Nexstar Media Group Inc (NXST) 2014 Q1 法說會逐字稿

Good day and welcome to the Nexstar Broadcasting Group's 2014 first quarter conference call. Today's 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 21A of the Securities and Exchange Act of 1934. The Company's future financial position 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 also be discussing GAAP information during this call. In compliance with the Regulation B, reconciliation of this non-GAAP information and GAAP measurements are included in today's news announcement. The Company does not undertake any obligation to update forward-looking statements reflective of [changes] and circumstances.

At this time I would like to turn the conference over to your host, Chairman, President and CEO, Perry Sook. Please go ahead, sir.

Thank you, operator, and good morning, everyone. I would like to thank you all for joining us this morning to review Nexstar's record first quarter operating results and our ongoing initiatives to drive continued free cash flow growth in 2014 and beyond. As always, our Chief Financial Officer, Tom Carter, is participating on the call with me this morning.

2014 is off to an excellent start for Nexstar with another record quarter led by robust growth in all financial metrics. Nexstar generated record first quarter net revenue, and with the operating leverage in our model, the 19.3% revenueincrease resulted in our highest ever first quarter broadcast cash flow, adjusted EBITDA and free cash flow which grew 27.2%, 27.4%and 148.5%, respectively.

Our consistent free cash flow growth again highlights the value in our long-term strategy to complete accretive acquisitions while evolving the traditional television broadcasting operating model and our locally focused content into a diversified entity with high margin revenue stream. With core advertising trends remaining strong, the cyclical return of political spending, our expanded digital media operations and our visible retransmission revenue stream, we believe that Nexstar is on track to generate record free cash flow growth and free cash flow in 2014.

Operationally, Nexstar had an outstanding first quarter with results highlighting our ongoing focus in building new local direct advertising as well as growth and distribution and digital media revenue at the station level, and the successful integration of the accretive acquisitions we completed in 2012, early 2013 and early 2014. Nexstar generated total first quarter revenue of $133.8 million. That is a 19.3% rise from the year ago period with increase driven by strong growth in local, national, political and retran.

Reflecting organic and acquisition-related growth, first quarter core ad revenue rose 11.4%. That is inclusive of 9.5% first quarter growth in local spots and 16.3% growth in national spot revenue. Overall core revenue growth highlighted gains in four of our top five and seven of our top ten add categories on a same station basis.

In addition to the 4% year-over-year growth in auto, we saw strength in cable, furniture, legal, healthcare, insurance and retail categories. Our core revenue growth continues to reflect healthy levels of new business with new to television ad revenue for Q1 of $6.3 million, marking a 17% increase over the prior year.

Nexstar's revenue growth in the first quarter, excluding political, was a robust 16.5% while first quarter political advertising revenue rose over five-fold compared to the same period last year and by 43% over comparable first quarter 2012 levels, as over the last two years we've strategically expanded our station base in markets with high levels of political advertising activity.

In addition to strength in core advertising, Nexstar's record cash flows highlights the continued double-digit growth in first quarter retransmission fee revenue which rose 31% on a quarterly sequential basis and 47.6% year-over-year to $35.1 million which marks a record level of quarterly revenue from this source. With the renewal of retransmission consent agreements representing approximately 22% of our subscriber base completed in late 2013, we project highly visible and significant revenue growth from this source throughout the remainder of the year.

During the quarter we announced and completed the accretive acquisition of Internet Broadcasting Systems, or IBS, a digital publishing platform and digital agency services provider. This acquisition marks Nexstar's entry into the profitable and fast-growing digital agency business while broadening Nexstar's digital media portfolio with technologies that are complimentary to the Company's existing digital businesses and multiscreen strategies. Overall, IBS strengthens our position as a leading local technology and services provider for businesses, and we see these capabilities offering the best opportunities for growth, and as such, they are the focus of our digital media initiatives.

Also with first quarter revenue of $6.3 million, that reflects -- I should said and reflecting the edition of IB, and excluding the one time items in 2013, we expect to generate record digital media revenue in 2014. We will continue to leverage our digital local content online via mobile devices to bring advertisers new marketing solutions that yield high interactivity and ROI while offering a suite of fully scalable digital solutions including award winning websites, our innovative staff based digital publishing platform and syndicated content technology and services.

In total our higher margins retransmission fee and digital media revenue taken together grew 36.7% year-over-year to $41.4 million and accounted for 30.9% of 2014 first quarter net revenue. By comparison, total first quarter 2013 fee and digital media revenue comprised 27% of net revenue and 22.3% of net revenue in the first quarter of 2012. The operating efficiencies that we are deriving from our expanded scale and the integration of recently completed acquisitions as well as continued focus on expense management, resulted in record 2014 first quarter operating income of $27.7 million at an increase of 55.5%.

Broadcast cash flow was $50.6 million, a rise of 27.2% and adjusted EBITDA of $42.1 million with growth of 27.4%. Free cash flow was $25.3 million which represents 148.5% increase year-over-year. That's also an approximate 100% rise over the first quarter of 2012, the previous political period.

Now let's look into our M&A activity and our recently closed and pending transactions. In less than three years Nexstar has doubled the number of television stations to which we own or provide services as we and Mission have acquired or agreed to acquire 53 television stations for a total value of approximately $863 million in accretive transactions. Of that amount, $410 million representing four transactions in 29 stations are pending before the FCC and we expect all of those to close in 2014.

Late in the first quarter Nexstar completed our acquisition of three stations in Des Moines, Quad Cities and Sioux City, Iowa from entities related to Citadel Communications for $88 million. (sic-- see press release) The acquisition of these Iowa stations marks Nexstar's entry into an important political state for political advertising activity, and Nexstar has operated these stations since last September pursuant to a time brokerage agreement and integration has already been completed. The financial and operating results are already meeting our expectations.

Last month the FCC approved Nexstar's purchase of five stations in Colorado and Florida which we are requiring for $33.5 million. These stations are being acquired from an intermediate seller as part of a separate transaction. We expect to close the transaction promptly once all of the original sellers' conditions have been met.

As we've reviewed on prior calls, pro forma for the completion of all pending transactions, we believe that Nexstar would generate free cash flow in excess of $350 million during 2014, 2015 cycle, or average pro formal free cash flow of approximately $5.85 per share per year during this two period. Not withstanding our confidence in completing the remaining transactions, our existing operations alone are expected to generate approximately $4.40 per share per year in this current 2014,2015 period. In addition, excluding the financing for the pending transactions, our free cash flow generation from existing operations would result in Nexstar's net leverage declining to less than 4% -- or four times I should say -- at the end of 2014.

Overall our strong free cash flow generation combined with our strength and balance sheet provides us with the flexibility to acquire additional stations in accretive transactions, to delever throughout the year and for ongoing return of capital to shareholders with our sixth dividend and second 15% quarterly dividend to be paid later this month. As shareholders free cash flow growth is our priority, and as we continue to generate excellent core political distribution and digital medial revenue growth, our free cash flow visibility is solid. Tom will now provide further details on the financials and will review the expected financing of our recently announced transactions and highlight our revised capital structure. Tom?

Thanks, Perry, and good morning, everyone. I'll start with a review of Nexstar's Q1 income statement and balance sheet data, after which I'll provide an update on our capital structure and details related to the pending transactions.

As Perry mentioned, our net revenue grew 19.3% to $133.8 million driven by 11.4% growth in core revenue to $92.8 million; the components of which were local revenue of $65.6 million, up 9.5% and national revenue of $27.2 million, up 16.3%. Political revenue in the even numbered years stood at $4 million and retransmission fees were $35.1 million, which as he mentioned, was up sequentially 31% over fourth quarter. It's important to note there weren't any acquisitions that closed in either Q4 or Q1, so that is really a same station comparison for the purposes of retran.

Our digital media revenues were affected by non-recurring revenues from previous year and stood at $6.3 million. And as Perry mentioned, we had record broadcast cash flow, adjusted EBITDA and most importantly to us, free cash flow of $25.3 million which was up almost 150% over the same period in 2013.

On a same station basis, and by same station I mean for stations owned more than one year, our net revenue increased 11%. Core revenue increased 5.4% driven by 11% increase in national revenue. And as Perry mentioned, our retransmission fees were up 30%-plus.

With a focus on generating free cash flow, we remain disciplined in managing costs and addressing our capital structure, leverage and cost of capital. First quarter station direct operating expenses, net of the trade expense, and station SG&A expenses rose 23.9% and 13.1%, respectively. These increases primarily reflect higher variable costs related to the significant increase in national and local revenues and continuing operating expenses of the acquired stations.

On a sequential basis, station direct OpEx and station SG&A increased a modest 1.9% Q4 2013 to Q1 2014. And on a same station basis fixed costs, which exclude the affiliation expenses and sales expenses, were actually down 1.9% versus Q1 of 2013. Again, for those stations owned more than one year, and that shows, I think, and demonstrates our ability to aggressively manage our business and control costs.

Nexstar's first quarter corporate expenses were $8.5 million of which $6.8 million was cash corporate expense. This is in line with the $8.5 million that we guided to at the Q4 2013 conference call. This compares to corporate expenses of $6.7 million a year ago, which included $0.5 million of non-cash stock option expense.

The increase reflects an increased staffing and infrastructure to support our expanded platform as well as an approximately $1.1 million increase in non-cash stock comp as a result of the options which were granted in the January 2014 board meeting to 53 executives, directors and managers in the first broadly distributed incentive option grants since 2009. For the remaining quarters of 2014, we project non-cash stock option expense to approximate $1.6 million per quarter. As such, total corporate overhead will approximate between $8 million and $8.5 million per quarter, but the cash corporate component of that will be between $6.5 million and $7 million per quarter.

During Q1 of 2014, Nexstar incurred approximately $900,000 in one-time transaction expenses during the quarter, which included $300,000 at the station level and $600,000 at corporate.

Turning to the balance sheet, I'll review key items as of March 31, 2014. Total net leverage at March 31, 2014 was 5.2 times versus the total permitted leverage covenant of 7.25 times. First lien leverage at March 31, 2014 was 2.67 versus a covenant of 4.

Nexstar's outstanding debt consisted of first lien debt of approximately $542 million outstanding under the term loans and $526 million of 6.875% senior unsecured debt. We had $105 million unfunded revolver at quarter end and approximately $50 million of cash at quarter end on the balance sheet. There were no changes in the capital structure in Q1, and overall, the net debt declined to $1.017 billion at March 31, 2014 from $1.031 billion at December 31, 2013 reflecting the paydowns of additional term loans and an increase of cash of approximately $10 million.

At March 31, 2014, the Company had deposits of approximately $35.6 million against pending acquisitions. The acquisitions have a total value of $410.3 million, as Perry noted before.

During the first quarter Nexstar completed the acquisition of the three stations in Iowa from Citadel for approximately $88 million, and additionally, we funded the purchase of Internet Broadcasting Systems for $20 million. Both of these acquisitions were fully funded from cash flows generated by Nexstar's existing operations.

The refinancing of the previously outstanding approximately $310 million of the 8.875% notes in Q4 was accomplished at a blended rate of approximately 5.75% comprised of $275 million at the 6.875% bond rate and $150 million of borrowings under a new credit facility at 3.75%. Looking forward, the committed cost of financing for the remaining transactions is below 4% which will reduce Nexstar's weighted average cost of borrowings to approximately 5% from the current approximate levels of 5.25%. However, we continue to incur commitment fees based on the outstanding commitments we have in place to fun these pending acquisitions, and in Q1 that amounted to approximately $0.25 million in ticking fees in the Company's operating statement.

Reflecting the refinancings over the last year and the previously mentioned ticking fees on the CCA financing commitment, total interest expense in the first quarter declined to $15.2 million from $16.5 million in the same period in 2013. Cash interest expense also fell and was at $14.5 million for the quarter compared to $15.7 million for the same period in 2013.

Nexstar's Q1 CapEx of $4 million compared to $6.8 million in Q1 of 2013. The CapEx incurred in 2014 was for newly acquired stations, the relocation of our corporate offices and the new Marquette news facility related to the launch of local news in that market.

The year-over-year CapEx reduction reflects the fact that much of the 2013 CapEx was front end loaded towards the beginning of the year for stations, additions, construction and equipment costs for the new broadcasting and news operations and acceleration of locally [HD] origination. For 2014, we are budgeting CapEx of approximately $22 million with approximately $2 million of that budgeted CapEx being earmarked for the stations to be acquired in the pending acquisition.

We believe our results, again, demonstrate we are successfully managing our M&A initiatives and discipline acquisition criteria, our top line fixed and variable costs and the balance sheet for cash, and remain focused on further actions that can enhance value. Also as Perry noted, the second increased dividend and our sixth dividend overall will be paid later this month.

In summary, we're very pleased with the free cash flow we are generating from our expanded platform and our balance sheet. Capital structure and cost of capital are in great shape, and we're prepared to both complete the pending acquisitions while simultaneously reducing leverage throughout the remainder of this year.

That concludes the financial review for the call. I'm turn it over to Perry for some closing remarks before Q&A.

Thanks, Tom. In summary, we are laser focused on closing, effectively integrating and extracting synergies from the remaining 29 stations we've agreed to acquire, and we believe that our long-term acquisition strategies and operating plan combined with Tom and his team's management of our capital structure is a proven formula for sustained long-term growth and shareholder appreciation. As we complete the four pending transactions, Nexstar will again generate meaningful higher cash flow allowing to us quickly reduce borrowing and our leverage ratios.

Our leading local news and content franchises as well as broadcast television's role as the most influential medium among consumers, remains the foundation of Nexstar's continuous long-term expansion and growth. On completing all announced transactions, our platform will expand to 108 television stations making Nexstar the second largest operator of television stations in the United States. Our combined audience reach will be approximately 16% of all US television households, allowing for further significant expansion of our platform while remaining under the current 39% regulatory cap.

With significant free cash flow and growing free cash flow, with positive industry trends and our strength in balance sheet, we're very confident that Nexstar's path to enhancing long-term shareholder value is clear. The first quarter results in Q2 trends to date reinforce our view that 2014 will be another period of record financial results for the Company as Nexstar benefits from its expanded scale, new operating efficiencies and synergies related to recent and pending acquisitions, the renewal throughout 2014 of retransmission consent agreements covering over 40% of Nexstar's subscriber base, as well as the ongoing financial growth and accretive acquisitions related to expansion of our digital media initiatives and the return of the political cycle this year.

With the results we announced this morning, Nexstar's record of exceptional compound annual growth on free cash flow continues with $25.3 million in the first three months of 2014. From the 2003, 2004 cycle when we first went public and from the 2003 to 2004 cycle through 2012 and 2013, we grew free cash flow at a compound annual growth rate of 61.4%. While that's impressive, our forward outlook is even brighter as pro forma for the completion of pending transactions, the compound annual growth rate from 2003, 2004 cycle to 2014, 2015 will increase to approximately 69% and Nexstar's pro forma free cash flow in 2014, 2015 is expected to rise more than 110% over the recently concluded 2012, 2013 cycle.

On behalf of Nexstar's more than 3,000 dedicated employees, I would like to thank you for joining us and for your interest in the Company. Now let's open the call to Q&A to address your specific areas of interest. Operator?

Yes. Thank you. (Operator Instructions). We'll move first to James Dix with Wedbush Securities.

Hey. Good morning, guys. A couple things. Just first on the M&A outlook, given that you've been going through this process with these pending deals, for some of them quite a while now, if you could just go through what are the things which are giving you some confidence that the pending deals will close this year? Then I had a follow-up on fundamental.

Sure, James. Let me just say it this way. We do have a plan, an updated plan and we're working through that plan to close the remaining pending transactions.

We're confident that we will be able to move this plan forward in compliance with the new rules that are currently out from the FCC. Notwithstanding, we do believe that those FCC rules will ultimately likely come under congressional review and probable judicial review.

We have a plan. We just don't want to put the play book out for public consumption.

Okay. Great. And then you mentioned my second topic in your first response.

Any more color now that you've seen the final rules that the FCC adopted as of mid April, they were published. Any more color that you can giving as to what you think either you or the industry is likely to do over the next two years just to adapt to those rules specifically on the joint sales agreements?

Sure. I believe that we will take the full two years to review our options with relationship to our existing JSA agreements. Obviously our focus is on pending transactions, and that's where we are modifying agreements to pass muster with the current regulatory regime.

Great. And then one just on fundamentals.

What pacings are you saying in the second quarter in terms of the ad business?I've heard from some people some mixed pacings on national, in particular, and maybe some headwind for Fox affiliates. Any color you could give on how the second quarter is looking from the core ad side versus what you saw in the first?

Yes, I think that as far as our Q2 outlook, I think you'll see a low single-digit growth in core. You'll see high teens for digital, and then add in results from IB which will begin to be reflected in our financial statements as of April 1. Add in a healthy dollop of political, and then you have retrans.

I think now, given our first quarter reporting, that you have a pretty good window into what that will look like for Q2. I think those are the basic buildings blocks and that is in line with our plan.

Great, thanks very much, Perry.

We'll now move on to Aaron Watts with Deutsche Bank.

Hey, guys.

Morning.

A lot of information. Appreciate all the detail. I was trying to write as quick as I could, but wanted to just clarify on the same station core performance in the first quarter. I think you said it was up 5.4% with national up 11%. What was local?

3.2. And again that's for -- 3.2%. All those numbers are for stations owned more than one year.

Actually, if you include the stations that we've acquired. It's slightly higher than that simply because those were not as well run, we would like to think, under the previous ownership. So we're bringing them under the fold here.

But on stations owned more than one year, it's 5.4% for core, 3.2% for local and 11% for national.

That's interesting. I think you're the first one I've heard say that national felt better than local in the quarter. Anything you attribute the variance there to, or just why national outperformed for you over local?

Well, obviously, I would like to take the opportunity to complement our superior sales force for their results. It has to do primarily with categories and where the advertising is placed.

And there is account shifts from local to national and national to local that happen all the time. A driver there was an increase in spending from cable and other media, and that is primarily placed nationally which would drive those results.

We refused to allow weather as an excuse in the Company. Everybody heard from that me on our first conference call of the year that we need to be selling smarter and further ahead and not let weather affect our ability to make the month. I can tell you that for the first quarter on an all-in basis, we exceeded our internal budget and forecast, so we're very pleased with the results.

Okay. And on auto, I think a lot of people had mentioned that the weather did have a dampening effect there on auto sales. I think you said your auto was up 4.4% in the first quarter. Should we expect that growth rate to feel better in the second quarter, just given the weather has calmed down a little bit?

Well, and again, maybe we're the exception, but our local dealer spending in the first quarter was up double digits. It was up 11%. Where the transactions take place in the individual showrooms, and I think that's an exception to what others have reported as well.

I think as we look forward, I think that the single digits increases you saw in auto in the first quarter, that's probably a pretty good proxy for second quarter. I'm not sure that there was anything driving acceleration beyond that. I don't think we're counting on more growth than we saw in the first quarter on a percentage basis.

Okay. Last one for me.

Tom, as you think about all this free cash flow you're generating, obviously you've been opportunistic with some acquisitions, you're paying a dividend on your stock. As you think about your debt balance, are you okay with the principle amount outstanding where you're deleveraging from this point on comes from growth of the business, or would we see some debt paid down with free cash flow as well?

Well, I think it all just depends. Right now, pro forma for closing all of the acquisitions, we've got about a $50 million to $70 million funding need. So depending on when these acquisitions close, there is a scenario that we have that we generate enough free cash flow in the next four to six months that we don't have to do an additional financing.

We have $172 million of unfunded Term Loan A, we have $105 million of unfunded revolver, and post the IB acquisition in April, we have $30 million-odd of cash. So we have either a combination of adequate funding and adequate access to capital, or adequate free cash flow over the course of the near-term to fund all of these acquisitions which is my first priority. Because as Perry mentioned, we believe these are going to close in 2014.

All right. Great. Thanks for the color.

We'll now move to Marci Ryvicker with Wells Fargo.

Thanks. Can you clarify that $4.40 free cash flow guide? Does that include the Citadel deal that just recently closed, or not?

Yes, it does.

Okay. And is there any financial metrics you can given us around IBS revenue and EBITDA contribution either for this year, or over time?

Sure. I think normally our transactions are anywhere from three to six months in terms of closing from a regulatory perspective. On IB, because it didn't require any regulatory approval, closed immediately after it was signed. So our synergies aren't really going to take effect in IB for probably three to four months.

Normally, we have three or four months to plan and get ready and so they take effect immediately. Having said that, for modeling purposes, it was approximately a one times revenue acquisition, and we believe that six months into it, it will be at a run rate pro forma multiple of approximately five times. We're just not going to get there for two quarters or so because of the lack of regulatory delays to close.

Okay.

Is that helpful?

Yes. And then just going back to my first question. What's the $33.5 million deal that got FCC approval but wasn't closed?

It's the Nexstar portion of Hoak.

Is that included also in the $4.40?

No.

Okay.

And Marci, we expect that will likely close by the end of this month. And those are stations in Grand Junction, Colorado and Panama City, Florida.

Right. That's all I have. Thank you.

And we'll now move to Tracy Young with Evercore.

You answered my question on the whole transaction. Just a question for you. A broader question.

Your retrans numbers were good this quarter as well as the e-media, yet you're keeping the $5.85 free cash flow, 2014/2015. Are you just being conservative at this point, or should we just be assuming that -- is there anything that we can take away from that? Thanks.

I would say the only thing you to take away from that is just being conservative. Right now I think all broadcasters are a little bit from Missouri. Show me when it's going to happen and how it's going to happen and then we can refresh that.

I think we will give additional guidance once the individual transactions start closing. But, obviously, the largest one of which is CCA, and that's probably the most complex one.

So more to come. I think it's important that we're reiterating guidance. If we felt there was downward pressure, we wouldn't be doing that.

Okay. Understood. Thank you.

We'll now move to David Hebert with Wells Fargo Securities.

Good morning, guys. Thanks for taking the questions. A couple for me.

The FCC's ruling on joint retrans negotiations for two of the top four stations. Can you outline how many markets this is would affect you, and how you might manage through that going forward?

I don't have an exact number but I would say there are 18 Mission markets. And it's either six or seven markets that it's not applicable on because one of us or both of us don't own a top four station. So it comes down to basically rough numbers, two-thirds of the overlap market would be prevented.

Now I will tell you that the order is not yet effective because it hasn't been published in the federal register. So we're currently not subject to it. We would like to see that get delayed as long as possible, but there are plans afoot to have Mission assume that responsibility, or to have them outsource those stations to someone other than Nexstar.

Okay. Got it.

I'm not going to give more details than that, but it's an A or a B, and both options are on the table.

To Tom's point, we did complete negotiations in April on a 2014 retrans agreement renewal, and Nexstar was able to negotiate on behalf of both the Nexstar stations and the Mission stations in those affected [months].

Perfect. Thanks for that color.

On the balance sheet, the target leverage you took up a little bit to 3.8 times just given with the timing of these acquisitions closing. Tom, you've been good about giving us some idea about balance sheet capacity for M&A. Does that change with this leverage outcome?

No. Really the leverage outcome is more -- the creeping up of the leverage at year end 2014 is more a function of the fact that we're not going to have access to the free cash flow. If you go back to the April 2012 announcement of CCA, we thought we were going to have that beginning in the fourth quarter of 2012.

Now it looks like we're going to miss at least nine months of that free cash flow and similar kinds of timelines affect Hoak as well as Grand. Really the creep-up in leverage is $30 million to $40 million of lack of free cash flow from some of those properties.

What I will say, David, is with the passing of time and the fact that we do have not insubstantial free cash flow as evidenced by the fact that we paid for the $22 million second payment on Citadel and $20 million for Internet Broadcasting out of free cash flow. And we haven't even seen the beginning of the strongest free cash flow months and quarters for 2014 yet. So with the passage of time, what historically has been roughly characterized as $200 million to $300 million of acquisition capacity, is going to increase just naturally through organic free cash flow.

Okay. Last question for me on political. One of your peers took up their full year guidance saying that political season could actually be a little bit more robust than they thought. Just curious if you're seeing that in any of your markets, and thanks for taking the question.

Well, I think we had guided to a continuation of about a 20% CAGR over our reported 2012 results which could give you a number in the mid 50s. I think we're very confident with that number. If we were betting people, we would probably bet the over. Given that 60% of the political comes in six weeks of a 52-week year, it's pretty hard to be much more finite than that.

I can tell you that we've booked $1 million in political this week and that's just for primary season in some states. So yes, I think that it will be a very active political year for the Company given its footprint.

Okay. Thanks a lot.

We'll now move to Edward Atorino with Benchmark.

Hi. You mentioned mobile. Mobile is one of the great promises of broadcasting that sort of hasn't happened. In fact the NAB says that 2014 is going to be the year of mobile.

Could you discuss whether you are seeing mobile build? Is this a strategic move? Is the NAB talking through it's hat?

Well, the mobile that we are experiencing now is basically our mobile video basically through our websites, and it's not true broadcasting to handsets. I probably think that's a ways a way, and we'll most likely acquire a change in transmission standard to get there fully.

But the thing that's intriguing to me is when you hear Comcast talk about building 8 million hot spots for Wi-Fi, and we then can communicate with mobile devices without really blowing up data plans, as well as our video is available real time right now. It is arguable as to what the transmission schema is going to be, but we still see a huge gap in just our digital revenues; mobile views, page views.

Approximately 40% of all of our page views and mobile revenue as a percent of our digital revenue is about 10%. So we are, like just about everybody else, running down the street trying to catch up with viewer adoption trends and finding ways to monetize them.

Is the problem technology? Not enough whatever they are out there to receive the signal? Or is the problem with TV having -- I'm not an engineer -- having the ability to send a signal to a mobile device?

Yes --

-- or both?

Well, hand sets are not currently equipped, and by and large to receive television transmission. That would require a chip, and so I think that's the first step. But again, there's a potential opportunity to change the transmission standard that would make all of that easier, and I think that's where a lot of us are focused on the future of being able to monetize ancillary spectrum as well as monetize mobile.

Sounds like the NAB is behind the curve. Thank you.

Thank you.

(Operator Instructions). We'll now move to [Sakeesh Bahoo with Piedmont].

Good morning. So in light of the recent FCC rulings on JSAs, I'm trying to get a sense for the exposure in your existing stations.

So the question is, if you have had to exit your JSA agreements effective, say, January 1, 2014, what percent of first quarter EBITDA would have gone away?

Well, let me just be clear that at no point would we have to exit those JSA agreements. We would have to modify them to comply with the current rules, but rather than selling approximately 70% of the air time of the stations, we can now only sell up to 15% of the air time of the Mission stations. So we will modify our agreements to come in compliance, but at no point do those agreement go away.

And with regards to the contribution of the -- Go ahead.

No. You were saying with regards to contribution from those -- the EBITDA impact if it had been modify those stations --

Again, every quarter we publish consolidating financial statements in our public filings. And you can go back and see under the Mission category the revenue between consolidated entities in Q1 of 2014 was $6.9 million in revenue of $133.8 million of revenue. That's the amount of revenue that was associated with the JSAs. Mission's total revenue was $18.5 million. So you can --

So only that $6.9 million --

You would have to make some assumptions with regard to expenses because Nexstar incurs expenses to provide these services to Mission, so it is not a material profit center for Nexstar.

Got it. And in any case as far as revenue goes, only that $6.9 million would be subject to the modification?

Right. And it's $9.6 million tobe clear.

$9.6 million, okay. Good. Also on spectrum, do you intend to try to monetize any of your spectrum in the incentive options coming up next year?

We'll keep an open mind as to the process, but I find it hard to believe that anyone who has a going concern television station is going to find the spectrum auction more lucrative. But, again, we will keep an open mind and review the process once the guidelines are established and determine if that is still valid. But that's our initial impression that we probably will not participate, but you never want to say never.

Great. Thank you.

(Operator Instructions). We will now move back to Edward Atorino.

I'm probably as far from an engineer as anybody on the phone. Could you use that excess spectrum to do something else instead of selling it? I mean it's unused.

Can you add stations? I'm sorry, it's probably a stupid question.

No, not at all, Ed.

Would mind tolerating me?

No. I'm happy to do so. Right now people are multiplexing and putting digital multicasts on the air. We've done that in certain circumstances, and we've inherited a bunch in acquisitions, but by and large we've kept our powder dry.

If you believe that the demand curve for core television advertising which is how these things would be funded is a low single-digit grower, then our view is that you don't want to introduce more supply. Now we just recently this year put a Telemundo D2 on the air in Abilene, Texas where there was no other Telemundo affiliate over the air, and that makes perfect sense.

We have put Bounce multicast which is a network geared at African American audiences on air in markets where we had a high African American viewing population. So we have done some of that.

I'll just remind you back during the analog to digital transition when Qualcomm was generating and starting their media flow project, we leased spectrum to them in a couple of markets on Channel 55 where they were building their nationwide media flow footprint and that was very lucrative to the Company. It was several million dollars over a several year period of time, but didn't require the government to have a thumb on the scale or a part in negotiations.

I think you'll see more of those kinds of discussions and opportunities once we get on the other side of an auction process. Then I think just naturally the market will bring parties together.

Thank you very much. Really appreciate the time. Thank you.

You Bet, Ed.

And it appears there are no further questions.

Thanks everyone for joining us and until next time, take care. Bye now.

And that does conclude today's conference, and we thank you all for your participation.