Nexstar's Record Political Quarter Beats Estimates And Speeds Debt Paydown, But Core Ads Weaken And TEGNA Stays Blocked

Nexstar Media Group delivered the biggest quarter in its history, but the cyclical tailwind that powered it is about to fade. For the September quarter, the company reported earnings of $8.20 per share, edging past the $8.16 consensus by 0.5%. Revenue of $2.133 billion topped the $2.05 billion estimate by 4.0%. Earnings grew 283.2% year over year and revenue rose 78.0%, a sharp step up from the 50.9% revenue growth over the first nine months. The acceleration reflects a full quarter of TEGNA ownership colliding with a record midterm political cycle. The revenue upside was clearly larger than the earnings upside. Rising interest, tax and deal-related costs absorbed much of the operating leverage. GAAP diluted EPS was $7.92.

The quality of the beat deserves scrutiny. TEGNA contributed $765 million of the $935 million revenue increase and $243 million of the $398 million Adjusted EBITDA gain. Political advertising was the other key driver, reaching $317 million in total, with legacy political up $163 million. The organic picture was weaker. Non-political advertising declined, partly from political crowd-out. Legacy distribution growth was flattered by a one-time charge in the year-ago quarter that did not recur. Below the operating line:

• Interest expense nearly doubled to $186 million.
• Corporate expense climbed to $105 million from $68 million, partly on TEGNA litigation costs.

On cash flow, net cash from operations of $680 million was helped by working-capital timing. Adjusted free cash flow of $443 million, up from $238 million in the June quarter, is the cleaner read. It is still impressive.

The call showed improvement across most operating lines:

• **Combined growth:** Pro forma revenue growth accelerated to 15.4% from 4.7% in the second quarter.
• **Margins:** Adjusted EBITDA margin expanded to 35.4% from 31.8% sequentially.
• **Distribution:** Combined distribution growth improved to 2.1% from 1.3%. Legacy distribution grew 4.2%, up from 3.1%.
• **Renewals:** Every renewal closed without a blackout, including DirecTV, which had declined an extension last quarter, along with FOX, ABC, CBS and CW affiliation deals.
• **Political:** Combined 2026 political revenue reached roughly $1.1 billion, up 31% from 2022. Management framed that level as a "new normal" after changes in coordinated spending rules.

However, the core ad market is moving the wrong way. Non-political advertising fell 5% in the third quarter, which was better than guided. Management now expects a high-single-digit decline in the fourth quarter. That extends a slide from +1.2% in Q1 and -5.8% in Q2. Guidance for legacy distribution and The CW was reiterated rather than raised.

TEGNA is the defining forward risk and catalyst. A preliminary injunction still prevents Nexstar from integrating the business, and the trial is not scheduled until July 2027. Because of that timeline, management stripped expected synergies out of its covenant leverage math. On the positive side:

• The Ninth Circuit hears arguments November 17 on narrowing the injunction.
• The FCC's repeal of the national ownership cap removes a structural overhang.
• Deleveraging is ahead of plan. Debt repayment totals $1.3 billion year to date, including $525 million after quarter-end, beating the target of more than $1 billion by year-end. Net leverage fell to 4.04x from 4.22x.

Offsetting that progress, rising SOFR is expected to keep fourth-quarter interest near $183 million. The CW remains on track for its first profitable quarter, but management would not commit to full-year 2027 profitability. World Cup and Olympics benefits will also not repeat.

Investors have grown noticeably more skeptical despite the operating momentum. Earnings Whispers sentiment fell from roughly neutral (-0.01) to clearly negative (-0.34), a meaningful shift. Price action shows the same caution. Shares sit just 1.2% above the opening price after the August report, and about 3.6% below the 200-day moving average. They slid to a 52-week low of $153.17 in early October before rallying about 21% into the report. Even so, the stock remains 6.6% below the $198.16 high set the day after the prior release. Sequential growth and AVWAP trend readings are positive while price momentum is neutral, which fits a stock that has stabilized but not re-rated.

The bottom line is that Nexstar posted a genuinely strong quarter, with record revenue, expanding margins, surging free cash flow and faster debt reduction. Still, much of that strength rests on acquisition math and a political cycle that ends in November. Heading into 2027, the debate shifts to three questions:

1. Can distribution gains offset a weakening core ad market?

2. Can rising interest costs be contained?

3. Do the courts free Nexstar to capture TEGNA synergies before the September 2027 window closes?

Until the legal picture clears, the market appears inclined to discount the cash flow rather than reward it.

Read our earnings preview for Nexstar Media Group, Inc.: https://www.earningswhispers.com/article/NXST/22157

This earnings review was originally published on Earnings Whispers.

This article is for informational purposes only and is not investment advice. Earnings Whispers and its staff may hold positions in the securities mentioned. It is AI-assisted, based on proprietary Earnings Whispers data and company reports, and edited by Earnings Whispers staff.