Local broadcasting and digital media company Nexstar (NASDAQ:NXST) fell short of analysts' expectations in Q4 FY2023, with revenue down 12.3% year on year to $1.30 billion. It made a GAAP profit of $3.32 per share, down from its profit of $5.31 per share in the same quarter last year.

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Nexstar Media (NXST) Q4 FY2023 Highlights:

• Revenue: $1.30 billion vs analyst estimates of $1.31 billion (0.7% miss)

• EPS: $3.32 vs analyst expectations of $4.19 (20.8% miss)

• Guidance for 2024 adjusted EBITDA of $2,140 million at the midpoint, below expectations of roughly $2,200 million

• Free Cash Flow of $265 million, up from $85 million in the previous quarter

• Gross Margin (GAAP): 58.6%, down from 66.7% in the same quarter last year

• Market Capitalization: $5.51 billion

On September 30, 2022, Nexstar completed its acquisition of a 75% ownership interest in The CW Network, LLC (“The CW”).

Founded in 1996, Nexstar (NASDAQ:NXST) is an American media company operating numerous local television stations and digital media outlets across the country.

Broadcasting

Broadcasting companies have been facing secular headwinds in the form of consumers abandoning traditional television and radio in favor of streaming services. As a result, many broadcasting companies have evolved by forming distribution agreements with major streaming platforms so they can get in on part of the action, but will these subscription revenues be as high quality and high margin as their legacy revenues? Only time will tell which of these broadcasters will survive the sea changes of technological advancement and fragmenting consumer attention.

Sales Growth

A company’s long-term performance can give signals about its business quality. Any business can put up a good quarter or two, but many enduring ones muster years of growth. Nexstar Media's annualized revenue growth rate of 12.3% over the last five years was mediocre for a consumer discretionary business.

Within consumer discretionary, a long-term historical view may miss a company riding a successful new product or emerging trend. That's why we also follow short-term performance. Nexstar Media's recent history shows the business has slowed as its annualized revenue growth of 3% over the last two years is below its five-year trend.

We can better understand the company's revenue dynamics by analyzing its most important segments, Distribution and Core Advertising, which are 54% and 34.4% of revenue. Over the last two years, Nexstar Media's Distribution revenue (licensing and affiliate fees) averaged 5% year-on-year growth. On the other hand, its Core Advertising revenue (TV and radio ads) averaged 2.8% declines.