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The Bottom Line Upfront 💡
$NXST ( ▼ 3.58% ) Nexstar bought TEGNA and nearly doubled its debt to do it. Revenue is up 38% and net debt is up $5.3B, which makes the equity a thin, highly geared slice sitting on top of $11.9B of borrowings. At ~$170 the share price is a bet on deleveraging, not on local television.
Since We Last Called It 🔁
Last look | The call | Price then | Price now | Since then |
|---|---|---|---|---|
November 2025 | Significantly undervalued | $195 | ~$170 | -13% (S&P 500 +11%) |
This call did not work. The stock fell 13% while the index rose 11%, a 24-point miss. Two things went wrong in our analysis. We anchored a $492 fair value on 2024 earnings of $21.41 a share, which were peak presidential-cycle political advertising: 2025 earnings came in at $3.00. And we called $6.96B of debt manageable one quarter before management took it to $12.1B.
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Strata Layers Chart
Layer 1: The Business Model 🏛️
Nexstar is the landlord of American local television, and it gets paid twice for the same broadcast.
Distribution revenue is money cable and satellite companies pay for the right to carry local stations. These retransmission contracts run three to five years with built-in annual increases, and they are close to recurring revenue. The catch is that they are priced per subscriber, and cable subscribers keep disappearing.
Advertising revenue is what local car dealers, national brands and, in even-numbered years, political campaigns pay to interrupt that broadcast. Political advertising is the swing factor in this entire business, and it is why Nexstar's earnings look broken when you read them wrong. 2024 was a presidential year: revenue $5.41B and diluted earnings of $21.41 a share. 2025 had no federal elections: revenue $4.95B and earnings of $3.00. Same company, same stations, a seventh of the profit. 2026 is a midterm year, so the money returns.
Before the acquisition, Nexstar operated roughly 200 stations in 116 markets reaching about 70% of American households, affiliated with ABC, NBC, FOX and CBS. It also owns The CW network and NewsNation. The company now employs about 12,400 people.
Key Takeaway: Nexstar collects rent from cable companies and advertisers on the same signal, and its reported earnings swing violently with the two-year political cycle.
Layer 2: Category Position 🏆
Scale is the whole strategy. Broadcasters negotiate retransmission fees station by station against national cable operators, and a bigger station group negotiates from a stronger position. That logic is what drove the TEGNA acquisition, completed in the first quarter of 2026 and visible in the balance sheet as $2.1B of added goodwill, $3.6B of added intangibles and $5.4B of additional debt.
It made Nexstar clearly the largest local broadcaster in the country, ahead of Sinclair and Gray. It also made it one of the most leveraged.
The structural headwind has not changed. Cord cutting removes paying subscribers from the retransmission base every year, and streaming has taken the national advertising dollars that local broadcast used to command. Local news remains genuinely defensible, because nobody else covers a county commission meeting, but "defensible" and "growing" are different words.
Key Takeaway: Nexstar just bought its way to a stronger negotiating position in an industry whose customer base is shrinking, and borrowed heavily to do it.
Layer 3: Show Me The Money! 📈
The top line has been transformed. Q1 2026 revenue was $1.40B, up 13.1% ↗️. Q2 was $1.99B, up 62.2% ↗️ as the acquisition landed. First-half revenue of $3.39B compares to $2.46B, up 37.6% ↗️. Roughly $764M of the second quarter's year-on-year gain is acquired revenue, not organic growth.
Profits are being eaten by interest. Q2 operating income was $362M against $213M a year earlier, a genuine improvement. But interest expense rose to $190M from $97M, and diluted earnings per share came in at $3.61 against $3.06. Operating profit up 70%, earnings per share up 18%. The lenders took the difference.
The balance sheet is the story now. Net debt went from $6.58B at the end of 2025 to $11.87B three months later. Trailing leverage sits near 6.5 times EBITDA, which is high for any business and very high for one in structural decline. Goodwill and intangibles are now $13.0B against $17.7B of total assets and $2.3B of book equity.
Cash generation is still real. Free cash flow was $743M in 2025 without any political advertising and $1.11B in 2024 with it. That is the asset supporting the debt, and in a midterm year it should be toward the higher end.
Shareholders are still being paid. The indicated dividend is $7.44 a share, roughly 4.4%, and the company spent $120M on buybacks in 2025, well down from $601M in 2024. Cash is going to lenders now.
Key Takeaway: Nexstar generates $750M to $1.1B of free cash depending on the election calendar, and now owes $11.9B, which makes the equity a leveraged option on paying that down.
Layer 4: Long-Term Valuation (DCF Model) 💰
Broadcasters trade on enterprise value to EBITDA, and with debt this size the equity is whatever is left after the lenders. Small moves in the multiple produce enormous moves in the share price.
The Verdict: Fairly Valued, Extremely Geared 🤔
Scenario | Fair Value | vs Current Price (~$170) |
|---|---|---|
Conservative (7x, $1.9B EBITDA) | $46 | -73% |
Base Case (8x, $2.1B EBITDA) | $161 | -5% |
Optimistic (8.5x, $2.3B EBITDA) | $252 | +48% |
Key assumptions:
EBITDA is normalised across the political cycle, blending a midterm year with an odd year, and includes a full year of the acquisition.
Every scenario subtracts $11.9B of net debt across roughly 30.5M shares.
The spread from $46 to $252 is not hedging. It is what 6.5 times leverage does: a single turn of EBITDA multiple is worth about $65 a share here.
One-line take: At ~$170 the market is paying about 8.6 times EBITDA, which is a normal multiple for a broadcaster and leaves no cushion for the debt.
Layer 5: What Do We Have to Believe? 📚
Bull Case 🚀
Midterm political advertising plus a full year of acquired stations pushes EBITDA above $2.1B, and free cash flow goes straight at the debt
Scale delivers real retransmission pricing power at the next round of carriage renewals
Leverage falls under 5 times within two years, at which point the equity re-rates on its own
Bear Case 🐻
Cord cutting accelerates and the retransmission base shrinks faster than per-subscriber rates rise, which is the one thing that breaks the deleveraging maths
Integration costs and synergies disappoint, leaving a bigger, slower, more indebted broadcaster
A weak 2027 odd year with 6.5 times leverage forces a dividend cut, and the income buyers leave
The Bottom Line: Nexstar is a well-run operator that made a large, debt-financed bet on being the last broadcaster standing. It might be right. But we told readers this was a cash cow trading at a third of fair value, and it was in the middle of becoming a leveraged roll-up. At ~$170 this is a fair price for a genuinely risky equity, and anyone owning it should be sizing it accordingly.
Layer 6: What to Watch 👀
Net debt below $11B. The single number that matters. Deleveraging is the entire equity thesis, and stalled debt reduction is the signal to leave.
Political advertising revenue in the second half. Midterm years are when this business earns. A soft cycle with this balance sheet is a serious problem.
Distribution revenue growth. Retransmission rate increases have to outrun subscriber losses. Flat or falling distribution revenue breaks the model.
The dividend. $7.44 a share costs roughly $227M a year. In a levered odd year that is the first thing a board reconsiders.
Integration commentary. Watch for specific, quantified synergy delivery rather than adjusted EBITDA definitions that keep getting wider.
AI-written, human-approved
Disclaimer: This guide is for informational purposes only and does not constitute financial advice, investment recommendations, or an offer or solicitation to buy or sell any securities. The information contained in this report has been obtained from sources believed to be reliable, but StrataFinance does not guarantee its accuracy, completeness, or timeliness.