Nexstar Broadcasting Group Inc. Reports Operating Results (10-Q)
Nexstar Broadcasting Group Inc. has a market cap of $156.4 million; its shares were traded at around $5.5 with and P/S ratio of 0.6. NXST is in the portfolios of Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:In April 2010, the Third Amendment to Nexstar Broadcasting s Fourth Amended and Restated Credit Agreement among Nexstar Broadcasting, Nexstar, and lenders became effective. Under the terms of the Nexstar Credit Agreement, the principal amount available under the revolving credit facility was reduced to $65.0 million, and the Term Loan B was reduced to $61.0 million. In April 2010, the Second Amendment to Mission Broadcasting s Third Amended and Restated Credit Agreement, became effective. Under the terms of the Mission Credit Agreement, the principal amount available under the revolving credit facility was reduced to $10.0 million, and the term loan B was reduced to $39.0 million.
On April 30, 2010, Nexstar Broadcasting completed the cash tender offer to retire its $34,337,174 (representing 82.47% of the outstanding aggregate principal amount) of aggregate principal amount of the Senior Subordinated PIK Notes due 2014 at 104.5%. In connection with this tender offer, a second supplemental indenture was executed whereby substantially all restrictive covenants and certain event of default provisions were eliminated. On May 25, 2010, Nexstar Broadcasting repurchased approximately additional $2.0 million of aggregate principal amount of the Senior Subordinated PIK Notes due 2014 at 106.5%. These transactions resulted in a loss of approximately $2.0 million.
On June 30, 2010, Nexstar Broadcasting purchased approximately $2.0 million of aggregate principal amount of the 7% Senior Subordinated PIK notes due 2014 at 90.25%. This transaction resulted in a gain of approximately $181 thousand.
On January 27, 2010, the Compensation Committee approved the repricing to set the new exercise price for the affected options equal to the closing price of the stock on that date (subject to shareholders approval). On May 27, 2010 (“the modification date”), the shareholders of Nexstar approved the repricing of certain stock options by lowering the exercise price to equal the closing price of Nexstar s stock on January 27, 2010 (which was $4.56 per share). The repricing applied to any outstanding option with an original exercise price of $5.00 or more. The total incremental cost of the repricing was calculated to be approximately $1.8 million, which represents the incremental fair value of awards. Of the $1.8 million total incremental cost, approximately $1.6 million has been recognized and included in selling, general & administration expense as of June 30, 2010. The remaining unrecognized incremental cost will be recognized in addition to the cost (fair value) of the original awards, which will continue to vest and amortize just as they did before the modification.
Our net revenue increased 21.7% to $143.2 million for the six months ended June 30, 2010, compared to $117.6 million for the six months ended June 30, 2009 partially due to increases in local and national advertising due to an overall upswing in the economy from the same period in of 2009.
Political advertising revenue was $10.0 million for the six months ended June 30, 2010, an increase of $8.7 million or 690.9% from the $1.3 million for the six months ended June 30, 2009. The demand for political advertising is generally higher in even-numbered years, when congressional and presidential elections occur, than in odd-numbered years when there are no federal elections scheduled. Since 2010 is an election year, we expect significantly more political advertising revenue to be reported in 2010 in relation to the amount of political advertising reported in 2009.
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