated political spends in the fourth quarter of this year as well as in early '08 as the competitive field prepares for the early primaries, which fit our geographic footprint very well.

Looking out to 2008 with our network diversification and our strong presence in the mid markets, we look for political ad spending to eclipse that of any prior Presidential race since we founded the Company. This will afford us great financial returns as well as flexibility in terms of free cash flow generation.

With all of that said, I would like to turn the call now over to the moderator to line up question and answer and we would like to answer any specific areas of interest that our questioners might have. Moderator.

(OPERATOR INSTRUCTIONS). [Bishop Sheen] from Wachovia.

Top of the morning to you. Couple of questions. First on the Laredo pending acquisition. What kind of margin are we talking about on net revenue that that will bring in per topline?

The station on an LTM basis currently operates with a margin in the 30% range which will obviously be improved under our LSA and our oversight.

Then going to the political, I know it -- no matter how bullish you are it is difficult to keep up. But do you have a feeling of a magnitude that you think you'll be blessed with above what was your best political ever? '06?

2002 was actually the high watermark for this portfolio of stations. Again this includes the acquisitions, the recent acquisitions of approximately $39 million. Our general guidance support next year will be in that neighborhood and probably a bit conservative to that neighborhood, because of some gubernatorial spending in 2002 that kind of was a -- pushed us to a high watermark. But in any event we think the number will certainly start with the 3 and may even go beyond that.

Great. And we are talking about gross on (multiple speakers)?

That is correct.

Last question and I will move on. You've often talked now of the goal of new media and retrans to contribute at some point in the future 30% of EBITDA and then I think you gave us the metric that in Q2, together they contributed 7.4% of net revenue.

That is correct.

Can you translate that into how much of EBITDA that was?

We can give a rough estimate because we are obviously in the ramp up stage where we launched half of our markets in second quarter. For the first 60 days or so there's not a tremendous amount of revenue that comes to a new market until the site gets populated and people become aware. But I think it's probably in the 5% range of EBITDA in the second quarter.

And I might add that while we reported $1 million in the first half of 2007 we already have over $1 million on the books against our new media revenue line for the third quarter of 2007. So we are seeing very nice linear growth month over month.

Victor Miller from Bear Stearns.

In your press release you are talking about other strategic options that you may be thinking about. Maybe you can just review those with us and would they ever include, for example, you can buy 2.5% of your Company back for a little under $7 million now with a stock repurchase. Would you do something like that?

Secondly on retrans, can you remind us what percentage of your retrans dollars are kind of up for renewal in '07, '08, '09 so you can just get a kind of cumulative view over the next three years?

Then, Matt, remind us what can you do with the picks next year in terms of taking out that piece of the balance sheet?

I'll grab a couple of those and Perry will grab a few as well.

First of all, I think your first question was what does it mean that we -- now that we've suspended our process and we are going to continue to pursue enhancing shareholder value. In my mind what that means is we are going to continue to pursue smart accretive transactions such as the WTAJ and the KTVE acquisitions which come to us at under 8 times the multiple at closing. We will -- I am sure we will go back and reconsider some nonstrategic station divestitures and see if they make sense to help shareholder value.

But more importantly and probably all of that in my mind is, we are going to continue to operate the portfolio and grow it the way we have been growing it as we go into a very robust 2008. I think when people model out the type of growth that we have been sharing on these calls, we will -- I think that will translate to a share price that was at least as full as the share price was when we were in the middle of our process of pursuing all strategic alternatives. And so in my mind those are the options that the Company will consider as we go forward.

As far as retrans goes, Vic, you asked about that a little bit. 40% of our current revenue dollars under contract are all up for renegotiation in 2008 and as a matter of fact, Duane Lammers -- who you know -- our Chief Operating Officer, has initiated that process with some of our key distributors and I think there will be some very nice news for people as Duane concludes the process of going into the second time to feed at the well, if you will.

In 2009 an additional 33% will come up for renegotiation. So basically we will have almost a total redo of our current contracts over the next two years. I think we are expecting some very significant improvements in the pricing of our currently existing contracts.

You asked about [picks], the zeros that we have come due in April of '08 at which time the Company will make an AHYDO payment to the tune of about $46 million to basically retire 1/3 of the outstanding at par. At that same time the balance of the issue will be callable and the Company will consider how they want to approach the balance of that issue, either at that time or perhaps at a sooner time.

And lastly I think your question related to a stock buyback. That is an issue that I'm sure will be discussed at the Board level. The Company as you know is improving its operations significantly, its free cash flow significantly. In my mind its debt is at a very, very manageable number and continues to decline significantly over the course of this year and through '08. And so I'm sure that will be a topic of discussion at our upcoming Board meeting.

Thanks, Matt, and thanks, Perry.

I'll just add two comments to that. You know we are somewhat restricted in what we can do in terms of a buyback based on our leverage, Victor. And as long as our senior leverages above 5.5 times we are limited to a basket. Below 5.5 times, our ability to affect shareholder -- share buybacks is unlimited.

So as you look at our deleveraging story continuing into 2008, we certainly have more flexibility and capacity as time goes on to do that. I said we wouldn't really comment on our process and I won't comment other than to just say this. Here in Texas we have a saying that you can't push a rope. And in today's current financial marketplace debt finance market, that's exactly what we felt was going to be the outcome.

That the financial marketplace in terms of debt availability was not conducive to maximizing our shareholder value. I just want to assure everyone on the call that we are financial animals with one goal and that is to maximize shareholder value as we are significant shareholders ourselves.

So we will continue to explore all alternatives. We can now focus full time for a period of time on running the Company and we think there's value creation in that; and by the same token we will continue to march down the road of maximizing shareholder value by whatever means is most effective.

Jordan [Trammell] from [Brigade Capital].

With regards to asset sales. You know that was kind of the mode that you were in, you know, the noncore asset sales and I think maybe you that closed on some according to press releases before the board came out and through the process. Do you plan to pick that up or not really because if you markets get better you might -- the Board might want to go down the process again selling the whole thing and you think you get a better price if you keep the whole thing together?

Yes, I think probably the best way to say it is pretty much how you said it. We have suspended our discussion. That to me would mean a hiatus which would mean that, when there's an opportunity to reengage with the party that we had pared down to a finalist list, we will most likely do that.

We certainly wouldn't want to diminish any offering there, but it is a tight line. I mean if we feel that -- and also if the credit markets are restrictive at the $1 billion level I'm not sure what that means at the $20, $30, $40, $50 million level. And you know the first gating issue for us would be in engaging in any of these discussions. Show me the money. Show us what you have in committed financing before we spend any time in discussions.

But again if there were an accretive station divestiture opportunity with a financially qualified buyer, Matt will continue to entertain those discussions and we'll see where that process leads as well.

Edward Atorino from Benchmark.

One of my questions was answered; and if I missed any comments on pacings I apologize. How are pacings looking? And would you sort of talk about some of the major categories? If you did I apologize. Auto, particularly, going forward?

Sure. Our pacings indicative in our guidance going forward is for mid single digit local revenue growth and flattish national growth, which I think is embedded in the guidance that was in the release.

Automotive as we said for the second quarter was down about 2.5%. On an all-in basis, while our individual automotive dealer spending market by market was actually up, we think that is an encouraging sign. I have the feel and it's a bit early in the quarter to call it, but we are bottoming out in terms of automotive declines. And we are not ready to signal any significant turnaround. But I think the rate of declines as evidenced in second quarter will be more of what you should expect to see from us in the back half of the year.

Thanks. One other question, I think was sort of half asked. Any early political yet?

Our political advertising in the first half of the year, it was roughly double what we had anticipated from a budget perspective. You know, we have political on the books for the third quarter and we have no political on the books yet for fourth quarter; but we expect that to book relatively close to the start date of those [flights].

So there's not a lot of advanced bookings that far out.

On your programming any major new series coming at that is going to bump up your programming contract costs, anything like that? Or are you pretty well set?

We completed a negotiation yesterday for probably one of the better off net programs for access time period on one of our recently acquired stations that we were able to replace the old with the new with probably an upgrade in programming for about 1/8 of the cost of what we were paying on a weekly license fee basis before.

So again with our focus in the mid markets where there is more programming then there are available time periods, we think we can continue to manage that cost. It was approximately about 3% of our net revenues in '06 and we don't see significant variance in that number going forward and even in the out years.

[Christine Petrie] from Carlisle Group.

I'd like you to touch a little bit more on Victor's previous questions in terms of baskets in the in credit agreement. Can you remind us what the basket is for dividends?

I -- and I don't want to state ahead of Matt here but I believe our restricted payment basket is above 505 times limited to $10 million on a calendar year basis and below five times, I don't know with respect specifically to dividends. But for purposes of buybacks or other things like that it is an unlimited basket.

And this is the (inaudible) not the whole (inaudible)?

That is correct.

And then Perry, just going back to your comments and what you said about how you feel about the debt markets. Does that change your plans for refinancing of those zips?

I don't want to say too much here, but I think we look forward to the AHYDO payment that is due and feel that with existing credit availability and cash on hand, we will be able to make that payment without having to re-enter the bank market.

And can you tell me what the variability into their revolver is today?

I think on a combined basis it's about $62 million. Between -- yes that's -- that would be right in the neighborhood of the number.

Perfect. Good quarter.

David Bank from RBC Capital.

A couple questions. First, Matt, could you give us a pro forma number for 3Q and 4Q '06 so we know what we are comping to? And second question is, Perry, wondering if you are seeing anecdotally any impact from all of this subprime shakeout on the local economy and how you think it is impacting local advertising? Sounds like from the last quarter and from forward pacings you are not really seeing a whole lot. Wondering if you have any observations?

And the last is on the political side, the dollars are staggering and sort of the number of primaries on that single date in February is just kind of skyrocketed.

I have two questions. The first is do you think that the displacement ratios are going to sort of -- you know typically we think there is a displacement ratio of about 50% with political advertising. But because they're so much political that will probably hit to think the displacement will be higher than that? And second do you think that the networks will start to eat into what has traditionally been really a spot product because you have so many primaries going on on the same day? It might make sense to do some network.

Let me start and then I will flip it over to Matt. I think as it relates to subprime we see absolutely no evidence of any dislocation of dollars at the local level. I don't know that a car dealer or a grocery store owner is really in that mode. Whether it might affect the confidence of certain national and regional advertisers that remains to be seen. It is not a topic of conversation that I hear when I talk to our managers and our regional vice presidents that this is cause for concern on Main Street at least yet.

I think moving on to political, I think that the 50% that you use is still a pretty good number. The way we manage the inventory, you know we can't go up a page but we can go up a grid and go up in rates. So I think you could see higher unit rate disparity in the high demand time periods. Certainly they could potentially take up more inventory depending on the race, depending on the geography. But the way we manage the inventory is obviously we don't go for share. We attempt to manage unit rates for yield increases and so I don't anticipate significant additional displacement.

As to the networks potentially getting into the "national primary business", I would point out that we have a national general election and all politics is local. So I think if your geography is a contested state for a particular race including Presidential you'll see dollars. But I don't see dollars migrating to the network. Otherwise you would see more dollars around all general elections, which are national in nature.

But, again, all politics are local and I think contested on a state by state and literally down to the county by county level. With that I will turn it over to Matt.

You asked about comparable numbers in Q3 and Q4 of last year?

Right.

I would tell you that our same station net revenue in Q3 of last year was $63.5 million and in Q4 was $77.1 million; and our EBITDA in Q3 of last year on a same station basis was $20.8 million and $29.3 million in the fourth quarter of last year. And as you know same station to us means we exclude the operating results of WTAJ in last year and that will also exclude the operating results of our recently announced transaction to acquire KTVE, which we are planning on receiving approval and closing on in the fourth quarter of this year.

I'm sorry but I guess to be able to model the Company right could you give us a sense of what [THA] in the third quarter and what those two stations did in the third and fourth quarter so we kind of know the base we're modeling off?

I'm not sure that is the correct way to look at it only because we weren't responsible for those results. So I think the best way to do it is to take the acquisition out, look at the platform that we been responsible for and compare those results. Excluding the acquisitions.

(OPERATOR INSTRUCTIONS). Bishop Sheen from Wachovia.

I just can't pass up the opportunity for a guy with perspective. I met you when you were in the trenches, managing stations through the awful credit crunch of the early '90s. This is -- let's say, it's some sort of credit dislocation. Can you just give me your perspective from the PD business? How this measures up and what kind of challenges it creates when you're trying to have total flexibility to sell stations, to make accretive acquisitions, etc., etc.?

Sure. I mean I remember and Matt and I were just talking about this the other day and we remember '91 the HLTs when all of a sudden every broadcast loan was in workout. I remember 1999 when we were in the process of closing on an acquisition and the leverage loan market, the leverage multiples came in about three times in a very short period of time. And that's why we ended up with some 16% paper in our capital structure.

So I think from our perspective we are well-suited to manage the organic growth of the platform, complete the acquisition, make our AHYDO payment without any exposure to going back into the credit markets and attempting to seek a new deal. I think from my perspective, the market seized up so quickly and it's not really a question of what the leverage level, what the multiple is?

It is, today, is the teller wonder window opened? Are the money center banks lending money and in a number of those cases the answer is not right now.

So we were not -- we were more concerned about people's ability to perform than we were price and value. That would have been the byproduct of further discussions. But from our perspective as we said we wanted to press the pause button, put the process on hold and we will see when the markets will open back up again.

Obviously they opened up after '91. Obviously they opened up after '99. They opened up again after 2001. And I am a firm believer in the cycles. So again I don't expect condition to persist for long although I would be hesitant to offer any kind of opinion about when. Is it two weeks or is it two months or is it more or less than either of those as to when the credit markets will come back to some sense of normalcy?

I think there's some digestion that has to go on, but again I'm not the money center bank expert. But just my opinion, having seen this and then through the cycle a few times before the pendulum always swings too far in either direction and it eventually gets back closer to the middle.

Very helpful. Agree all the way although I might take the over on the two months. But thank you.

Andrew Finkelstein from Lehman Brothers.

I just wanted to come back to retrans. You mentioned it earlier in the call, I might have missed it, but if you could just give us more color on when those renegotiations start or how much of it is coming up? I don't know if it is the end of this year or early next year.

And then maybe how far behind -- I don't know how much quantitative you can put around it, but how far behind the levels per household those original deals were? And then maybe looking forward, how much growth you expect to get? What kind of growth on this line item? It's become such an important and good part of the story. How much growth should we think about for the retrans, the line item going forward?

As Matt mentioned 47% of our dollars are tied to agreements that expire before the end of 2008 and, cumulatively, 80% of our current contracted dollars are tied to agreements that expire before the end of 2009. I think as a matter of perspective -- I mean, we reported in this quarter on the growth in that number and that's basically organic growth escalators and existing contract provisions.

I think that I mentioned when we did our -- we have started to do deals with the telephone companies. We have done a couple of deals that have set new high watermarks in terms of our per subscriber consideration and we obviously feel that in 2005, we were attempting to push an elephant from underneath by ourselves. We think in 2008 and 2009 there will be a lot of other cars on the racetrack and to use NASCAR parlance maybe we can't draft with some others are draft behind some others that will be out there attempting to recognize this revenue stream for the first time.

It appears there are no further questions at this time. Mr. Sook, I will turn it back over to you for any additional or closing remarks.

Well, I would like to thank everyone for their attendants and attention and interest in NEXSTAR. We think we have got an exciting story unfolding here in the back half of 2008 and we look forward to reporting our third quarter results in about three months time. Thank you for joining us.

That does conclude today's conference. Thank you for joining and have a great day.