Buried beneath the usual discussion of distribution deals, political advertising, and the CW network, a subtle yet powerful shift is occurring within Nexstar's business strategy. While analysts focus on the headline numbers, a quiet revolution in local news coverage is taking place, one that could ultimately cripple cable news networks and reshape the entire media landscape.

Nexstar's immense scale, encompassing over 200 local television stations, provides them with an unparalleled network of 5,500 journalists spread across 40 states. This vast, on-the-ground presence allows Nexstar to dominate local news coverage, delivering immediate and comprehensive reporting on events impacting communities across America. Think about it: who's first on the scene for a devastating tornado in Michigan? Who provides the most in-depth analysis of a local mayoral race? It's not CNN or MSNBC. It's Nexstar's army of local reporters.

This hyperlocal focus, once seen as a limitation, is now a powerful differentiator in an era of national news fatigue. While cable news networks struggle with declining viewership and accusations of bias, Nexstar's local news broadcasts are trusted sources of information for millions of Americans seeking relevant, unbiased coverage of the events impacting their lives.

Nexstar isn't just relying on organic growth. They're actively weaponizing this local news dominance to fuel the expansion of NewsNation, their burgeoning national cable news network. The strategy is ingenious in its simplicity: leverage the existing local news infrastructure to provide a cost-effective alternative to the bloated and increasingly irrelevant cable news behemoths.

This strategy is already bearing fruit. NewsNation, despite being a relative newcomer, has surpassed MSNBC in cable distribution and continues to demonstrate impressive audience growth. Their recent broadcast of the GOP Presidential primary debate, simulcast on the CW, drew over 4 million viewers, a remarkable achievement for a fledgling network and a clear indication of NewsNation's growing reach and credibility.

Here's the hypothesis, and it's backed by the numbers: as Nexstar continues to invest in NewsNation and leverage its local news assets, the network will inevitably siphon viewership away from the established cable news channels. This audience shift will have a cascading effect, impacting advertising revenue, carriage fees, and ultimately, the long-term viability of these cable giants.

Consider this: Nexstar's annual free cash flow, projected to be around $1.1 billion, allows them to aggressively invest in NewsNation while simultaneously repurchasing shares and paying dividends. They are essentially playing a long game, using their financial strength to build a news powerhouse while their competitors grapple with declining margins and mounting debt.

The recent announcement of a joint sports-focused streaming venture by FOX, ESPN, and Warner Bros. Discovery, while initially interpreted as a threat to broadcast, may actually accelerate Nexstar's rise. The venture's focus on 'cord-nevers,' individuals currently outside the pay-TV ecosystem, could inadvertently expand the audience for Nexstar's local news programming. If Nexstar opts into the service, they'll gain access to a new pool of potential viewers, further solidifying their local news dominance.

Nexstar's quiet revolution is a testament to the enduring power of local news and a harbinger of a dramatic shift in the media landscape. While Wall Street fixates on short-term metrics, Nexstar is strategically positioning itself to become the dominant force in news coverage, one local story at a time. And the cable news giants, burdened by their legacy costs and increasingly irrelevant programming, may soon find themselves on the brink of financial collapse, victims of a stealthy power play orchestrated from the heart of America's local communities.

Nexstar's Revenue Growth

The following chart shows Nexstar's revenue growth from Q1 2023 to Q1 2024 based on company transcripts. Data extracted by SeekingAlpha.

Nexstar Financial Highlights

Market Cap: $5.195 Billion (Source: SeekingAlpha)

Annual Free Cash Flow: Projected $1.1 Billion (Source: Company Transcripts)

Net First Lien Leverage Ratio (Excluding CW): 2.21x (Source: Q1 2024 Earnings Call Transcript)

Total Net Leverage (Excluding CW): 3.73x (Source: Q1 2024 Earnings Call Transcript)

2024 Adjusted EBITDA Guidance: $2.085 Billion to $2.195 Billion (Source: Company Transcripts)

"Fun Fact: Nexstar's reach is truly national. Their stations cover 68% of all U.S. television households, reaching a larger audience than any other local broadcaster. If Nexstar were a country, its viewership would be larger than the population of Brazil!"