Good day, and welcome to the Nexstar Broadcasting Group's 2012 First 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 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 and circumstances. In addition, given Nexstar's announcement on July 21, 2011, that the company's Board of Directors decided to explore and evaluate strategic alternatives intended to maximize shareholder value, including a possible sale of the company, Nexstar does not intend to disclose developments with respect to this strategic review progress, until such time as the board has approved a transaction or otherwise deems disclosure appropriate. As such, management will not be making comments on this topic today. At this time, I'd like to turn the conference over to your host, Nexstar President and CEO, Perry Sook. Please go ahead.

Thank you, Morrissey, and good morning, everyone. Thank you, all, for joining us to review Nexstar's 2012 First Quarter Results. Tom Carter is here with me on the call today. 2012 is off to an excellent start for Nexstar with another record quarter, led by robust growth in all of our financial and operating metrics. Nexstar generated record first quarter net revenue, and with the operating leverage of our model, the revenue increase resulted in our highest-ever, first quarter broadcast cash flow, adjusted EBITDA and free cash flow. Our 19.6% rise in first quarter net revenue was highlighted by 7.8% growth in our core and a 70% rise in our retrans revenue. It's evident how our operating efficiencies are translating into this solid revenue growth, turning it into cash flow as our EBITDA margins rose to 34.2% from 28.6% in the year-ago period, and if you look back to the first quarter of 2010, our margin was 30.4%. So 34.2%, we feel, in Q1 '12, compares impressively. Overall, 2012 will be a watershed year for the company, as the improving ad environment combined with a substantial increase in our retransmission revenue growth rates continue double-digit growth from our e-Media operations and the benefit of what are projected to be record political revenues, all will drive record top line revenue and bottom line profitability for the company. In addition, we managed the company, as you know, for free cash flow. Tom and his team have remained active in further reengineering and delevering the balance sheet. During the first quarter, we repaid approximately $18 million in borrowings and most recently announced additional plans to strengthen our capital structure. Tom will go over those activities in just a few moments. Next, our generated total first quarter net revenue of $83.6 million, which as…

Thanks, Perry, and good morning, everyone. I'll start with a review of Nexstar's Q1 income statement and balance sheet data, after which I'll provide an update on our capital structure. Q1 2012 net revenue was $83.6 million, as Perry mentioned, up 19.6% over the year-ago quarter. Core revenue was up 7.8% to $62.8 million. The components of that were local revenue, up 5% to $45.4 million and national revenue up a healthy 15.6% to $17.4 million. Political revenue was $2.8 million for the quarter, up from $6 million in Q1 of '11. Retrans revenue was up 70.2% to $14.5 million, and e-Media continued its trend of double-digit growth up 12.5% to $4.1 million. Broadcast cash flow was $34.1 million for the quarter, an increase of 37.1% over Q1 of '11. And adjusted EBITDA was $28.6 million, up 43.1% over the year-ago quarter. Free cash flow for Q1 of '12 was $12.7 million, up from $3.6 million in Q1 of '11. Nexstar's first quarter corporate expenses were $5.4 million or 12.4% ahead of a year ago. Of the additional $600,000 in corporate expenses, the majority of the increase was associated with the addition of our GoLocal operations, which are accounted for in the personnel cost. They're accounted for in our corporate overhead, as well as the additional professional and management expenses associated with our strategic review process. In Q1 of '12, we incurred $212,000 -- $217,000 of non-cash option expense compared to $285,000 in the year-ago quarter. Station direct operating expenses, consisting primarily of news, engineering and programming and selling and general administrative expenses, all net of trade expense, were $20.6 million for the 3 months ending March 31, 2012, compared to $17.6 million for the same period in 2011, an increase of $3 million or 17%. The increase largely reflects…

All right. Thanks very much, Tom. To recap, our unwavering focus is on leveraging our localism, and the company is consistently delivering industry-leading top line results as a result. With all of the options available to consumers these days, television viewing remains at record levels across all demographic groups, and advertisers recognize that broadcast television is the most effective medium for driving awareness and building both traffic and brands. At the same time, Nexstar has effectively migrated our content across every viable platform and monetized at every step, whether online, mobile or through the myriad of cable, SAT and telco distribution platforms. Given that over 74% of our core revenue is local, Nexstar is and always has been very focused on building brands for local advertisers. We have developed direct relationships with the owners and managers of local businesses in the markets which we serve, and we incentivize our local sales teams based on their ability to develop new advertiser relationships. Our new-to-television sales metric that I report on every quarter consistently highlights our progress on this front, and this remains a significant differentiating factor in our ability to drive our top line. In addition, over the long term, we've been very successful in leveraging the strength of our news programming into high levels of political advertising. This focus has led to an even-year political revenue compound annual growth rate of over 20% from 2006 through 2010. The record 2012 budgets for state and local candidacy spending are being complemented by a broad range of advocacy spending, and we are also benefiting from continued high levels of partisanship in our country. The record first quarter results reinforce our view that we're poised for continued local, national, political, retrans and e-Media revenue growth for the remainder of 2012. And at the…

[Operator Instructions] Our first question comes from Aaron Watts with Deutsche Bank.

I don't know if you can give us any color. Just to strip away the acquisitions you guys closed on, the back half of '11. And give us a sense for -- on an apples-to-apples basis, what first quarter, perhaps, revenue growth was?

Sure. Let me take that, Aaron. When we -- the way we look at it is kind of on a steady-state basis. And we strip away the acquisitions, and we also take out the 3 station affiliation switches that we had in 2011. So we view that as kind of our unaffected stations. And core growth there was 1.3% for Q1, and overall growth was about 13.5%. Is that helpful?

That is.

In effect, the acquisitions represent 5 to 6 points of both revenue and expense growth on an all-in basis.

Got it, okay. And as I look at local and national here, obviously, national's been a little bit lagging of local so that -- last few quarters. Now it's pacing ahead or at least perform better in the first quarter. Is that on auto pop, or what else is going on there?

It's driven primarily by the switch of agencies for Gulf Space Toyota to which is Texas, Arkansas, Louisiana. And it went from an agency that was handled locally to an agency that's now handled nationally. So it's really an inside baseball move. I would just focus on our core number which is, obviously, in line with and slightly ahead of our plan.

Okay. And, Perry, I think you said that the second quarter was going pretty well so far for you. I was just curious, is it lumpy out there like month-to-month, up, down? Or do you feel like there's some kind of momentum building for the core ad environment? Just some general thoughts, since I know you don't like to give specifics.

Yes, I don't see it as lumpy. I mean, you would expect in the month of May to have marginally more revenue because of all of the season finales in primetime. And people will tend to pay off for those slightly Mother's Day and things of that sort. But thematically, I mean, second quarter looks a lot like first quarter to us, and that's the way the revenue's coming in.

All right. And last one for me. Obviously, great year-over-year growth and retrans fees coming in to you. I was curious if we should expect any kind of movement on the expense side of that -- and what you might have to kind of pay back to the networks.

Any of that is already contracted and in our results from operations, so it's in our operating expenses now.

Okay. So no big movement coming on that line item?

No.

We'll take our next question from Bishop Cheen with Wells Fargo.

Presentation in detail. I have 2 questions, but I was looking back at my old notes, so this is Q1 2009, when we all thought the world was ending. And Perry, you commented to a question on that call. How much can your non-core revenue grow? And you said I think we can be 25%. And I remember the trades -- some of the trades thought you were crazy. You're there. It's up from 18% to just about 25%, correct?

Yes, I can't argue with your math.

Okay. And you may have even said it before Q1 of '09, but I have it from my notes, so belated well done. Two questions, because you covered so much. Tom, technically, if you want to put debt on top of the second lien notes, could you remind us again what the limit there is? Is that a $200 million maximum dollar amount that could go on top of the 8 and 7/8%?

When you say on top, first-lien debt?

Yes.

First-lien debt is limited by 2 things: one is a $100 million -- is a $200 million basket, which you referenced, and the other is the 5.5x secured covenant. There is no first-lien covenant in the indenture. It's just 5.5x secured debt is the incurrence test, and 7x total debt is the incurrence test. And then underneath that, you have a carve-out of $200 million. So you're not limited by $200 million in terms of first-lien debt.

Got it. I'm not suggesting you would do that, but I just want to know given all the events that are possible what could go on top of it under the existing covenant.

Understand.

And second, you have such a great upcoming dilemma. Political, no matter how bullish you are, it seems to be tough to keep up, but then comes 2013. Could you give us a little color again on how you go about replacing political? And if you can -- if you can quantify it for us by x percent historically, where you've been able to pass 2 or 3 years to replace x percent of political fee at the other nontraditional or non-core revenues.

Let me -- I think that if you go back and look at 2011, which was, obviously, the year after 2010. For the full year, our net revenue was down 2.2% over the prior year. And that's the closest that we've come since -- closing the gap since the last century, since the '90s. We will see continued growth in our retrans and e-Media, and even a 3% growth on core revenue, that's moving north of a $0.25 billion revenue line so 3% or 4% growth there, with the inventory returning back to the stations for sales and non-political advertisers. That still can close literally 1/4 of the political gap. So obviously, that's our job, and our job is to continue to find new revenue sources that will help to drive and diversify away from the core ad and the political ad revenue model. But obviously, the better this year is, the steeper that hill is for next year as well.

Our next question comes from Edward Atorino with Benchmark.

When you were talking about the steady-state or whatever, I mean, the core business according to the press release was what, 7% or something like that. And you said 1.3%. What was 1.3%?

Well, 7% is the GAAP measurement between 2011 and 2012. That includes the acquisition that we made in July of 2011 in Green Bay and December of 2011 in Evansville. If you back those 2 out and back out the effect of the affiliation changes which happened in the summer of 2011, our core business was up 1.3% not 7.8%.

We'll take our next question from Barry Lucas with Gabelli & Company. Barry L. Lucas - Gabelli & Company, Inc.: I've got several areas I'd like to touch on, Perry. I think you singled out issue money and maybe candidate money. And I was hoping you could maybe provide a little more color as the tax and super PACs providing a significantly greater proportion of political advertising in dollars that we've seen previously? I mean, it's certainly the expectation given the super PACs.

Yes, Barry. In the first quarter, 51% of our reported political revenue came from PAC or issue advertisers, 49% was candidacy ad spend, so that is a similar quarter. That's the first time that candidacy ad spend has been in the minority, although it wasn't by much. To put that in perspective, if you go back to 2010, approximately 1/3 of our political revenue was issue or PAC revenue and 2/3 candidacy ad spend. Barry L. Lucas - Gabelli & Company, Inc.: Interesting phenomenon. One for Tom, and then we'll come back to you, Perry. The -- it looks like you did a really good job on the balance sheet, Tom. You talked about $12 million of free cash flow, but net debt was down, not quite double that, but about $20 million. So what's going on in the working cap area? Is that where the improvement came from?

Yes. But we're a little bit held hostage to the funds flow, and I think we may have even talked about this on the fourth quarter. We got a large payment from the termination of the Four Points agreement on January 3. So only it was at -- almost an $8 million payment, some of which was a receivable year end that was the incentive payment due and was earned in the fourth quarter but payable in the first quarter. So that alone made up about $6 million of favorable working capital. Before we were always lagging kind of one quarter behind on the receipt of those funds, but with the termination agreement, obviously, the funds became due when the deal closed. So that was probably the biggest working capital item. Having said that, working capital, obviously, is always kind of -- we're always collecting fourth quarter revenues, which are our best core revenue quarter in the first quarter, so that's always favorable to us. And with our expenses under control, accrued expenses are down, we had a big interest payment due on April 15. So it's just really the ins and outs of the cash and the accounts payable within the quarter. But as I mentioned before, the actual -- the redemption occurs on Friday, and we will be borrowing less than the $34 million required payment for the redemption, actually, including interest. Probably something on the order of about 80% of that will be borrowed, the other 20% will come from cash. So further debt reduction -- net debt reduction. Barry L. Lucas - Gabelli & Company, Inc.: Okay. And last, back to Perry. If can you shed any light or color or thoughts on the LIN-New Vision deal, that would be illuminating and particularly in light of your own strategic review process.

I'm not sure that it would be prudent for us to say anything ahead of them commenting on the deal that they made. We, obviously, looked at the deal, and we're not able to able to -- even with hubbing and retrans, make -- the final price would not have been an accretive deal for our shareholders, so we stick true to our process of continuing to look for accretive acquisitions and leverage neutral acquisitions, while continuing to run our strategic process. And I guess, the comment that I would make on that is, as I said several quarters ago, we're in the early earnings of the ballgame. And I would say now, we're probably at the seventh inning stretch, and we're closer to the end of evaluation of all of our alternatives than the beginning. Having said that, no announcement is imminent or forthcoming, and we won't have any further comment until there is such an announcement to be made.

We'll take our next question from Andrew Finkelstein with Barclays.

First, I just want to go back to auto. I think you guys said it was up 9% in the quarter. One, do you have what it would've been on that sort of same-station basis? And maybe how it's looking in the second quarter? I know at some point, the comps -- I think the auto comps get easier, given the tsunami last year.

Andrew, the 9% is same station. If it were a GAAP basis, it would be about double that.

Okay. And then any thoughts on auto going forward? Does your comps get easier, as you lap the sort of the impacts from the tsunami?

The tsunami occurred, I believe, on March 18 or 19 of last year, so we started to see the effect in second quarter. Having said that, automotive is pacing for the second quarter about where it was where we finished up in the first quarter. So we're seeing strong spending from General Motors, from Nissan, from Mercedes, from Mazda, Subaru, Acura and for dealers as well. So it's very well, 9 of our tracked manufacturers, 9 of the 10 were over last year. And, obviously, as we mentioned earlier, dealer -- local dealer advertising, which makes up literally 49% of our total automotive spending, also was up on a same-station basis, 14% over the prior year.

Okay, great. And then was there any impact of Super Bowl this year, NBC versus FOX? And if you could maybe talk a little about what you expect for the Olympics.

We did about $1.5 million in Super Bowl revenue on our NBC affiliates. That was the on-air portion. Online was another $300,000 to $400,000 of revenue for the Super Bowl. That was ahead of our goal and about 5% ahead of what we did on our FOX stations in the year prior. As far as Olympics, we have an ambitious goal there for our NBC stations. We are about 70% of the way there. It's approximately a $5 million goal between on-air and online, and we feel very confident that we will hit that, come the opening ceremonies.

Okay, great. And then one balance sheet question. I guess, you have the rest of the 7% bonds due in '14. It seems like you might have wanted to wait to wrap up the strategic review, as that's kind of dragging longer. How do you think about waiting on any refinancing decisions around the bonds now that we're sort of middle of 2012?

Well again, I think your commentary is correct. We don't want to do something only to have to undo it later depending on what the outcome of the strategic process is. So those 2 kind of go hand in glove in terms of dealing with the 7s in concert with whatever strategic initiative or path we set off down. I don't want to have to take 2 steps where one step would be more appropriate.

But you're comfortable sort of waiting further, as that maturity date gets closer?

It is. If for no other reason, quite honestly, I could -- I believe, we will have enough free cash flow to retire all the majority, if not all, of those bonds just out of free cash flow between now and January of '14. So in theory, we could just pay them off. I think the right answer is to refinance a portion of them and use a portion of our free cash flow in the remainder of the year to retire them as well.

Our next question comes from John Kornreich with J.K. Media.

A couple of questions. Can you help us with the retrans for this year and next? There's the -- what looks like is going to be close to $60 million of retrans this year reflect basically every -- all your distributors and/or is there something meaningful coming up for negotiation this year that would be reflected in 2013? I would think that with $60 million, 2013 would kind of be a pause year. Any comments on that one?

Well, I'd say pause is relative -- if you mean pause relative to a 50% increase, I would say yes.

No. I mean, like inflation index only.

I would say it'd be more than that.

In '13?

Yes.

Okay.

But you're right. We had said before that we expected a 50% increase between '11 and '12. I think the early returns there, and if you just annualize Q1 of '12, that will be -- will exceed that. And '13 will not see that type of growth between '11 and '12. You won't see that again between '12 and '13, but you will see something more than, as you put it, a CPI or a inflationary growth trend between '12 and '13.

If you look at the top 5 distributors: Comcast, Time Warner, DirecTV, EchoStar and somebody else, they're already in this $60 million number?

Yes.

Okay, so whatever you got new is not significant, and next year should be inflation index plus?

Yes, John. You could put a double-digit increase, a 10% increase on next year, just for escalators and the dozen-or-so agreements we have this year that will expire. And then -- and none of our top 5 expire in 2012, but 2 of our top 5 expire in -- at the end of '13 and one expires early in '14.

But these were 3-year deals basically?

Yes. And then let's put it this way. All of our top 5 will reprice again between the end of '13 and the end of '14.

Okay. Did I hear you say that the 2-year free cash flow should be $110 million at least? Because it was $34 million last year, right? You said at least $75 million this year.

Yes. If you continue to grow trend that we've historically grown, which is 30-plus percent, and you apply that to the '09, '10, 2-year growth, it will be north of the $100 million of free cash flow. And we already had $35 million or $34 million in '11.

But you made a statement that it would be at least $75 million this year, which brings you to $110 million.

Correct.

Okay, I get it. I want also the -- there's no more management fees after this quarter, correct?

Correct.

Okay. And looking at the core ad revenues, I'm a little puzzled by them actually. On a same-station basis, it looks like local was actually down, maybe 1% or so, even though auto, the biggest category, was especially strong in the local end of it. So what's going on at local where your biggest guy is up significantly, and yet the whole category, same-station -- same-station was actually flat to down.

Well, I think Perry mentioned some of it has to do with shifting and categories within local and national. I would say, if you told me local was down, I would say that's really not -- that's the way we keep score. But if you normalize that, local would be up a low single-digit, because of these category shifts where someone in 2011 was deemed local, and in 2012 they're deemed national.

Okay. And looking at your 2-year free cash flow, whether '11 and '12 and '12, '13 projection, guess whatever you want to call it, you'd come out with like $1.80 a share per year average. So make sure you emphasize that to your strategic buyers.

Well, I think Perry mentioned the $1.70 a share, so our math is not far off.

[Operator Instructions] We'll take our next question from Edward Atorino with Benchmark.

I don't have another question. I've asked my question.

It appears there are no further questions at this time. I'd like to turn the conference back to our speakers for any additional or closing remarks.

Okay, thank you very much. I just wanted to reemphasize what John Kornreich just mentioned at the end. If you look at our free cash flow over the last 8 quarters, it averages out to an average of $1.70 per share per year. And I think as we said, we see our trailing 8-quarter run rate rising, as we progress through the remainder of 2012. So thank you very much for joining us. We look forward to reporting on our second quarter results in late July or early August. And as always, if you have specific questions, Tom and I are available afterwards. Thanks very much, everyone.

That concludes today's conference. Thank you for your participation.