In a year when broadcasters have been playing defense against the brutal economic forces hampering their business, Nexstar Chairman, President and CEO Perry Sook has actually played some offense. In March, Nexstar announced it was providing management services for the stations owned by Four Points Media Group for more than $2 million a year. In May, it closed on WCWJ Jacksonville, Fla., a nearly $18 million acquisition that was one of the largest station deals in 2009.
Last month, Nexstar reported a 12% decrease in second-quarter revenue—perhaps not something to celebrate, but about half as bad as the rest of the station group competition. Driving Nexstar's performance was a bold Web strategy and retransmission consent fees. That Nexstar booked $7.9 million in retrans cash for the quarter is no surprise; Sook has been a pioneering force when it comes to extracting retrans fees, a crucial source of revenue for broadcasters in these lean times.
Irving, Texas–based Sook, 51, spoke with B&C's Michael Malone about what it means to be Broadcaster of the Year. “I was kind of hoping for a cash reward, as we can use the incremental revenue this year,” he joked, “but I am honored nonetheless.”
What's been your professional highlight of 2009?
The implementation of the management agreement with Cerberus for their Four Points stations. It's a validation of our management team and our operating strength and strategy. So far, it's been a win for both parties.
You've been vocal about entering into more of these arrangements. Any new partners?
We're having discussions. We have a finite amount of bandwidth to leverage our management team while still doing justice to our owned-and-operated stations and anybody we signed up to work with, so we'll be somewhat selective. These conversations take a fair amount of time, but we do anticipate we'll have an opportunity to leverage our management team across a broader platform before year-end.
The big story in the station business this year has been content sharing among rivals. It's not unlike what Nexstar has been doing for a long time with its “virtual duopolies.” When you see new pools announced, do you feel like, “We've been doing this for years”?
Yes, we began sharing content within a market back in 1998. We see the economics of running two television stations off a single fixed-cost base while maintaining separate editorial and sales functions as a natural evolution of the business. As the environment continues to be challenged, people are looking for ways to survive, and this is one of those coping strategies.
Are you seeing signs that the recession might be ending?
Our view is we're bumping along the bottom of the ocean, probably through the end of this year. We really don't forecast internally an uplift in core spending until first quarter of 2010.
What was the key to putting up relatively strong numbers for the second quarter?
The fact that we had the smallest negative number in terms of revenue decline in the peer group is encouraging, but not really inspiring. But [it's about] the relentless focus on local business development, and that's been going on for a very long time. Our focus on continuing to build out the e-media portals as true community portals and not just TV station Websites, and obviously our distribution revenue—vis-à-vis our retransmission agreements—added up to the slightest net revenue decline of all the public companies that have reported thus far.
Do you have retrans battles coming up?
We completed our deal with Time Warner at the end of June, and that is in place for several years. I have half a dozen agreements that expire at the end of this year, and our station managers have another dozen or so. But the bulk of our agreements were renegotiated or renewed at the end of 2008.
Do you hear much from your peers about the role you've played in terms of retrans, since Nexstar was out there fighting for it when really no one else was?
I've had a tremendous number of congratulatory phone calls and e-mails after being named the recipient of your award, and many of them have mentioned us being the tip of the spear in terms of retransmission battles. It's humbling to think about the latest Kagan forecast, which said retransmission revenue will be over a billion dollars in a year or so. That's a revenue stream that really didn't exist in any meaningful way five years ago. We're proud to have played a part in that. We're glad about the way it has transformed our company, and we think it's a good thing for the industry.
Where do you see stations five years from now?
As a commercial television station, our business purpose is to ring the cash register for a local advertiser. As long as you are helping ring the cash register, you are going to be in business. I think we need to spend less time talking about how we do what we do. What we do is ring the cash register. How we do it can be through a message on the big screen in the den, on the little screen on your phone, on your computer, a text message alert, an e-mail blast.
We have these tremendous content-generating and local marketing organizations in individual marketplaces, and we can do local better than anybody. So I think that television will continue to evolve more toward its roots, where 85% of the business will be local and 15% national. It will look a lot like radio in five years, but that can be a very good business if you are serving your community through relevant content and business propositions that are valuable to local advertisers.
Long-term, we think it's a terrific business to be in. We think this 50-year-old brand we have in our communities is our most valuable asset. When you think about it, every retail purchase takes place inside a television DMA, and people on both sides of the cash register know who we are. What we need to do is find ways to get involved or get in the way of more transactions, and not just sell advertising. If we focus more on the customer's business than our business, we're going to be in business for years to come.
