Good day, and welcome to Nexstar Broadcasting Group's 2012 Fourth 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 this conference call are made only as of the date of this 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 obligations to update forward-looking statements reflective of changes in circumstances. At this time, I would like to turn the conference over to your host, Nexstar President and CEO, Perry Sook. Please go ahead.

Thank you, and good morning, everyone. I'd like to thank you all for joining us this morning to discuss Nexstar's record fourth quarter and 2012 full year results, and our recently completed transactions that will drive continued growth for the company in 2013 and beyond. As is custom, Tom Carter, our CFO is here with me on the call this morning. The 38.4% rise in fourth quarter net revenue concluded what was already a record year, financially, for Nexstar. And with the operating leverage in our model, our revenue increase resulted in strong fourth quarter BCF adjusted EBITDA and free cash flow increases. For the quarter, free cash flow was $28.7 million bringing our annual free cash flow to $80.5 million, illustrating our long-term record of growth driven by operation disciplines and select strategic accretive station acquisitions. The company's historic 2-year free cash flow for the '11, '12 cycle exceeded our goal of $100 million as we reached $114.7 million for the 2-year period. We've recently completed a series of transactions on -- in addition, that are leading to continued significant free cash flow growth in '13 and beyond. Throughout 2012 and into 2013, Nexstar actively and opportunistically identified station acquisitions that adhere to our criteria for accretion, and creating new, strong local platforms. Since mid-2012, Nexstar has announced and completed the acquisition of 18 television stations, and accretive transactions that also creates 6 new duopoly markets for the company. These transactions expand our geographic diversity and scale, allowing us to further leverage our overhead and infrastructure as well as our operating disciplines and our local market focus. The net result of these acquisitions is that Nexstar will generate over a 50% increase in free cash flow compared to the run rate of Nexstar's legacy station portfolio prior to the…

Thanks, Perry, good morning, everybody. I'll start with a review of Nexstar's Q4 income statement and balance sheet data, after which, I'll provide an update on our capital structure and the recently announced transactions. In Q4 of '12, we had net revenue of $116.2 million, which represents a 34.8% increase over the same period in 2011. On a same-station basis, our net revenue increased 22.4%. Core revenue, which is comprised of local and national television spot sales stood at $72.3 million for the quarter, compared to $67.3 million for the fourth quarter of '11, which represents an 8.8% increase. On a same-station basis, core revenue declined 1.9% due to the crowd-out affecting in October and the first week of November of political advertising. Local revenue increased 6.8% to $52.6 million, and National, another component of core, increased 14.3% to $20.6 million for the quarter versus $18 million in the previous year's fourth quarter. Political revenue, as I mentioned before, was a stellar $27.3 million for the quarter compared to $2 million in 2011. Retransmission fees for Q4 of '12 stood at $16.1 million, up almost 56% from the prior year's fourth quarter. EMEA revenues stood at $5.3 million, a $1 million increase or almost 25% over the $4.3 million of Q4 of '11. Broadcast cash flow increased 61.2% to $56.3 million. And on a same-station basis, broadcast cash flow increased 47% in 2012, on the fourth quarter. Adjusted EBITDA was up 62 points [Audio Gap] million. And as Perry mentioned, free cash flow for the fourth quarter was $28.7 million, up 87% [Audio Gap] corporate expenses were $8.2 million compared with $5.4 million 1 year ago. As we mentioned, in conjunction with an 8-K that we filed in February, nearly all of the increase reflects expenses associated with personnel costs,…

Thanks, Tom. Great job. Nexstar's consistency in driving record results are the direct result of our disciplined approach to the operation of our core television broadcasting operations, our revenue diversification initiatives, as well as the success we are achieving in identifying, efficiently financing and integrating selective, accretive station acquisitions. Our recently completed transactions bring further diversification and scale to our operations, and very significant incremental free cash flow which has positioned us well to further address debt and leverage. With respect to our shares, our current dividend yield is approximately 3% and the annual capital allocated to dividend payments, at this time, is approximately $14.2 million, which is a modest payout relative to the total free cash flow that Nexstar now generates. As such, we will have ample liquidity to continue to reduce leverage, evaluate additional accretive station acquisitions and pursue other initiatives to enhance long-term shareholder value. In addition to the top line of free cash flow growth reported this morning, we've repositioned and de-risked the company through significant leverage reduction. In addition, our trading float has risen by over 100%, to approximately 24 million shares, of course, with no dilution to our current shareholders, and the average daily volume in our share reflects this significantly improved liquidity. With significant and growing free cash flow generation, a strengthened balance sheet and solid visibility on 2013 growth drivers, both Tom and I are confident that our free cash flow growth story will remain among the most impressive in the industry. I'd like to thank you all for joining us this morning. And now, let's open the call to Q&A to address your specific areas of interest. Operator?

[Operator Instructions] And we'll take our first version from Marci Ryvicker with Wells Fargo.

We are well through the first quarter. So wanted to know if you could characterize the pace of business. As I understand it, for the industry, the year may have started out slow but we're seeing some acceleration. And also, comment on any bad categories that have changed in Q1 versus Q4, in terms of strength or weakness.

Sure, Marci. If I look at our revenue results for the fourth quarter, on our top 10 product categories, which were, on a net basis, up for the fourth quarter, with 5 categories up and flat either 5 or down. And, now, fast-forward to Q1, I see that we, out of our top 10 categories, at this point, with business on the books, have 5 up and 5 laddered down. So, thematically, I think the core business looks a lot like fourth quarter. I will say that, if I look at the progression of months in the quarter, February ended up better than January, in terms of growth over prior year. March is pacing to be better by a not insignificant margin than January or February. So we are seeing an acceleration throughout the first quarter of the year. Interestingly, when I look at the product categories for Q1, it's a fairly tight bandwidth. No category is up more than 4%, and no category is down more than 5%. And so everything's kind of plus or minus a couple of point bandwidths. So, thematically, I think the quarter is evolving as we had anticipated that it would. And we are seeing acceleration the further we get away from fiscal cliff discussions that happened in December. So unemployment seems to be continuing to inch down slightly in our marketplaces. Fuel cost continue to inch down slightly in our marketplaces, and we think that drives a lot of consumer psychology and behavior. So, I think, on balance, we are positive to cautiously optimistic, not only for Q1, but for the balance of the year in core revenue.

Is your core spot business flat in the first quarter or is it slightly up?

Slightly up.

And then, any comments on expenses for the year, in terms of a same-station core growth that we can think about?

Sure. As I mentioned, in Q4, our fixed growth, which was x basically the commissions around the political in Q4 was up 2.9%. And that includes fully-loaded network affiliation fees compared to Q4 of '11. Obviously, we're going to see continuation of the lack of political in '13 versus '12, tamp down overall expense growth but I think the way we think about it is our fixed expenses, absent sales cost and commissions, are going to be in the 1% to 2% range. Then that will be increased slightly due to additional network fees paid during the year. But, overall, I think we're kind of in the low to mid-single-digit growth in terms of expenses for 2013 over 2012, on a same-station basis, is that responsive?

Yes. And then the last question is more of a strategic question. Sinclair looks like their now buying small market stations. Do you view them as competition in terms of the potential targets that you would be looking at? What's your view on what they're doing?

I think if you go all the way back to the beginning of this current M&A cycle, the acquisitions that have been made have encompassed both large, medium market and small market acquisitions as parts of groups. And I think that if you go back and look at everything that has happened over the last 2 years, I'm not sure that anything has really changed. Going back to the initial acquisition of Freedom, that encompassed stations in Beaumont, Texas, where we both operated. So I don't know that the competition is any different than it has been. We are selective. I mean, as I said earlier in the week at a conference, there's about 1,400 commercial television stations on the air in the United States. And we have a legitimate interest in probably 90 of those, either duopoly opportunities in existing markets or groups that we think would fit our profile. Not everything fits our profile, and so I think we're going to continue to be selective and disciplined in what we acquire. And that means, we'll win some and we won't win some. But I'm not sure that the competitive environment has changed from what it's been over the last 2 years.

We'll take the next question from Avi Steiner with JPMorgan. Avi Steiner - JP Morgan Chase & Co, Research Division: First off, you went through a lot of information. So if you said this already, I apologize for making you repeat it. But, Tom, could you just refresh us on post-December 31, the flows on the balance sheet and what you still have to pay for?

Sure. Again, on January 3, Mission borrowed $60 million, the majority of which went right out the door to pay for their Little Rock purchase from Newport. So that still left us with a mid-60s number of cash on the balance sheet. Subsequent to that, we've made the Newport 2 acquisition, as we call it, and the Smith acquisition which comprised approximately $52.5 million of purchase price. So that reduced our cash balances down to about $15 million. And then, as well, in that same timeframe, in the month of February, we entered into an agreement to acquire Granite's CBS affiliate -- NBC --I'm sorry --NBC affiliate in Sacramento, KSEE, and that was a $26.5 million purchase price. We entered in an LMA with them at that time of the signing and paid $20 million for the non-FCC licensed assets. So that basically put us into a slight borrowing position under the revolver where it stands today, which is around $10 million. So the only remaining commitment that we have outstanding is a balance of a $6.5 million purchase price for the second half of the payment on Granite, Fresno. And we have $10 million outstanding under the revolver right now. Avi Steiner - JP Morgan Chase & Co, Research Division: And then you talked about reverse comp earlier and expenses. I don't know if you mentioned re-trans but can you help us with what's coming up for renewal this year? And if you don't, or can't be specific, can maybe talk about it as a percentage of subs and how to think about that.

Sure. We have approximately 27 agreements that expire this year. They all expire at the end of the year. I would categorize 2 of the 27 being significant. And, as those roll over, they will certainly affect 2014 in terms of re-trans revenue growth because you know our 2012 growth was driven primarily from pricing, 2 of our top 5 MVPD agreements, and we will reprice one of our largest MVPD agreement at the end of the year, as well as several others that are significant but outside of the top 5. And then in early to mid-2014, and again, and at the end of 2014, that's another year where we have 158 agreements that are up for renewal, including the remaining 2 of the top 5, which will continue to drive revenue growth in '15 and beyond. So I think we pretty well guided on a same-station basis for roughly a 10% or maybe slightly greater increase in retransmission fee revenue in 2013. Obviously, that will be colored by the addition of the acquisitions, but -- and then we'll return to more dramatic growth in '14 and '15 because of the repricing cycle, the agreements that will be up for discussion in those years. On the -- on the reverse of that, we are paying at this point, paying reverse compensation program fees, reverse re-trans, whatever you would like to call it, on approximately 85% of our network affiliates at this point in time. And so, that is embedded in the expense projections that Tom gave you for first quarter of '13 and the year. And so, at this point, that is, for lack of a better term, a fully-baked number. There is less than a 1/2 dozen stations, at this point, who have not renewed to kind of 2.0 affiliate economics. So that's fully baked in certainly to our operating model and certainly into the guidance that Tom gave you for expenses earlier in the call. Avi Steiner - JP Morgan Chase & Co, Research Division: And last question for me. Tom may be directed at you. But we're about 1 year away from your second liens being callable, your 8s, and I'm just curious how you think about that. I think Perry gave you a shout out for all the hard work you did on the balance sheet, but it would seem there's further opportunities. I'm curious how you think about that.

Sure. No, that's definitely on the to-do list. I can't say it's on the near-term to-do list, because the near-term to-do list is pretty full as it stands right now. Clearly, that's an opportunity. If you look at kind of where our bonds are trading, where the bank debt is trading, we can significantly average down that almost 9% coupon. I think the balance there is the fact those bonds trade at 110 or 111 right now. So there's a big premium associated with that. I think the other thing that we think about here is, obviously, the strategic initiatives drive the tactical initiatives. And I view the refinancing of the 8 7/8s as more tactical than strategic. So as we -- as the strategic alternatives and strategic acquisitions present themselves over the course of the next couple of quarters, I think that will go a long way towards determining the timing on any refinancing of the second lien bonds.

I'll just add that it's certainly not lost on us, that the positive arbitrage would yield approximately $0.30 a share of additional free cash flow. So it is something that is on the radar screen, and it's just a question of at what point we decide to move forward.

And then we'll take our next question from Tracy Young with Evercore.

You gave a lot of good color. Just 2 questions. Could you give us your same-station core revenue growth in December? And also, are there any one-time charges for this quarter, that we should be aware of?

There will be a modicum of one-time charges. In this quarter, I would say, as they stand right now, it's probably under $1 million associated with some of the acquisitions. I haven't totaled that amount up yet, and I don't have same-station for the month of December at my fingertips, but I will get it for you, Tracy.

And we'll take our next question from Aaron Watts with Deutsche Bank.

Tom, maybe for you. I know $146 million was EBITDA for 2012. Because you've kind of paid out cash for all the acquisitions you've walked through, is there a fully-baked EBITDA number or a pro forma EBITDA number that we should be thinking about as a base for 2012, to work off for 2013?

Aaron, we have not given that number.

Okay, all right. And then secondly, FCC has been kind of noodling over JSAs and I was just curious if you could kind of give us your thoughts, Perry, maybe on how you think that plays out and whether that could have an impact on Nexstar.

The JSA proceeding has been an open proceeding since 2004. Since 2004, we have initiated in excess of a dozen additional JSAs which the FCC has approved. The way everything is currently constituted, this is wrapped up in an ownership proceeding that -- upon which, I think the FCC has decided to stop down and do further study as it relates to minority ownership. So we are not anticipating anything other than the status quo as it's been since 2004.

Just one other. This is Tom Carter. Just one other thing to add. Tracy Young, you asked the question about December. December core pacings were up 3%, '12 over '11, and that's on a same-station basis. Go ahead, operator.

And we'll go next to Michael Senno with Credit Suisse. Michael Senno - Crédit Suisse AG, Research Division: Just a quick question in terms of the M&A strategy. Given you do have the free cash flow generating and you've gotten the leverage down. Is there a target leverage that you intend to manage to as we think about potential future acquisitions? And also, just wanted to see what stage you feel like you're in the progress of recognizing the synergies from the acquisitions that you've completed?

Sure. I'll take the first part of the question. I think, as Perry mentioned, we're at a little below 4.2x right now. We see that just organically because the lack of political in 2013 creeping up into the high 4s. So on an average basis, that's about 4.5x. However, if you fast-forward to '14, with the retransmission agreement, renegotiations that Perry mentioned and the return of political, we see leverage in the low 3s in 2014. So it kind of peaks out at about a 4.5 average of '12, '13. But if you look at an average of '13, '14, it's probably going to be in the high 3s. So I think we would be willing, and we've said, we're looking for, with synergies, on a leverage-neutral to slightly leveraging basis. So could it go up slightly above the 4.5x average? Yes, but I think it would only do that for that period of time until we realized some of the political and the re-trans growth in '14 and brought it down to sub 4. So there's a lot of moving parts as relates to that. But in terms of material leveraging above kind of where we are on an organic basis, we don't think we see the need to or have any reason to at this point.

As it relates to the synergies, I think we had been public in the first Newport acquisition of identifying approximately $19 million of synergies, I'm happy to report that after our team has gone in and spent the time, and done the additional work and followed every line item down to the decimal point, that our actual realized synergies for the first Newport series of acquisitions will be closer to $21 million on an annualized basis. The vast majority of those have already been realized. There are some synergies related to the Inergize acquisition because we are running our operations in parallel for the first 6 months of this year. They won't be realized until the end of second quarter. As it relates to the second wave of acquisitions, which is Burlington, Fresno and Bakersfield, synergies around those acquisitions, will be realized by the end of April. And then, with the Granite acquisition, the second acquisition for Nexstar in Fresno, those will be realized subsequent to the FCC closing, which again, we would anticipate being in the second quarter. So we are well on our way to realizing more synergies than we had advertised, and the synergies in the second wave of acquisitions will all be encompassed in the second quarter, and sooner than later in the second quarter I should add. Michael Senno - Crédit Suisse AG, Research Division: And I just have one further question to touch back on the expense side. Looking at the visibility that you have into most of the affiliation agreements and where reverse comp is going, and also, how you intend to manage your station OpEx. Like looking ahead past '13, into '14 and '15, as re-trans keeps growing and presumably reverse comp does. Do you expect that you could still expand margins or will the reverse comp likely have some dampening effect even if you manage your cost base?

Well, I would say that in the macro, and we have -- our model runs 5 years out at this point in time and we have fully baked both the revenue and the expense equation as it relates to re-trans. And the bottom line is that, if we do our job well, we will be able to preserve and slightly grow the margins that we have because we would expect top line revenues, which is the bigger number, to grow at a rate faster than the individual expense line. So we feel that it will be a net positive, as it relates to re-trans payments to the networks, that margin will compress over time. But, again, remind you that for the 15% to 18% of our re-trans revenue that comes from CW, MyNetwork or independently affiliated stations, there is no sharing of that with the networks. So we anticipate the margin on re-trans for the company, for that reason, always being above 50%.

[Operator Instructions] We'll go to our next question from Tracy Young with Evercore.

Yes, actually it's a question, Perry, from Doug Arthur. One kind of big picture question and one sort of more micro question. On the big picture, in light of this action by Cablevision with Viacom and the sort of the continued bubbling up à la carte mention. If that plays out over a long period of time, in some form or fashion, do you think that actually helps your negotiating posture in re-trans or is it just basically neutral that plays out? And then secondly, on auto. I mean, auto has been strong, the comps start to get a little tougher here certainly by the second quarter. Any thoughts on what you're hearing on kind of the longer-term trends there?

I'll start with auto quickly, Doug, and tell you that, anecdotally, what we hear from not only the factory reps but the dealers is that, yes, the comps do get tougher in the back half of the year, particularly for some nameplates that were up against supply chain disruptions. But in conversations as recently as last week, with those name templates, everyone is continually surprised at the SAR being above the new car sales rate, above what they had projected for, at least, the early going here in 2013. So I think that we're -- I had lunch 1 year ago with the outgoing president of the National Automobile Dealers Association. And he said that, in his opinion, the sustainable long-term new car sales rate, was probably somewhere in the 16.5 million. And that's due to population growth, more drivers, whatever, eco boomers and all of that. And that we're nowhere near that now. We're talking about kind of a mid-15 million up from a 14 million last year. So we think there's 10%, and then probably 10% again, before we start to hit that maximum. I don't think we'll ever return to 17 million, 18 million SARs, channels stuffing to keep factories busy because that capacity is now out of the system. But we do think that there is probably another 24 months of run rate in automotive before it would level out to a more GDP like growth. I can't predict the future but, I mean, that seems to be the indications and anecdotes that we have at this point. And as it relates to à la carte, and I think that I pay close attention to what folks that run major MVPDs have said. And I think, thematically, they're saying, "I'm paying more for the most popular,…

And at this time, there are no more questions in queue. I'll turn it over to our presenters for any closing remarks.

Well, thank you, all, for joining us here today. We look forward to reconvening in the first week of May to talk about our Q1 results and update you further on our most recent acquisitions. Thanks again.

That concludes today's conference call. We appreciate your participation.