Nexstar reported its second-quarter 2023 earnings Tuesday, revealing the TV stations group giant had turned a profit of $153 million in Q2, while its CW broadcast network posted a loss of $78 million for the April-June quarter.

For the CW, which was formally acquired by Nexstar in October 2022 from Paramount Global and Warner Bros. Discovery, a year-over-year comparison can’t be drawn based on the lack of financial results disclosed publicly by its former parent companies. But it’s long been known the old CW was not profitable, and this $78 million is an improvement over the $83 million loss the CW posted in Q1 of this year.

And that’s what Nexstar wants to see in its journey to reach its goal of profitability at the CW in 2025. On that front, the company is taking a “moneyball,” per Nexstar CEO Perry Sook, approach to content spend at the CW. The network has stacked its fall 2022 lineup — a schedule set amid the early days of the ongoing writers strike in May and somewhat tweaked as the actors guild joined the picket lines in July — with acquired dramas and comedies, new and acquired reality content, and a whole lot of sports.

Nexstar’s core ad sales were $404 million in Q2, a decrease of 2.2% from the comparable year-ago quarter. Political ad sales fell 89.7% to $9 million from $87 million last year, when midterm elections spiked that categories revenue.

Total TV ad sales were $413 million, down 17.4% year-over-year from $500 million.

Elsewhere, distribution revenue, digital revenue and “other” revenue fueled the good Q2: Distribution was up 7.7% ($696 million vs. $646 million), digital climbed 11.4% (98 million vs. 88 million) and “other” rose 200% ($33 million vs. $11 million).

Wall Street forecast earnings per share (EPS) of $2.35 on $1.24 billion in revenue, according to analyst consensus data provided by Refinitiv. Nexstar reported diluted EPS of $2.68 on $1.24 billion in revenue. That net revenue figure is down 0.4% from the $1.25 billion in Q2 2022.

Free cash flow stood at $100 million, which rises to $131 million when excluding the CW. Net income was $75 million, down 66.8% year over year from $226 million in second-quarter 2022.

“We are excited about Nexstar’s near- and longer-term organic growth opportunities as we continue to leverage our portfolio of local and national media assets,” Sook said in a letter to shareholders. “Our platform provides nationwide reach with local activation at a greater scale than every other major broadcast network owner. Nexstar’s platform has attracted strong interest from sports properties looking to align with broadcast television to deliver the highest ratings and widest distribution to their fan bases while also providing promotion and engagement at the local level to drive attendance and ancillary revenue streams. Subsequent to quarter-end The CW entered into sports programming agreements to carry ACC football and basketball beginning in September 2023 and the NASCAR Xfinity Series beginning in 2025, both of which are expected to accelerate viewership and revenue growth for The CW ecosystem. In addition, with our deep local and national news resources and unbiased approach, NewsNation remains the fastest growing cable news network in primetime. During the quarter, NewsNation marked a major milestone by becoming a 24/5 news network with the debut of new expanded daytime programming, the launch of the network’s political ensemble program, The Hill, and the addition of a new evening news program.

“Looking forward, we expect the balance of 2023 will continue to reflect our ability to outperform the overall advertising market and benefit from renegotiated distribution contracts representing more than half of our subscribers at the end of 2022, partially offset by the ongoing impact of negotiations with certain distribution partners. We are even more excited about 2024 as Nexstar will realize upside from presidential election year political advertising, additional distribution contract renewals this year, a slowing of losses related to The CW Network, as well as expectations for a declining interest rate environment and a recovering economy. Given Nexstar’s exciting growth initiatives, robust free cash flow generation, solid capital returns to shareholders and our modest leverage, we remain well positioned to deliver enhanced value to shareholders.”

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