Good day, and welcome to Nexstar Broadcasting Group's 2011 Third Quarter Conference Call. Today's call is being recorded. All statements and comments made by management during this conference, other than statements of historical fact, may be deemed forward-looking statements within the meaning of Section 21 of the Securities Act of 1933 and Section 21A of the Securities and Exchange Act of 1934. The company's future financial conditions and results of operations, as well as forward-looking statements, are subject to change. The forward-looking statements and comments made during the conference call are made only as of the date of today's conference call. Management will be also be discussing non-GAAP information during this call. In compliance with Regulation G, reconciliations of this non-GAAP information to GAAP measurements are included in today's news announcement. The company does not undertake any obligation to update forward-looking statements reflective of changes in circumstances. At this time, I'd like to turn the conference over to your host, Nexstar President and CEO, Perry Sook. Please go ahead, sir.

Thank you, Lori, and good morning, everyone. Thank you, all, for joining us to review Nexstar's third quarter 2011 operating results. Our Chief Financial Officer, Tom Carter, is on the call with me today. Brian Jones, our Co-Chief Operating Officer, is also here this morning. The 2011 third quarter was a very active and productive period for Nexstar as we extended our strong operating and financial momentum while continuing to build our platform for further growth. Nexstar's record third quarter revenue reflects our eighth consecutive quarter of core television advertising revenue growth, which was complemented by significant double-digit revenue gains in every one of our non-television advertising revenue sources. Nexstar's third quarter results again highlight the value created by our revenue diversification initiatives, our select accretive station acquisitions and our continued success in generating new local direct advertising. The revenue reported this morning is an all-time third quarter record for Nexstar that stands over our 15-year history and reflects the company's success in overcoming a $6.7 million year-over-year political revenue decline as well as the challenges experienced by several of the major Japanese auto manufacturers following the earthquake and tsunami of earlier this year. In addition to the record Q3 revenue, during the past quarter, we further optimized our station portfolio through accretive transactions including the completion of the purchase of WFRV-TV in Green Bay and WJMN-TV in Michigan. We also significantly expanded the number of hours per week of proprietary local programming, primarily additional local news that we produce. We added an ABC affiliation in Terre Haute, Indiana. And we agreed to acquire WEHT-TV, Evansville, Indiana's ABC affiliate, which upon closing later this year, will create Nexstar's 22nd duopoly market. We've participated in the launch of Bounce TV, the nation's first over-the-air broadcast television network targeted specifically to African-American…

Thanks, Perry, and good morning, everybody. I'll start with a review of Nexstar's Q3 income statement and balance sheet data, after which I'll provide an update on our capital structure. As reported, net revenue increased 2.3% to $74.8 million. Core revenue, local and national, increased 5.3% to $59.6 million. The components of that were a 3.9% increase in local revenue and a 9% increase in national revenue. Political revenue, as expected in the odd year, declined to $1.7 million from $6.7 million the previous year's third quarter. Retrans revenue fees increased 30.5% to $10 million for the quarter. As Perry mentioned, this was the first quarter that we saw the impact of the DirecTV contract in addition to retransmission revenues in our Green Bay station. e-Media revenues were up a healthy 17.5% to $4.2 million. Broadcast cash flow stood at $26.1 million, down from $28.8 million as, again, we lost the high-margin political revenue in the odd non-political year. Adjusted EBITDA was $21 million, and the free cash flow was $5.2 million for the quarter. Nexstar's third quarter corporate expenses were $5.1 million or 5% ahead over a year ago. Of the additional $438,000 of cash corporate expenses, a large percentage was associated with our acquisition activity in Green Bay and in Evansville and legal professional and travel costs related to our ongoing strategic review process, which was announced in July. In Q3 '11, we incurred $290,000 of non-cash option expense, and in Q3 '10, that same expense was $313,000. Station direct operating expenses, consisting primarily of news, engineering and programming, and selling and general administrative expenses, all net of trade expense, were $40.4 million for the 3 months ended September 30, 2011, compared to $37.1 million for the same period in 2010, a $3.3 million or 8.9% increase. The…

Thank you very much, Tom. Our record third quarter net revenue, our excellent core revenue growth and Q4 pacings highlight the growing stability in our markets and our ability to leverage our platform and our relationships with our local advertisers. We are one of but a few broadcasters who generated solid Q3 core and net revenue growth both on an actual and same-station basis. And we continue to rapidly grow our other revenue streams, thereby completely offsetting the impact of the political cycle in 2011 year-to-date. In the first 9 months of 2011, Nexstar's net revenue rose to $220.3 million from $216.3 million in 2010, and that revenue total is also up 23.7% over the first 9 months of 2009. Beyond revenue and operating momentum, our recent acquisition and programming activity have strategically strengthened our platform through accretive and deleveraging transactions and our expanded scale, and that's bringing upside into our 2012 outlook. 2011 has been a watershed year for Nexstar in terms of our ability to overcome the odd year/even year revenue disparity related to the political ad cycle. In aggregate, our acquisitions and our initial round 3 retransmission agreements are expected to contribute an incremental $30 million in net revenue and approximately $17 million in EBITDA next year. And with the anticipated significant net revenue growth throughout the year, margins should surpass the levels we achieved in 2010. In addition, Tom and his finance team have done a superb job in improving our capital structure. And we plan to address that further in 2012 based on our expected record levels of free cash flow. As importantly, with our strengthened balance sheet, we now have the appropriate resources and financial flexibility to pursue additional growth initiatives that will inure to the benefit of our shareholders. It's evident that the…

[Operator Instructions] We'll go first to Aaron Watts with Deutsche Bank.

A few quick clarifiers for me. Perry, when you were talking about the $30 million of revenue and $17 million EBITDA incremental retrans that you're expecting next year, is that, as we look at where 2011 lands, incremental to that is what we should expect in 2012?

Incremental to, yes, in 2012, $30 million of net revenue and $17 million of EBITDA. That counts the full year impact of our current and pending acquisitions as well as our retransmission agreement round 3 that will have the full year benefit of next year.

Got it. All right, that's great. And then I think, at your last call, you guys talked about how DirecTV and the acquisitions you have made would add $10 million of revenues and $5 million of EBITDA in the second half of '11, and we can see what your retrans bump got in the quarter, which is great. Can you maybe help us understand what your same-station local and national revenue growth was in the third quarter if we look at it on apples-to-apples basis?

Sure. I guess, Aaron, the way that we're looking at it is kind of an unaffected comparison between Q3 '10 and Q3 '11. And when I say that, it's ex the acquisition in Green Bay and Marquette and it's also ex the affiliation changes that we had in the 3 markets in Indiana and in Missouri. And if you look at that, our core revenue was up almost 3%. And total revenue was really not much different, it was down about 1% if you ex out those onetime events. Is that helpful?

Yes, that is. Was national still positive for you into that?

In that scenario, national was up over 6%.

Okay. Yes, we've heard national has been a little softer for a lot of your peers. What do you attribute kind of the difference for you guys in that you were able to put up that kind of number?

I think it's focus on the business. I do believe that the mid-sized markets have probably been more resilient than the larger markets, the larger markets tend to have more of a "flavor of the month boom and bust" kind of a cycle. But Aaron, if I look at the fourth quarter or October, which is in the books for us, we had a double-digit increase in national, ex political, in the month of October. That might be expected, given the displacement of political in the prior year. But if I look at our categories, and I think we're somewhat unique in the numbers we're reporting, automotive was up approximately 4%. It was a little over 4% for the quarter, and that was with the absence of over $900,000 in Toyota spending due to the supply train -- chain disruptions. So we -- if Toyota would've been flat, our automotive would've been up double digits. Again, unlike maybe other reports that you've heard, our local dealer spending was up 17% in third quarter over the prior year and that is really helping to drive the increase in the automotive category. If I look aside from that, all in, our foreign nameplates were down 12% in the quarter, domestic was up 3%, but the real story for us is the local dealers and dealer association money. And again, some of that comes through national or regional agencies. But again, I think that we're very focused on the business and focused on playing for those dollars aggressively when those budgets are available.

Okay, that's helpful. And then kind of the flip side to this line of questioning is just on the expense side. Looking at the expense increases in the quarter, is that -- should we think about that as kind of a onetime lift as you integrate these new purchases? Or how far out should we model in kind of this larger bump in expenses?

Again, if you ex out the acquisitions and any onetime expenses associated with the affiliation changes, our core operating expenses were up 3%. And a large percentage of that was additional payments made under the JOA to Sinclair in Rochester and Peoria where we had very good quarters. So I think our general thought is the pieces on expenses in terms of low single digits remains. It's just, when you add on Green Bay and Marquette, that's what drives the higher-single-digit total operating expense.

Got it. That's exactly what I wanted. And then you mentioned the fees. When did the Four Point fees shut off? Or what are you expecting? Is that early next year?

Well, it all depends on when it closes, but it's basically the early year, March 31 for the closing of that acquisition. And I know that Sinclair has stated they expect it to close early in the first quarter. I don't know if that means January 1 or February or what, but it'll -- we will accrue fees up through the closing.

Okay, got it. And then last one, I appreciate you taking all the questions. FOX has been out there with some closing some deals for their own stations on the retrans side, got a lot of press. Can you just give us an update of where you stand in your negotiation with them?

Well, I was here until about 8:00 last night, if that's any cue. We have one of our top 5 MVPDs that were in the final stages of documenting a new agreement, which will impact, obviously, the full year 2012. We basically agreed on economics and we're working through the final stages of the language, so that will be a significant positive impact. Beyond that, we have approximately 122 agreements that are up for renewal at the end of this year. Of that, there are only 12 of them that have an excess of 10,000 subscribers. So I'm negotiating that dozen agreements myself and then working with our general managers, basically calling the place from the press box as they deal with the individual MVPDs that serve only their markets. And that's where the bulk of those 100-plus agreements reside.

[Operator Instructions] We'll go next to Barry Lucas with Gabelli & Company. Barry L. Lucas - Gabelli & Company, Inc.: I have several, as well, but let's just start with the management fee and the absence thereof. Perry, how do you make up the shortfall? And are there any other deals similar to Four Points that might be able to backfill the deficit?

Well, we will obviously accrue in 2011 our full earned incentive fees through the end of the year. And depending on the amount of the incentive fees, depending on when the transaction closes, there will likely be a termination payment due to us in the first quarter of 2012. But on a full year 2012 run rate basis, our new retrans deals, one in particular that was a top 5 agreement that I'm currently working on closing, the incremental revenue from that were more than equal the management fee and incentive fee agreement from Four Points. Having said that, we made a proposal this week on an additional management services agreement, and we'll see where that goes. There are opportunities out there. Obviously, we've been spending a lot of our time being responsive to requests and diligence and otherwise in our strategic alternatives review, so we've not been laser-focused on this but we do have a proposal in the works and we'll see where it goes. Barry L. Lucas - Gabelli & Company, Inc.: Okay. Second item, just looking over the station lineup and starting with Hagerstown, the NBC affiliate and your biggest station. So what does the Super Bowl shift back to NBC look like? And how does that help you?

It's obviously a net positive. We've got 13 NBC affiliates in the portfolio versus 8 FOX affiliates that we own. And so we -- it's somewhat dependent on the teams, but that should be, for us, if history is any guide, somewhere between $1.5 million, $2 million of incremental revenue in the first quarter. We've already organized our NBC affiliate attend our group sales presentation, planning calls. And we've already got some business on the books, but obviously, a lot of it will come as first quarter budgets are released. But we do expect that to be a lift over last year for the company. Barry L. Lucas - Gabelli & Company, Inc.: Last item and something you said you wouldn't comment on, but if we can go back to the strategic review process for just a moment. You're almost 4 months into it, borders 4 months into it. Is there a time point where it goes away? You terminate it in the sense that it's business as usual. How should we think about just the timing of this whole deal?

Sure. Well, I think that, last quarter, we used the baseball analogy. Tom and I are very fond of baseball analogies. I think we said at the beginning of last quarter on our earnings call that we were kind of in the early innings of a ballgame. I would characterize that we're in the middle innings of the ballgame. There are a number of parties, there are multiple diligence requests and site visit requests and then just trying to orchestrate all of that in a portfolio of our site. It's just takes some time, but in this last quarter, the process is in full swing. We are actively engaged and I would characterize it as kind of the middle innings of a ballgame. As to when an announcement would be made, I think it will be over when it's over. But if we're in the middle innings of a ballgame, you can probably extrapolate from that.

Our next question is from Edward Atorino with Benchmark.

Two questions. Speaking of political, any early political of noteworthiness? And the Olympics also takes place next year. I was trying to go back and look what you got in the 2008 period. Could you remind us of that and what you might think this year would bring since it's in London?

Sure. Well, on political, if I look at what's on the books for the fourth quarter, it's over $1 million already. We almost built $1 million in October. And we've had off-year elections in Kentucky and in West Virginia and in Louisiana. We also are involved now with our station in Green Bay with the recall election up in Green Bay that's generated significant dollars for us. But I think, important to note, I mean, we've got half again -- have that much on for November and we're post-election after today. And a lot of that is issue money, a lot of that is for state and local issues as well. And some of the earliest primaries, the actual political period, will trigger in mid-December in terms of low and key integrated obligations and all of that. So we're ramping up to be on that treadmill, and obviously, we're setting in odd-year record in 2011 for political revenue. We think the same will be likely true for 2012, the upcoming even year. And as we said just a moment ago, Olympics, for us, if history is any guide, with our NBC portfolio and kind of the size of their markets, our NBCs tend to be in larger markets like the Shreveport, like Little Rock, like Wilkes-Barre and Hagerstown. We think that it's probably a $1.5 million, potentially $2 million revenue lift for the first quarter over what we did with our smaller FOX station portfolio for the Green Bay Pittsburgh Super Bowl in 2010.

Look, did I miss the forecast of fourth quarter political?

No, we didn't have a forecast, but I'm just telling you that there's over $1 million on the books for fourth quarter.

We'll go next to John Kornreich with J.K. Media.

CapEx for 2012, I imagine it'll be up because you'll probably take advantage of a boom year to accelerate some projects. Is that correct?

It'll be up a little bit but I wouldn't say it's going to be up meaningfully.

Less than $20 million?

Oh, clearly.

John, I've actually got a meeting on Thursday where we're going to review our CapEx for next year as well as back in the context of a 3-year plan. But we'll be roughly $14 million this year, we'll be -- it won't be more than $18 million next year, it will likely be less.

Can you review again where you are in the affiliation agreement contracts with the networks? When do they expire?

We have 8 FOX affiliates that expired last year that we continue to work on finalizing an agreement with them. We have basically an equal amount of NBC affiliates that expire at the end of this year, it's actually 7. And I've been in discussions with NBC. As you know, NBC and Comcast are looking to bring forth potentially a proxy proposal where they would, over time, gaining the negotiating rights on behalf of the affiliates and their owned and operated stations. That's obviously, since May, taken some time to develop. But NBC, we feel we have a very good relationship there, and they said to us if we can't get the proxy out or it's too late in the year before we begin our discussions, we'll just do 3- or 6-month extensions of our current agreements. So those are the only pending agreements. We renewed our 1 CW affiliation agreement in the third quarter for another 5 years and no money changes hands there. We do have a couple of CBS affiliates in 2012 and a couple more in '13 and a couple more in '14. So that will just kind of be down, I think, on a one-off basis as those come up. But in terms of the major groups, we have FOX and NBC that we're working toward extensions with for those groups of stations.

Let me better understand retrans. You did $10 million in the quarter, which was again a jump, a big, sizable 30% jump. In the $10 million, I take, it includes a fair amount of what you call round 3. Is that correct?

Really, not a lot of agreements. There are less than a handful of the new agreements that affected third quarter. I think we highlighted the major one. But obviously, we'll see the full effect of these 100-plus agreements at round 3 economics in 2012.

John, the way I would put it is, the majority of the increase between Q2 and Q3 came from a new round 3 agreement.

Okay, so next year, you'll have the full year benefit. I don't know if you want to comment. Do you feel comfortable with retrans being in the mid 40s next year?

I think we're confident that the growth trajectory of retrans will continue as it has been, which has kind of been a high teens or a low 20s that we've seen over the last couple of years and in 2012 has the potential to be higher because of a couple of agreements. That's kind of a way we think about it.

[Operator Instructions] We'll go next to Michael McCaffery [ph] with Shenkman Capital.

I was hoping you could just elaborate a little bit more on what you're seeing in some of the categories ex auto. You mentioned a couple, Perry, in your initial comments, but the one that you didn't mention I was curious about was healthcare. Just anything that's different now versus earlier this year will be helpful.

Medical healthcare in the third quarter was up by a couple of thousand dollars, so basically, flat over the prior year. If I look at October, it was up 17%. So that's the state of the category there. Fast foods, as I think we mentioned, a slight decline, a very small single-digit decline in both Q3 and then in October. Furniture was up, as we've said, in the 8%, 9% range. Attorneys, up in the 3% to 5% range. Radio, TV, cable, newspaper kind of fluctuates quarter-to-quarter based on where we have advertising commitments. They're free to spend those literally at any point over the year. So it was down a little bit in the third quarter but be up in the fourth quarter as people have to meet spending commitments by the end of the year. Retail stores, up 13% in the third quarter, up 20% in October. So I think that people realize that Thanksgiving and Christmas are coming and there are 47 shopping days. And this is when we make our money, we need to get our share of market. And telecom again was down about 5% in the third quarter. And from our perspective, obviously, the ups and downs of mergers and non-mergers are variable [indiscernible], but our top 10 product categories were up in the third quarter and up even more in the month of October versus the prior year. Again, I would caution irrational exuberance around the October numbers because, obviously, there was a displacement of political advertising to the tune of almost $23 million. So I think that, as water fills available space as do the advertisers, that the absence of the political, that you would expect the comps to be up in October.

So with that said, just going back to the healthcare specifically, are there specific campaigns that are being rolled out in the fourth quarter? Or is the October up 17% based on the easy comp that you just alluded to? I'm just trying to get a sense for pacing on that category specifically as it relates to the fourth quarter.

Yes, I mean, if I look at what's, it's local organizations: the blues [ph] advertising for open enrollment then changes at the end of the year; Aspen Dental, up for us. And it represents a little less than 4% of our core ads and so it's not a huge driver of our results. But I think what we see this time every year -- and I was traveling last weekend and heard all over the radio ads for open enrollment periods and mid-year elections now, and this is, I think, when the HMOs jockey for position, particularly as employees are making their healthcare elections for the coming year.

Our next question is from Andrew Finkelstein with Barclays Capital.

Perry, just following up on what you were just talking about. I mean, do you think October came in as you would expect it in terms of getting the replacement dollars coming back against political? And then if you will look into the November, December numbers, maybe you can talk about sort of how that's pacing once we sort of normalize it out of political.

Well, October came in at our expectations because our core revenue was basically at budget, so this is what we had anticipated and planned for. We have positive paced in November and December, maybe not to the order or magnitude of a plus 9 but we do have positive pace. And people are concerned about national. We have positive pace in national in November and December, kind of post-political periods. And we have positive pace on our core ad for the entire quarter. So I think a lot will be determined by holiday spending and advertising to capture holiday spend in the month of December. Typically, there are certain manufacturers like Lexus that have put a lot of money into the December to Remember campaign, and I would, if history is any guide, I would anticipate that. And that money has not yet been available on the books. There is some concern about in supply chain disruptions particularly for Honda with the flooding in Thailand. Honda is not a huge driver of our automotive category, but that spending is -- at this point, business on the books is down for fourth quarter by a small amount over what it was in the fourth quarter of 2011 -- I'm sorry, 2010. But again, where we're seeing tremendous growth obviously is in our local dealer ad spends, which we concentrate on. We are taking these people to lunch and playing golf and bringing packages and sending the weatherman out to sign autographs for 2 hours on a Saturday morning and all the things we can do to help move the sheet metal. And our Ford dealers are up 11% in the third quarter. General Motors was up 50%. Dodge, up 16%. Some of the smaller nameplates with Jeep and Hyundai up in excess of 100%. Volkswagen, Kia, along the same lines. Obviously, the big drag for us was Toyota and Lexus in the third quarter due to the supply chain disruptions. But overall, I see a battle for market share. I think that the new car sales results are better than expected and portend a spending rate in or a new car sales rate, I think, next year better than perhaps people are expecting and new car -- dollars for new car sale really drive the advertising category for automotives. So we think that there will be a probably a high-single-digit increase in the automotive ad category throughout all of '12 just based on the way and the comps from a couple of the spending categories in automotive for the 4 nameplates that had supply chain disruptions. So a long way to say we think the automotive category is diverse and generally pretty healthy.

Yes. It just seems, with a really strong October and somehow replacement and then positive pacing in November, December, that the sort of the core pacing for the quarter should be higher than sort of this low-single-digit number we've been seeing from the guys. So I'm wondering maybe, what's dragging it back? And I think you mentioned auto was strong so...

It is. And well, I think I reported on October. We think that, obviously, Toyota, still in the fourth quarter, what I have on the books versus where we finished last fourth quarter, we are in excess of $800,000 down. Add on to that the business on the books for Honda and that's another $200,000. So we're $1 million in the whole on those 2, but yet we're projecting growth in the automotive category. That was basically the story for third quarter where Toyota spending was down almost $1 million, Toyota and Lexus, and put a 4% increase on the board. So I think that, that's still playing out, and next year, assuming no supply chain disruptions, I would expect each of those nameplates to spend aggressively to recapture market share. I mean, they're totally market share-driven companies, and so I think that automotive will be very healthy next year.

But no other categories in the fourth quarter that are particularly dragging down the rest of the overall number?

Not with a positive pace, so I wouldn't say we're being dragged down by anything at this point. Obviously, we won't generate the amount of political in Q4 that we did last year. But ex of that, we think that fourth quarter will evolve pretty much like the third quarter results we're talking about today.

And with no other questions in queue, Mr. Sook, Mr. Carter, I'll turn the conference back over to you for any additional or closing remarks.

Okay. Well, we just want to say thank you, everyone, for joining us on the call. And obviously, if you have additional questions, you can reach Tom or I in the office. And our 10-Q will be filed tomorrow. We look forward to sharing with you our fourth quarter results early March of 2012. Thanks again.

And that does conclude today's conference call. Thank you, all, for your participation.