Nexstar Media Group Inc (NXST) 2011 Q2 法說會逐字稿

Good day, and welcome to NEXSTAR Broadcasting Group's 2011 second-quarter conference call. Today's conference call is being recorded.

All statements and comments made by management during this conference, other than statements of historical fact, may be deemed forward-looking statements within the meaning of Section 21 of the Securities Act of 1933 and Section 21-A of the Securities and Exchange Act of 1934.

The Company's future financial conditions and results of operations, as well as forward-looking statements, are subject to change. The forward-looking statements and comments made during the conference call are made only as of the date of today's conference call.

Management will be discussing non-GAAP information during this call. In compliance with Regulation G, reconciliations 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'd like to turn the conference over to your host, NEXSTAR President and CEO Perry Sook. Please go ahead.

Thank you, Latif, and good morning, everyone. Thank you very much for joining us to review NEXSTAR's second-quarter 2011 operating results. Tom Carter, our Chief Financial Officer, is also here with me this morning.

NEXSTAR's strong operating and financial momentum continues in 2011, as reflected by our record second-quarter revenue and EBITDA and our strong free cash flow. These are all-time second-quarter records over our 15-year history, and they reflect our success in overcoming a negative $4.8 million year-over-year delta on political revenue, as well as the auto industry disruptions caused by the earthquake in Japan.

The ongoing advertising rebound in our markets and NEXSTAR's effectiveness in driving new-to-television local direct billings drove our seventh consecutive quarter of core television advertising revenue growth, core being defined as local and national advertising.

The 4.3% rise in core ad revenue growth and another period of double-digit increases in e-media and retransmission fee revenue more than replaced the record levels of political revenue we recorded in last year's Q2. At the same time, we continue to make tangible progress in streamlining our capital structure, reducing leverage, lowering our weighted average cost of debt, and expanding our station base, also vertically integrating aspects of our e-media operations through the accretive acquisition of dot biz.

We are excited about our two new CBS affiliates, which we recently added, as well as our acquisition, as I mentioned, of Internet technology provider GoLocal.Biz, both of these deals bringing NEXSTAR financial and strategic benefits which I will review in more detail in just a few minutes.

Before we get deeper into our discussion this morning, I want to quickly address a piece of housekeeping with respect to the announcement on July 21 that our Company's Board of Directors decided to explore and evaluate strategic alternatives intended to maximize shareholder value, including a possible sale of the Company. As we indicated on July 21, NEXSTAR does not intend to disclose developments with respect to the strategic review progress until such time as the Board has approved a transaction or otherwise deems disclosure appropriate. As such, we will not be making comments on this topic on the call today.

Moving back to our results, our revenue growth reflects the strength of our core local content and continued success in driving new local revenue, while developing distribution and digital extensions for our core content including new online text, mobile, and content and applications. These factors position NEXSTAR to offset the cyclical impact of political advertising in the second quarter and political and Olympic revenue for the first half of 2011.

Excluding political revenue from both periods, NEXSTAR's 2011 second-quarter gross revenue rose 6.9% year over year and rose 6.1% in the first half of 2011 versus the first half of 2010. Despite the recent macro uncertainty, positive core television advertising trends are continuing for NEXSTAR in the third quarter, and we remain on track to continue growing all of our non-political revenue sources in the second half of 2011.

NEXSTAR's 2011 second-quarter net revenue increase of 1.3% was driven by the increase in core revenue, including our sixth consecutive quarter of auto advertising increases, despite the impact of Japan's earthquake, as well as significant e-media and retransmission fee revenue growth. Total second-quarter retransmission fee, mobile, and e-media and management fee revenue collectively rose 18.8% to $13.2 million. These higher-margin revenue streams accounted for over 17.5% of 2011 second-quarter net revenue, up from 14.9% a year ago.

Looking deeper at the second-quarter gross local and national television ad growth of 4.3% to $62 million, it marks a quarterly sequential improvement over the 3.3% rise posted in Q1 of 2011 and is also on top of the 13.6% growth recorded in last year's second quarter.

Second-quarter 2011 local revenue rose by 5.4%. National revenue was up 1.3%.

NEXSTAR's television ad revenue strength, combined with double-digit growth in retransmission fee, mobile, and e-media elements of our revenue quadruple play and our quarterly management fee revenue, resulted in the 1.3% increase in total second-quarter net revenue to $75.5 million. We generated second-quarter broadcast cash flow of $30 million, about in line with last year.

Our adjusted EBITDA was $25.5 million. That is a second-quarter all-time record, and our free cash flow was $10 million.

Let me quickly review our quarterly financial highlights, then Tom will take you through additional financial detail.

Second-quarter retransmission consent fee revenue, $8.6 million. That represented an increase year over year of 18.4%. And we are starting to see the benefits of our newest contracts rolling into the mix.

With respect to our round three deals, on July 3 we completed a new multi-year agreement with DIRECTV, the nation's largest satellite television service provider. As a result of this agreement, we expect a meaningful acceleration in our quarterly retrans revenue growth trajectory, well above the 18% growth recorded in Q2, and we will see this growth beginning in the current quarter. We believe this trend will continue for the balance of 2011 and 2012 as additional contract renewals will be negotiated over the next several months.

Our Q2 e-media revenue growth also continues to accelerate, as we successfully expand our base of revenue applications to achieve further penetration and monetization of our mobile marketing and our video initiatives.

Q2 e-media revenue came in at $4.1 million, surpassing last year's second quarter by 22.5% and marking the 19th consecutive quarter of growth. Also, it was NEXSTAR's highest-ever level of quarterly e-media revenue.

A moment ago, I mentioned our accretive acquisition of GoLocal.Biz. This transaction is a terrific complement to our existing platform as it vertically integrates a critical function of our e-media offerings while creating new revenue opportunities for NEXSTAR.

In the second quarter, we recorded $500,000 of management fee revenue from our management services agreement with Four Points. We're entitled to performance compensation as we generate broadcast cash flow for this station group above a specified threshold. We see meaningful upside on this front in the third and fourth quarters of 2010, and, based on current pacing and operating performance, we fully expect to achieve similar or greater results beginning in the current quarter, third quarter of 2011.

NEXSTAR generated $4.7 million in new local direct advertising in Q2 2011. That represented 10.2% of our total local billing. We improved this metric by 19% relative to what we did in Q2 of 2010. Of note, we have shown successive year-over-year growth in generating new local direct billings on a quarterly basis for the last two years.

Political revenue of $2 million in Q2 of 2011 marks an odd-year record and a 154% rise from 2009 levels, as during the quarter we took advantage of statewide issue and municipal race spending across virtually all of markets, including a Congressional special election in Rochester, New York. Based on what occurred in Washington last week, it goes without saying that we see the political season heating up, and we are also expecting the issue spend to continue to increase.

Now to look at other category data. NEXSTAR was up in seven of our top 10 advertising categories in Q2 with our top 10 categories collectively up 4% year over year, led by increases in auto, our top category, up 2%; fast foods and restaurants, number two, up 7%; and we also saw a significant rise in department and retail store spending, up 33%. By the way, our auto gains were driven by a 30% increase in spending from our local dealers.

Tom will now provide further detail on our financials and our debt-reduction initiatives, after which I'll come back and talk a bit about our outlook. Tom?

Great. Thanks, Perry, and good morning, everybody.

I'll start with a review of NEXSTAR's Q2 income statement and balance-sheet data, and then spend a minute updating you on our debt-reduction progress and simplification of our capital structure.

Total revenues, as Perry mentioned, were up 1.3% to $75.5 million. Core revenue, which is a combination of our local and national business, was up 4.3%. The components of that were local, up 5.4% to $45.7 million, and national, up 1.3% to $16.4 million.

Political revenue was down $4.8 million from Q2 of 2010 to $2 million, but as Perry mentioned, it was up 154% over Q2 of 2009. Our retransmission revenue -- fee revenue was up 18.4% to $8.6 million. E-media revenues continued their growth trajectory, up 22.5% to $4.1 million. Broadcast cash flow was relatively flat at $30 million for the quarter -- for Q2 of 2011.

Adjusted EBITDA was up slightly, 1.3%, to $25.5 million, and our free cash flow was $10 million for the second quarter.

NEXSTAR's second-quarter corporate expenses were $4.5 million, down from $5.6 million a year ago, which included a $1.6 million one-time, non-cash, stock-based compensation expense from the stock-option repricing which was executed in May of 2010.

In Q2 2011, we incurred $288,000 of ongoing non-cash option expense, compared to $297,000 in the year-ago quarter. Of the additional $50,000 -- I'm sorry, $500,000 dollars of cash corporate expenses, a large percentage was associated with the professional costs of the Green Bay acquisition, as well as the GoLocal acquisition.

Station direct operating expenses, consisting primarily of news, engineering, and programming, as well as SG&A expenses net of trade expense, were $37.9 million for the three months ending June 30, 2011, compared to $36.7 million for the same period in 2010, an increase of $1.2 million, or 3.2%, with all of the increase coming from SG&A at the station level. The additional SG&A largely reflects increased variable expenses associated with our JOA payments to Sinclair in Peoria and Rochester, local broadcasting commission -- sales commissions, as well as e-media sales expenses, also additional utility costs and property tax expenses.

Excluding the variable expenses, which were the JOA payments, the local broadcast and e-Media sales commissions, our fixed G&A expenses were up a modest 1.5%. In addition to our expense diligence -- vigilance, we continue to actively deleverage the balance sheet and have successfully eliminated all of the most expensive pieces of our capital structure, which has significantly reduced our weighted average cost of borrowing.

During the second quarter, we expanded our term loan B credit facility by $50 million to $149.5 million and, used the proceeds to redeem the remaining $33.2 million of the 11-3/8% senior discount notes.

During the second quarter, we also repurchased approximately $20.5 million of the outstanding 7% subordinated payment-in-kind notes and $7.4 million of the 7% senior subordinated notes.

Following a significant reduction in debt in 2010, NEXSTAR lowered total debt by $27 million in the first half of 2011. The net effect of our debt-reduction program has been to reduce our weighted average cost of borrowings to approximately 7.5% at June 30 from 7.94% at June 30, 2010.

Reflecting the completion of our accretive acquisitions for the two CBS affiliates in Michigan and Wisconsin, and the GoLocal.Biz acquisition subsequent to Q2's quarter-end, we borrowed an additional $19 million under the credit facility to facilitate those acquisitions.

Reflecting the improvements in our capital structure over the past two years, I'll review key balance sheet items as of June 30, 2011. Total leverage at quarter-end was 5.53 times, down from 5.65 times at 12/31/10 and versus a total permitted leverage covenant of 8.5 times. First-lien leverage at 6/30/2011 was 1.34 times, compared with 0.9 at 12/31/10 and versus a 2.5 times covenant.

Reflecting their purchase -- repurchases and redemptions and our significantly simplified capital structure, NEXSTAR's outstanding debt at June 30, 2011, consisted of $148.9 million of outstanding term loans, which are first-lien debt; the second-lien bonds at $317.9 million; and the other debt which comprises two tranches of the 7% senior sub debt, $111.9 million of the PIK security, and $37.4 million of the cash pay security. Both of those actually are now cash pay; we just differentiate the 2Q subs.

Total debt at quarter-end was $116.1 million, and we had cash on hand of $12.5 million.

Total interest expense in the second quarter of 2011 was $13.3 million, compared to $13.9 million for the same period in 2010. Cash interest expense for the quarter was $12.5 million, compared to $10.7 million for the same period of 2010. This increase primarily related to the $325 million senior secured second-lien note offering which was completed in the month of April 2010.

With our debt-reduction initiatives in 2011, to date our cash interest expense run rate will be approximately $12 million per quarter.

NEXSTAR's Q2 CapEx of $2.8 million compares with $4.6 million in the second quarter last year, and we project total CapEx for 2011 to come in in the $13 million to $14 million range, with $6.9 million of that expended in the first half of the year.

Overall, we successfully managed the topline, our fixed and variable costs, and the balance sheet for cash, and remain focused on further actions to enhance value, and we plan to deploy what will be another year's solid free cash flow in 2011 for debt-reduction initiatives.

That concludes the financial review for the call, and now I'll turn it back over for some closing remarks to Perry before Q&A.

Thanks, Tom. Just to clarify, our total debt number was $616.1 million at the end of Q2.

The economy remains challenged. NEXSTAR continues to demonstrate that we can successfully grow and diversify our business by delivering great local programming and content to our viewers, both mobile and online and on air, while offering a unique set of traditional news media and marketing solutions to advertisers as well.

Q2 of 2011 marks NEXSTAR's 15th anniversary, and our success over this period reflects our deep industry experience, as well as our confidence in the future of television as the foundation of a broad-reaching multimedia platform.

Last month, we announced our acquisition of GoLocal.Biz, an Internet technology provider and marketing services company offering targeted online local business listings. The acquisition's created another new revenue stream for NEXSTAR as we are prepared to expand the distribution and syndication of the GoLocal.Biz platform to other online publishers in television and radio markets not currently served by NEXSTAR.

We also further expanded our station base through the July 1 closing of our accretive acquisition of WFRV-TV and WJMN-TV, the CBS affiliates serving Green Bay, Wisconsin, and Marquette, Michigan, markets. We followed this up with yesterday's announcement that NEXSTAR had reached a definitive agreement to acquire WEHT-TV, the ABC affiliate serving the Evansville, Indiana, market. This acquisition is expected to close at the end of the year.

All told, our acquisitions and our new agreement with DIRECTV are expected to contribute an incremental $10 million in net revenue and $5 million of EBITDA to our second-half 2011 results; and for the full year of 2012, an incremental $30 million in net revenue and approximately $17 million in EBITDA for the full year of 2012. We do not believe that any of this incremental revenue and EBITDA has yet been recognized in analyst projections and models currently out on the Street.

To date, 2011 is on plan, and we continue to experience core ad revenue growth in the mid single-digit rates. NEXSTAR is planning to achieve and pacing to achieve odd-year record financial results in 2011, and we are on track to replace a significant portion of the $6.7 million in political revenue from Q3 of 2010, core revenue growth, mid-single digits; high retrans revenue; and our latest agreement with DIRECTV, which will push our growth rate of this revenue stream ahead of the 18% growth recorded in Q2.

We also see ongoing double-digit growth of our e-media offerings and contributions from our new CBS stations, and a near full year -- full-quarter contribution in Q3 from the GoLocal.Biz acquisition.

Looking forward and reflecting on what occurred in Washington last week, it goes without saying that we see the political landscape heating up and political season heating up with a range of Republicans vying for the presidential candidacy that we expect will lead to robust political spending during the primaries. We also expect to see issue spending to continue to increase as a result of the many heated topics facing the country, including the debt crisis, increased government spending, and continued high unemployment.

We believe that political spending at the state and local levels will continue to increase and will increase in 2012 during the upcoming political season due to highly-charged issues such as the state and a municipal employee collective bargaining, immigration issues, as well as state government budgets.

Looking at this current two-year cycle, 2011-2012, we believe that from now through the end of next year, we have the potential to generate in excess of a nine-figure amount of free cash flow. Our combined 2009- 2010 free cash flow grew to $79.6 million, so when we reference the low nine figures, we are expecting a continuation of this free cash flow trend in the upcoming period that will end with next year's presidential election.

With that, I would like to thank you again for joining us this morning, and now let's open the phone lines for your Q&A to address your specific areas of interest. Latif?

(Operator Instructions). Bishop Cheen, Wells Fargo.

I think I heard you right, 15.

15 what, years? Yes.

Yes, 15 years. Yes, I don't know what else we can count on as 15 these days.

So, a lot of stuff, a lot of great detail. How about Q3? Can you give us some color on what you're seeing, what you're feeling, where auto is? If in whatever you're seeing, if that's kind of -- if there's guidance in there, or if it is only based on pacing or expectation? Any color you can add about cancellations from nervous folks out there?

We've had no cancellations that I'm aware of, Bishop. I can tell you that July is in the books and it's a continuation of a trend -- single-digit growth in core revenue, double-digit growth in e-media, double-digit growth in retrans, as well as better-than-expected political advertising.

We now are the proud owners of a television station in Green Bay, Wisconsin. You probably saw the piece on Bloomberg this morning talking about the Wisconsin recall election is getting record spending in the first battle of 2012, and that certainly has positively affected the revenue at our Green Bay station with over $1 million of political revenue in the third quarter alone.

So, I would say a continuation of a trend and business as usual, and with July in the books, that's the validation that we have.

We did have a slow start on selling NFL and preseason, but that has now dramatically accelerated with the end of the labor disagreements, and we are actually -- we actually see better pace in August and September than what we saw in July.

And how about auto? What does auto feel like to you?

It feels about like second quarter. It was up 1%, driven by a 30% increase in local dealer ad spend, and we see no discernible difference here in the third quarter in terms of what we have on the books to date and what we -- what our visibility would tell us as where we will end up the quarter.

Okay. And then, Q4, just way too early to say anything meaningful about visibility or expectations into Q4?

I think that's fair. I'm not even looking at the Q4 pace in any meaningful way yet. It's just too early. (Multiple speakers) such a small sample size, it's not -- I'm not sure you could discern anything from the results, in any event.

All right. No argument from me. And Evansville. Close by year-end, $18.5 million, I think I understand the two parts of the transaction per the press release, but basically that means that your revolving credit facility will have, between mission and NEXSTAR, like $18.5 million more on them at year-end when it closes?

That's correct. And obviously, that's in addition to the $19 million that we borrowed early in July to complete the Green Bay/Marquette acquisition.

Right. And then, so, great color on what the acquisitions in DTV do. So, let me just see if I have this right. The Evansville is not going to close until year-end. So in the second half, the $10 million revenue, $5 million EBITDA contributions, that really is not including Evansville or is that pro formas if Evansville were in there?

No, that's not including Evansville. The two elements there would be our new agreement with DIRECTV, which will influence the back half of this year, as well as the two CBS affiliates we acquired from liberty.

Right. Okay. And then, the 30 and the 17 into next year. Why don't I let somebody else jump here, and I may loop around at the back end. Thank you.

Thank you, Bishop.

Aaron Watts, Deutsche.

Maybe kind of a follow-on to the situation of what played out in Evansville, Perry. I'm just curious how you're thinking about retrans. I've asked this of a couple of your peers, too.

And with what the different networks are asking for from you, do you view retrans as being a profitable proposition for you in the years ahead? And maybe the agreements you've struck so far, and is that what you're fighting against with Fox is that it wouldn't be a profitable proposition? Just how you think about that, what you're getting in the door from cable and satellite, and what is going out to the affiliates?

I guess conceptually, and I'm not sure it really has anything to do with Evansville, but conceptually, no network in their most aggressive ask has asked for more than 50% of retrans revenues, and that's conceptual ask.

So, I think anything at a 50% margin is pretty profitable, and we'll see how it all plays out.

You know, we just did a new agreement with ABC for 10 ABC affiliates. The station in Evansville who has a current agreement with NBC that runs for another several years -- with ABC, I should say, will be our 11th ABC affiliate.

You know, we continue to have discussions with Fox and we are now having discussions with NBC. So, and we are down to the last moment of renewing our CW affiliation in Jacksonville for another five years.

So, the discussions are ongoing all the time. I'd really decouple the two. One is a revenue relationship. The other is a vendor relationship. So I have got revenue and costs, and the negotiations are not directly tied because the contracts obviously don't sync up.

So, from our perspective, we'll just continue to negotiate with our vendors and our network partners to try and reach equitable agreements for both parties, and we'll continue to negotiate aggressively to grow our retrans revenue stream, as we have demonstrated in our history.

Okay. That's helpful. And then, last one for me. Just thinking about the nervousness in the markets right now and whether that translates to your advertising customers, can you kind of compare what's being felt out there so far to a couple years' ago and maybe specifically how we should think about where auto stands now versus a couple of years ago? So in kind of a downside scenario, if advertising continues to pull back, how should we compare that to the pullback that was experienced in 2009, for instance? Thanks.

Yes, the pullback in 2009 was driven by a lack of available credit. As long as the credit markets remain open, we think that advertising, particularly for big-ticket items like auto and furniture, will continue to be available here.

We see continued opportunity for growth in the auto category that most people point toward a SAR this year of sub-13 million and an eventual steady-state SAR of new car sales of 15 million, 15.5 million.

Again, I don't think the stock market affects Main Street as much as the availability of credit, and two years ago when the credit market seized up, or I should say four years ago, 2007, when the credit market seized up, that's what caused -- when you can't finance a car, you can't sell a car. That isn't the case today.

We do have high unemployment. We do have nervousness about Wall Street, but, you know, that makes for good water-cooler discussion, but I think as long as credit is available, advertising of big-ticket items will continue to be available. I don't see a correlation, and we don't see a pullback at this point.

Thank you.

Edward Atorino, Benchmark.

Sort of asking the same question that Bishop said. So the $10 million is in the second half, the acquisition?

Right. The $10 million of net revenue and $5 million of EBITDA would be incremental to a second-half model that currently exists. That's pro -- that is the real-time effect of the acquisition. Not pro forma, but the real-time impact of the acquisition in the back half of this year, and then for the full year of next year --

$30 million.

Yes, $30 million of revenue, $17 million of EBITDA, and as Tom illustrated, from where we are today, an incremental $37 million revolver borrowing, but that will produce $17 million in EBITDA, which is roughly a two-times multiple, so we'll take that.

And Ed, think about it this way. The DIRECTV contract and Green Bay both have effect in the second half of the year. Those two get a full-year effect in 2012, plus you add on Evansville. Building blocks.

Right. Anything going on in the political arena? Are you seeing any early political?

Yes, our political for the month of July was about three times what we had budgeted, Ed, and for the quarter it's thematically in the same place.

As I mentioned, we took over the Green Bay station on July 1. We've got $1 million of political on the books in the third quarter just for those recall elections that are going on in upstate Wisconsin. And political continues to be robust around the horn as we see people buying time and special interest groups buying time to influence legislation and not just influence candidate elections.

Are you giving a number for political this year? Did I miss one?

No, we haven't given full-year guidance on that, but it's generally 5% of our revenues in an odd-numbered year. I'd bet the over on that, and it can be as high as 15% of our revenues in an even-numbered year, and we're feeling pretty peppy about that for 2012.

2012 should be interesting. Thanks very much.

Dennis Leibowitz, Act II Partners.

I was wondering on the Fox situation. Can you just review where you are in terms of affiliation changes and what that means to the P&L versus what the substitute programming and affiliations are?

Sure. I'll take that. We have -- Evansville has changed. That was effective July 1. Fort Wayne changed affiliations effective August 1 and Springfield takes affect September 1.

That then leaves us with eight remaining Fox affiliation agreements that continue to be month to month, if you will. There are a couple -- Beaumont, the affiliation agreement isn't up there until year-end 2013, and then the two Fox affiliates in Peoria and in Rochester are actually Sinclair stations that we manage.

So it really kind of comes down to the Group of Eight, as we call it, which all are parts of existing virtual duopolies. So we think that we have a very strong position in those eight remaining markets. And as Perry mentioned, we continue to have ongoing dialogues with Fox regarding those, but yet to have come to any sort of a resolution.

I think the only thing -- only comment we've made in a public forum with regard to kind of sizing the potential impact of those eight remaining stations is a nominal effect on BCF. Something less than three -- potentially 3% diminution of BCF in those eight remaining markets.

And what about the three that you've done already?

When you say what about them, you mean --

In terms -- the P&L effect of change in affiliations.

Less than 1% on BCF.

Just some anecdotes there, Dennis. Fort Wayne, which switched to a local station as of August 1, exceeded their August budget. We doubled the amount of local news that we have available in that marketplace, and it will become the market's first HD station later this year, full HD. And so, we really haven't missed a beat there.

In Evansville, just anecdotally, we have introduced to the market a high school sports package where we will have live high school sports 41 weeks of the year on Friday night. In about four weeks of selling, we now have more revenue on the books and sponsorships for those high school sports than we did for the full year of Fox prime on Friday night. So that will be an incremental revenue gain.

We've also increased our local news, which was 55% of the revenue of this television station to begin with in Evansville, by 25%.

So, you know, we -- our goal is to try and make agreements with all of our network partners, and we don't comment on, but we continue to have discussions with Fox. But we continue to have conversations with all of our networks pretty much all the time about a wide range of topics.

Has Fox given any concession at all to the demand for a certain dollar amount as opposed to a percentage, anywhere?

I really can't comment on that. I know that we continue to have discussions with them, but we don't have an agreement with them, and we're hopeful we'll be able to work something out, you know, an agreement that works for both parties.

But we have shown our ability to make deals with the CW, with CBS, with ABC, and we are in discussions with NBC for our maturities at the end of this year. We've also had early and preliminary conversations with CBS about some of our 2012 maturities. So, it's just part of the job. It's an ongoing discussion of negotiations and discussions with our network partners. So, it's just part of what we do.

Okay. Thanks.

[Brian Warner], [Centurion Trading].

Thanks. Actually, my questions were answered.

Barry Lucus, Gabelli & Co.

Good morning. Perry, maybe you could sort of size this GoLocal opportunity, what you think that could be a couple of years down the road?

Well, it's obviously -- it is the technology platform for our online and mobile classifieds program, and we are doing a lot with that in terms of video, mobile couponing, deals of the day, those kinds of things.

So, there is the contribution of revenue and EBITDA to NEXSTAR just from the technology that now we own the intellectual properties for. And that, for a full year of this year, will probably be somewhere between $4 million and $5 million, and that was a couple hundred thousand dollars in a test market or two last year.

Where we see opportunity is this is a scaleable platform, and we think there are opportunities to, for lack of better word, syndicate it beyond our group to other groups that we are not direct competitors and market places.

So, and I think we feel that that has a similar $4 million to $5 million revenue and EBITDA potential on a going-forward basis. But we are in the early stages of developing that.

And as I think Tom has mentioned in the past, the acquisition of GoLocal was a low seven-digit acquisition for us, primarily for us to have access to this intellectual property. Then we also see the syndication opportunity, which we think will play out over the next couple of years.

If -- I don't want to beat this to death, but I just want to make sure, the $30 million in revenue and $17 million that we are talking about or ballparking for 2012, does that include or exclude the change in Evansville, or is it just the incremental retrans coming from DIRECTV and the two CBS stations that you just finished acquiring?

That would be net of any effect of losing a Fox affiliation in Evansville. So that would be true incremental revenue.

That's helpful. And last area, again when you think about auto in Q3 and what you have seen thus far as you talk about guidance or the feel for the quarter, you're talking about, again, what you have on the books for auto, or are you anticipating some ramp in September, either early or late, as new models -- new Japanese models are introduced and Japanese inventory starts to hit the showrooms?

Well, Barry, everybody is talking about the September push. We don't have any of their requests yet that would prove that out.

You know, I look at our automotive spend, and our local dealer spend, which was up 30%, local dealers were $6 million of the $11.7 million in total auto ad spend which we had in the quarter. I think our model and our approach to auto is maybe different than what you hear from a lot of other folks. But this is basically on our local deal ad spend, their commitments, and the anecdotal discussions we have at lunch or at church or on the golf course or wherever we interact with these folks where we're dealing with the owner of the business.

So, our local dealer ad spend continues to be strong, and that is driving our automotive category. And again, we think that the third quarter will look a lot like second quarter in terms of our final results, where our domestic spending as a category, those nameplates were down a little bit in Q2. The foreign ad spending was down double-digit percentages in Q2, offset by the local dealer spending.

Now if we do get a September push by the foreign, then I would bet the over on those numbers. I don't have visibility into that. You know, our rep firms are talking about it, and I've heard and read transcripts of other calls where people expect for it to happen. We would like for that to happen, but as of yet I don't have any avail requests on the books that would say, okay, we're planning a flight after Labor Day.

Again, automotive, and particularly as supply chains build back up, probably will get booked pretty close to the air dates. So it may well be that those are in the works, but they have not manifested themselves in request for rates and avails at our local stations at this point.

Perfect. Thanks very much, Perry.

[Tracy Young], Evercore.

Two questions. One was, again, on auto, but could you tell us how July came out? And also, can you remind us of your retrans sales coming up this year and next year? Thanks.

We -- on retrans, we have over 120 agreements that expire between now and the end of the year. And of that, there are only about a dozen that are over 10,000 subscribers, but they're -- one of our top five retrans agreements expires between now and the end of the year.

So collectively, taking the DIRECT deal and the remaining deals, that would cover about 50% of our subscribers, maybe a little bit more. As for next year, I've not looked at the end of 2012 maturities beyond focusing on what's on this year.

And as I mentioned on July, we saw core revenue up in the mid-single digits for the month of July. Retrans, political, e-media, all up beyond our expectations. So, thematically, I think that's about as deep as we'll go with July right now.

Okay, thanks.

Bishop Cheen, Wells Fargo.

I was threatened to follow up. Look, Perry and Tom, two guys I knew who know a thing or two about capital markets. So let's go back 15 minutes or so ago, talking about what this air pocket freefall, much better today, has been like.

In terms of capital flow, Perry, we know that the bank flex market has gotten wider. We know that the high yield market, and it opens and closes like some sort of exotic orchid, has kind of locked up. And we know from yesterday, and you saw it, your own stock got bashed, that the markets really pummeled these smaller cap, lower rated names, I think on the thesis that they wouldn't have access to capital.

So if that was a big fear 24 hours ago, and as we look forward on that, tell me how you would debunk that fear or think all those fears are overplayed into capital flow and liquidity of our markets?

Are you speaking, Bishop, in our relationship to our ad market or to our strategic process?

I think -- I don't want to get into your strategic process directly because we agreed not to get into that. But I think that liquidity and capital flow affects everything. And it affects the ad market and it affects the auto dealer and the clothier and the brand marketeer and what they are comfortable with on spending and investing for futures.

I understand, Bishop, and I've got an opinion just like everybody else. I think as it relates to NEXSTAR in particular, Perry mentioned and we're very focused on the positive free cash flow that we have on a quarterly basis for NEXSTAR, and that business model we don't believe changes appreciably. It may -- on the margin, if there is a slowdown, but we have positive free cash flow and we will have substantial positive free cash flow.

I think the difference from our perspective, and back to Perry's comments about what's different now than four years ago, is the banks are much better capitalized now than they were four years ago, and I think the flow of funds there will continue in terms of availability of credit. That is my perspective. And I think the U.S. is better prepares for this, perhaps, than other areas of the world in terms of capitalization of their financial institutions. But that remains to be seen.

Again, no argument from me. I just wanted to hear it from your perspective. Perry, anything you'd like to add?

No. Again, I think when you tell me that people can no longer get car loans or get loans to buy furniture or refrigerators or appliances, I'll tell you that there will be a direct effect, negative effect, on our ad market.

But again, our auto ad spend, 50% of it was from local dealers in the second quarter. That's Main Street. That's where we live. That's the folks that we talk to on a daily basis. They are concerned about what is going on on Wall Street, but it's not their life, and I think that you kind of have to get out of that bubble to see what's going on in Main Street, America, and our mid-markets where we operate.

And we talk to these people every day, the owners of these businesses. We have 335 local salespeople that knock on doors and go to lunch with owners and managers of businesses every day. So I get real-time feedback.

Most of our television stations have a 5 at 5, a five-minute meeting at 5 o'clock to talk about what they learned today. So I mean, we are getting continuous closed-loop feedback from the local business community, and we have not heard anything to date that I would consider to be alarming.

And I think high unemployment is factored in. I think that state government spending and cutbacks and those kinds of things are being dealt with in real time. You know, what is playing out in Washington, I think, will continue to play out probably through the 2012 elections and beyond, and I think that real constructive progress there on the margin would be helpful to Main Street, Wall Street, and every other street, but I think that life goes on.

Traffic was just as bad coming into the office today as it was three months ago. And people have to go to work. They have to earn a living. They have to replace their car. They have to fix their air conditioner, and those are the folks that we do business with at the local market level.

So, I don't want to be Pollyanna about it, but I do think that the slowdown in 2007 and 2008 was driven by the lack of credit that is the -- at the Main Street level. I don't think you need to extrapolate much more than that out of -- this was an equity-market correction. We're reading all about head and shoulders and double dips and false bottoms and all the technical terms.

And our stock was down 2% yesterday. We weren't real happy about that. But it wasn't as badly hit as some of the peer group, and I guess as it relates to our process, the only thing I will say is it is in full swing this week, and when we have something to announce, we will, but it is in full swing as we speak.

Okay. That's great. I wanted to draw you out and I did, and I appreciate the comments.

Edward Atorino, Benchmark.

Follow-ups. Elaborate a little bit on this little company you bought. Is that going to add $4 million to $5 million in revenues next year? And does it have proprietary content or anything like that?

And secondly, can you talk a little bit about -- if there is an acquisition market out there, what pricing is all about?

Well, the GoLocal acquisition, I'll repeat what I said. That will generate for the NEXSTAR account somewhere between $4 million and $5 million of e-media revenue this year. It is one of the reasons why we continue to put up --

For this year?

Yes. For the full year, but you've already seen a couple of quarters of that.

But our GoLocal.Biz products are driving the trajectory of the NEXSTAR e-media revenue. So for a full-year runrate, that will be somewhere between $4 million and $5 million this year; growth trajectory off of that next year.

What we said is we think that there is a syndication possibility for this product to online publishers in markets that we're not in, and we think that could potentially be $4 million to $5 million. But that is not embedded in any of the 2012 projections that we gave you because that is much more speculative.

We are just finalizing, formulating our business plan for that now. Whether or not that will happen is up to our ability to size the opportunity to execute.

But that is not embedded in any of the 2011 second-half or 2012 full-year projections of incremental revenue and EBITDA that we gave you earlier.

And on the acquisition market?

Well, you know, we bought a station yesterday, and that will be a very -- a highly accretive acquisition for us because we will be able to create our 22nd virtual duopoly with our existing station there, which we will transfer the FCC license assets to Mission, sell them to Mission, to facilitate the transaction under the current rules.

And there are other properties out there. People know about the McGraw-Hill process ongoing. We announced a process, which, as I said earlier, is in full swing, and a very active week this week for us regarding that, and obviously when we have something to announce about that, we will.

But I think that people looking forward, which I think is how most people will tend to look and equity investors tend to look, 2012 looks like a good year to be in this business and 2011, at least for us, is turning out to be even a better year than our plan.

So despite what you see on CNBC, the drumbeat for 12 hours during the business day, and again I don't want to be Pollyanna about this, all of this does affect the Main Street and our business eventually, but right now we think this is a pretty good time to be in this business. As I said in my comments, we see the television stations as a solid foundation for building a local market multimedia platform. And that is really the business we are in.

Thanks.

As there are no further questions in queue, I'd like to turn the call back over to Mr. Sook for any closing remarks.

Thank you, Latif. I want to thank everyone for joining us here this morning, and we look forward to discussing our third-quarter results with you and potentially we'll be back with you sooner if we have anything else to talk about. Have a great day.

Thank you, Mr. Sook, and thank you, ladies and gentlemen, for your participation. That does conclude your call. You may disconnect your lines at this time. Have a great day.