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How Nexstar Works to Stay Healthy Amid Pandemic

The coronavirus came early to Nexstar Media Group.

Someone who attended the annual National Institute for Computer-Assisted Reporting conference in New Orleans and visited a Nexstar TV station there tested positive for the virus on March 10.

The station, WGNO, had to go through an exposure analysis to see who that person had been in contact with, as well as a heightened disinfectant process, said Terri Bush, senior VP of human resources and associate counsel.

“Since then, New Orleans has been on our radar,” said Bush, who is working from home, where she has a view of Nexstar’s Irving, Texas, headquarters.

Even before that, in mid-February, Nexstar’s outside counsel and other advisers were telling the broadcaster to prepare for a pandemic. The company had a disaster plan that had been tested a few ago by major flooding. They followed that plan, with everyone getting a laptop, VPN access and the right communications tools. “Even the receptionists work remotely,” Bush said.

Blue Teams, Green Teams

A key part of the plan was the creation of blue and green teams within each of Nexstar’s stations. Each team could keep the station’s news operation going and members of each team were kept apart, to make sure one group was always healthy and available.

All of the preparations and precautions had a primary goal. “This is keeping the team safe so they can continue to provide the essential services,” Bush told B+C. “This is game day for them.”

All over the United States, people are staying home to stop the spread of the coronavirus and tuning into local news to find out how the global pandemic is affecting their communities.

“In a national emergency, broadcasters are deemed essential businesses,” Nexstar Broadcasting president Tim Busch said. “We are the last bastion for local content. The live local content we’re delivering is not provided by Google or YouTube; it’s not provided by other electronic sources.”

With 196 stations, Nexstar does business in many cities hard hit by the virus. In addition to New Orleans, the company’s KTLA Los Angeles and WGN Chicago are in the hottest of spots.

Interest in Nexstar content doesn’t mean business overall is booming. Far from it. People are turning to local news in record numbers. But with social distancing in place to slow exposure to the virus, many businesses are closed and many of those who are open are wary of advertising, cutting into television revenue.

Analyst Steven Cahall of Wells Fargo lowered his forecast for Nexstar’s first-quarter ad revenue by 2% in the first quarter because of the pandemic. He dropped his forecast by 26% in the second quarter, 18% in the third quarter and 4% in the fourth quarter. Because of industry leading retransmissionconsent rates, Cahall expects Nexstar to bounce back as the economy rebounds and advertisers resume spending, though. He called Nexstar his “favorite cyclical media idea” in a recent research report.

With a strong balance sheet, Nexstar hasn’t yet furloughed or laid off employees, as some other media companies have. “We’re fortunate enough to be a big company and we’re fortunate to be fairly responsible so that we can continue to do what we're doing,” Busch said.

Because Nexstar is publicly owned, Busch declined to say how much ad sales have been affected by the crisis.

“We had had a short-term impact,” he admitted. “But how we work with our advertisers today will have a long-term impact on the relationship tomorrow.”

Before the virus hit, Busch was based at Nexstar’s headquarters in Irving, but he spent about 80% of his time flying from station to station. “Probably the biggest impact on me is I haven’t been on a plane in the last month, where I was on a plane five times a week,” he said.

For now, Busch is living with his family in Rochester, New York, where he started working for Nexstar as general manager of WROC in 2000. He drives to the station, where he can see staffers scrambling to produce the early newscasts. He walks upstairs, where he has an office tucked away at a distance from other employees.

Zooming in to Manage

Busch manages remotely. “I’ve got probably 15 Zoom calls a day,” he said. “We’ve got sales calls across the universe every day. So there's a lot of activity going on to keep all the engines running.

“It takes a toll on you. There are so many folks, whether it’s advertisers or employees, that just want a virtual pat on the back. At the end of the day, when I shut it down at nine or 10 o’clock at night, I mean, I’m pretty much out of gas.”

In addition to informing viewers, “our job is to make sure that we try and keep commerce going in our individual communities,” Busch said. “Our TV stations are not only modeling good behavior on the virus, but they’re modeling good behavior on business practices to be able to do what they need to do to develop revenue.”

When the virus canceled sports, closed businesses and forced people to stay home, that wasn’t easy. Some sponsors canceled ads immediately and some pushed campaigns until later in the quarter. Some pulled campaigns and shifted to commercials about curbside pickup, while others launched community-support messages. Some just didn’t know what to do.

“Our advertisers for the most part are worried,” Busch said. “They’re trying to make payroll and trying to figure out a way to sell their product. This hit us in all markets, but you know L.A. is going to be more impacted on a percentage basis than Oklahoma City and Chicago’s going to be more impacted than Myrtle Beach, South Carolina.”

Strategic Thinking

Nexstar didn’t just sit back and react to what advertisers were doing. Busch believes in the classic Harvard Business Review notion that it’s smart to advertise through tough times, because if a client stops, it will take years to rebuild the value lost from not promoting themselves.

That led to Nexstar’s sales team rolling out a three-part strategy.

The first strategy is convincing shaky clients that advertising is the right move for most of them, especially when television ratings are so high, Busch said.

In some cases, that takes convincing and hand-holding.

“We’ve got our sales managers ordering up pizzas to put into the service delivery departments in our auto dealerships,” Busch said. “Why? Because we want them to know we're thinking about them.”

A dealer group called John Lewis, then the general manager at WNCT in Greenville, North Carolina, to pull its ads for the quarter. Busch said the dealer group didn’t know how it was going to sell cars. Nexstar execs held a Skype call the next day and convinced the dealers to launch a campaign telling customers how to disinfect the car to keep their families and parents safe if they take turns driving the vehicle.

The campaign inspired emails coming into the dealerships that thanked the dealers for caring. Lewis was promoted to general manager of Nexstar’s station in Raleigh.

“This is one simple idea that turned an advertiser in panic into one dedicated to the community,” Busch said.

The second strategy is to find new advertisers and new businesses that are essential at this time, from janitorial services to lawn cutting.

Nexstar has created a portfolio of training webinars, best-practices sales presentations and pre-created PowerPoints for sales people at individual stations to convince businesses to buy ads and open new categories. With salespeople working on commission, Nexstar is compensating for the work they’re doing even if it’s not resulting in revenue in the short term, Busch said.

The third strategy is long-term planning in order to be ready to accommodate the pent-up demand that will be released once socialdistancing restrictions are lifted and businesses reopen.

Planning for Pent-Up Demand

That pent-up demand could strain Nexstar’s ad inventory at a time when 17 primary elections are scheduled from May through July and there’s a presidential election in November.

Busch’s plan is to create packages of advertising to reach viewers who are watching Nexstar’s main broadcast channels, its digital broadcast networks, its duopoly stations and websites and applications.

The company uses data from Comscore to ensure clients that buy ads on multiple platforms get unduplicated reach.

The numbers show that, at most of Nexstar’s stations, viewership is as high as it’s ever been. And at this time, those stations are providing what audiences need, whether it’s entertainment in the form of reruns of college football games, coverage of governor’s press conferences, extra newscasts or simply the comforting presence of familiar anchors during a crisis.

Busch cited one note sent by a viewer. “She said, ‘I watch your news. I see your folks socially distanced from the set in your news operation and it says volumes to me, because we all don’t have the luxury of working from home.’ ”

An 85-year old woman in Lansing, Michigan, called Nexstar’s station there to say the virus situation makes her nervous, but when she sees the 11 p.m. news, she feels things will be “OK, because you are the calm in the storm.”

Despite many staffers working distantly, Nexstar has been brought together by this crisis.

“The byproduct of this is we are all more closely connected and more deeply involved than I think we’ve ever been,” Busch said. Instead of doing business as usual, “we’re actually having much more thoughtful discussions. The outcome of this is going to be all of us continuing to think this way and act this way, which is significant.”