Good day, and welcome to the Nexstar Broadcasting Group’s 2014 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 facts, maybe deemed forward-looking statements within the meaning of Sec 21 of the Securities Act of 1933 and Sec 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 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 sir.

Thank you, operator and good morning everyone. I’d like to thank you all for joining us this morning to review Nexstar’s record first quarter operating results and our ongoing initiatives to drive continued free cash flow growth in 2014 and beyond. As always, our Chief Financial Officer, Tom Carter is participating on the call with me this morning. 2014 is off to an excellent start for Nexstar with another record quarter led by robust growth in all financial metrics. Nexstar generated record first quarter net revenue and with the operating leverage and our model, the 19.3% revenue increase resulted in our highest ever first quarter broadcast cash flow, adjusted EBITDA and free cash flow, which grew 27.2%, 27.4%, and 148.5% respectively. Our consistent free cash flow growth again highlights the value in our long-term strategy to complete accretive acquisitions while evolving the traditional television broadcasting operating model and our locally focused content into a diversified entity with high margin revenue streams. With core advertising trends remaining strong, the cyclical return of political spending, our expanded digital media operations, and our visible retransmission revenue stream, we believe that Nexstar is on track to generate record free cash flow growth and free cash flow in 2014. Operationally, Nexstar had an outstanding first quarter with results highlighting our ongoing focus in building new local direct advertising as well as growth of distribution and digital media revenue at the station level and the successful integration of the accretive acquisitions we completed in 2012, early ‘13 and early ‘14. Nexstar generated total first quarter revenue of $133.8 million, that’s 19.3% rise from the year ago period with increase driven by strong growth in local, national, political and retrans. Reflecting organic and acquisition related growth, first quarter revenue, our core ad revenue I should say rose…

Thanks, Perry and good morning everyone. I will start with a review of Nexstar’s Q1 income statement and balance sheet data. After which, I will provide an update on our capital structure and details related to the pending transactions. As Perry mentioned, our net revenue grew 19.3% to $133.8 million driven by 11.4% growth in core revenue to $92.8 million. The components of which were local revenue of $65.6 million, up 9.5% and national revenue of $27.2 million, up 16.3%. Political revenue in the even numbered years stood at $4 million and retransmission fees were $35.1 million, which as he mentioned, was up sequentially 31% over fourth quarter. And it’s important to note, there weren’t any acquisitions that closed in either Q4 or Q1, so that is really a same station comparison for the purposes of retrans. Our digital media revenues were affected by non-recurring revenues from previous year and stood at $6.3 million. And as Perry mentioned, we had record broadcast cash flow, adjusted EBITDA, and most importantly to us free cash flow of $25.3 million, which was up almost 150% over the same period in 2013. On a same-station basis and by same-station, I mean, for stations owned more than one year, our net revenue increased 11%. Core revenue increased 5.4% driven by 11% increase in national revenue. And as Perry mentioned, our retransmission fees were up 30% plus. With the focus on generating free cash flow, we remain disciplined in managing costs and in addressing our capital structure, leverage and cost of capital. First quarter station direct operating expenses net of the trade expense and station SG&A expenses rose 23.9% and 13.1% respectively. These increases primarily reflect higher variable costs related to the significant increase in national and local revenues and continuing operating expenses of the acquired…

Thanks Tom. In summary we are laser focused on closing, effectively integrating and extracting synergies from the remaining 29 stations we have agreed to acquire and we believe that our long-term acquisition strategies and operating plan combined with Tom and his team’s management of our capital structure is a proven formula for sustained long-term growth and shareholder appreciation. As we complete the four pending transactions, Nexstar will again generate meaningfully higher free cash flow allowing us to quickly reduce borrowings and our leverage ratios. Our leading local news and content franchises as well as broadcast televisions world is the most influential medium among consumers, remains the foundation of Nexstar’s continuous long-term expansion and growth. On completing all the announced transactions our platform will expand to 108 television stations making Nexstar the second largest operator of television stations in the United States. Our combined audience reach will be approximately 16% of all U.S. television households allowing for further significant expansion of our platform, while remaining under the current 39% regulatory cap. With significant free cash flow and growing free cash flow, with positive industry trends and our strength in balance sheet, we are very confident that Nexstar’s path to enhancing long-term shareholder value is clear. The first quarter results and Q2 trends to-date reinforce our view that 2014 will be another period of record financial results for the company as Nexstar benefits from it’s expanded scale, new operating efficiencies and synergies related to recent and pending acquisitions, the renewals throughout 2014 have retransmission consent agreements covering over 40% of Nexstar’s subscriber base as well as the ongoing financial growth and accretive acquisitions related to expansion of our digital media initiatives and the return of the political cycle this year. With the results we announced this morning, Nexstar’s record of exceptional compound annual growth on free cash flow continues with $25.3 million in the first three months of 2014. From the 2003/2004 cycle when we first went public and from the 2003/2004 cycle through ‘12 and ‘13, we grew free cash flow at a compound annual growth rate of 61.4%. While that’s impressive, our forward outlook is even brighter as pro forma for the completion of pending transactions, the compound annual growth rate from 2003/04 cycle to ‘14/15 will increase to approximately 69%. And Nexstar’s pro forma free cash flow in 2014/15 is expected to rise more than 110% over the recently concluded 2012/13 cycle. On behalf of Nexstar’s more than 3,000 dedicated employees, I’d like to thank you for joining us and for your interest in the company. Now, let’s open the call to Q&A to address your specific areas of interest. Operator?

Yes, sir. Thank you. (Operator Instructions) We will move first to James Dix with Wedbush Securities.

Hey, good morning guys. A couple of things. I guess, just first on the M&A outlook, I mean, given that you have been going through this process with these pending deals for some of them quite a while now, just if you could just go through what are the things which are giving you some confidence that the pending deals will close this year? And then I had a follow-up on fundamentals?

Sure, James. Well, let me just say it this way, we do have a plan, an updated plan and we are working through that plan to close the remaining pending transactions. And we are confident that we will be able to move this plan forward in compliance with the new rules that are currently out from the FCC. Notwithstanding, we do believe that those FCC rules will ultimately likely come under congressional review and probable judicial review, but we have a plan, we just don’t want to put the playbook out for public consumption.

Okay, great. And then you mentioned kind of my second topic in your first response. Any more color now that you have seen the final rules that the FCC adopted as of mid April, they were published? Any more color that you can give as to what you think either you or the industry is likely to do over the next two years, just to kind of adapt to those rules specifically on the joint sales agreements?

Sure. I believe that we will take the full two years to review our options with the relationship to our existing JSA agreements. Obviously, our focus is on pending transactions and that’s where we are modifying agreements to pass muster with the current regulatory regime.

Great. And then one just on fundamentals, just what type of pacings are you saying in the second quarter in terms of the ad business? I mean, I have heard from some people, some mixed pacings on national, in particular, and maybe some headwind for Fox affiliates. So, any color you could give on kind of how the second quarter is looking from the core ad side versus what you saw in the first?

Yes. I think that if you – as far as our Q2 outlook, I think you will see a low single-digit growth in core. You will see high-teens for digital and then add in results from IV, which will begin to be reflected in our financial statements as of April 1. And in a healthy dollop of political and then you have retrans and I think now given our first quarter reporting that you have pretty good window into what that will look like for Q2. So, I think those are the basic building blocks and that is in line with our plan.

Great, thanks very much, Perry.

And we will now move on to Aaron Watts with Deutsche Bank.

Hey, guys.

Good morning.

A lot of information appreciate all the detail. I was trying to write as quick as I could, but wanted to just clarify on the same station kind of core performance in the first quarter I think you said it was up 5.4% with national up 11%, what was local?

3.2%. And again, that’s for 3.2%, those are, all those numbers are for stations owned more than one year. Actually, if you include the stations that we have acquired it’s slightly higher than that, simply because those were not as well run we would like think under previous ownership. So we are kind of bringing them under the fold here, but on stations owned more than one year it’s 5.4% for core, 3.2% for local and 11% for national.

That’s interesting, I think you are the first one I have heard say that national felt better than local in the quarter, anything you attribute the variance there to or just why national outperformed for you for than – over local?

Well, obviously, I would like to take the opportunity to complement our superior sales force to just for their results. But it has to do primarily with categories and where the advertising is placed. And there is account shifts from local to national and national to local that happen all the time. A driver there was the – was an increase in spending from cable and other media and that is primarily placed nationally which would drive that results – drive those results. But we refused to allow weather as an excuse in the company, but you heard that from me on our first conference call of the year that we need to be selling smarter and further ahead and not let weather affect our ability to make the month. And I can tell you that we for the first quarter on an all-in basis we exceeded our internal budget and forecast, so we are very pleased with the results.

Okay. And on auto I think a lot of people had mentioned that the weather did have a dampening affect there on auto sales, I think you said your auto was up 4.4% in the first quarter, should we expect that kind of growth rate to feel better and the second quarter just given the weather has calmed down a little bit?

Well and again maybe we are the exception, but our local dealers spending in the first quarter was up double digits, it was up 11% and that’s where the transactions take place in the individual showrooms. And I think that’s an exception to what others have reported as well. I think as we look forward, I think that the kind of single digits increases you saw in auto in the first quarter that’s probably a pretty good proxy for second quarter. I am not sure there was anything driving acceleration beyond that. So I mean I don’t think we are counting on more growth than we saw in the first quarter on a percentage basis.

Okay. And last for me, Tom as you think about all this free cash flow you are generating, obviously you have been opportunistic with some acquisitions, you are paying a dividend on your stock, as you think about your debt balance are you okay with kind of the principal amount outstanding where deleveraging from this point on comes from growth of the business or would we see some debt pay down with free cash flow as well?

Well, I think it all just depends, right now pro forma for closing all of the acquisitions we have got about a $50 million to $70 million funding need. Now, so depending on when these acquisitions close, there is a scenario that we have that we generate enough free cash flow in the next four to six months that we don’t have to do an additional financing. And we have $172 million of unfunded Term Loan A. We have $105 million of unfunded revolver and post the IB acquisition in April we have $30 million odd of cash. So we have either a combination of adequate funding and adequate access to capital or adequate free cash flow over the course of the near-term to fund all of these acquisitions which is my first priority because as Perry mentioned we believe these are going to close in 2014.

Alright, great. Thanks for the color.

And we will now move to Marci Ryvicker with Wells Fargo.

Thanks. Can you clarify that $4.40 free cash flow guide, does that include the Citadel deal that just recently closed or not?

Yes, it does.

Okay. And then is there any financial metrics you can give us around IBS revenue and EBITDA contribution either for this year or over time?

Sure, I think normally our transactions are anywhere from three to six months in terms of closing from a regulatory perspective. On IB, it because it didn’t require any sort of regulatory approval closed immediately after it was signed. So, our synergies aren’t really going to take effect in IB for probably three to four months. Normally, we have three to four months to plan and get ready and so they take effect immediately. Having said that, for modeling purposes, it was approximately a one-times revenue acquisition and we believe that six months into it, it will be at a run-rate pro forma multiple of approximately five times. We are just not going to get there for two quarters or so, because of the lack of regulatory delays to close. Is that helpful?

Yes. And then just going back to my first question, what’s the $33.5 million deal that got FCC approval, but wasn’t closed?

It is the Nexstar portion of Hoak.

Is that included also in the $4.40?

No.

Okay.

And Marci, we expect that will likely close by the end of this month.

Okay.

And those are stations in Grand Conjunction, Colorado and Panama City, Florida.

Great, that’s all I have. Thank you.

And we will now move to Tracy Young with Evercore.

You answered my question on the Hoak transaction. Just a question for you sort of a broader question, your retrans numbers were good this quarter as well as the e-media yet you are keeping the $5.85 free cash flow 2014/2015, are you just being conservative at this point or should we just be assuming that you will – is there anything that we can take away from that? Thanks.

I would say the only thing you could take away from that is just being conservative. And right now, I think all broadcasters are a little bit from Missouri. Show me when it’s going to happen and how it’s going to happen and then we can refresh that. I think we will give additional guidance once these individuals, transactions start closing, but obviously the largest one of which is CCA, and that’s probably the most complex one. So, more to come, I think it’s important that we are not – we are reiterating guidance if we felt there was downward pressure, we wouldn’t be doing that.

Okay, I understood. Thank you.

We will now move to Davis Hebert with Wells Fargo Securities.

Good morning guys. Thanks for taking the questions. A couple for me, the FCC’s ruling on joint retrans negotiations for two of the top four stations, can you outline how many markets this would affect you and how you might manage through that going forward?

I don’t have an exact number, but I would say there are 18 Mission markets. And if either six or seven markets that is not applicable, because one of us or both of us don’t own the top four stations. So, it comes down to basically rough numbers, two-thirds of the overlap markets would be prevented. Now, I will tell you that the order is not yet effective, because it hasn’t been published in the federal register. So, we are currently not subject to it. And we would like to see that get delayed as long as possible, but there are plans afoot to have Mission assume that responsibility or to have them outsource those stations to someone other than Nexstar.

Okay, got it. Yes.

I am not going to give more details than that, but it’s an A or B and both options are on the table.

Okay, got it.

To Tom’s point, we did complete negotiations in April on a 2014 retrans agreement renewal and Nexstar was able to negotiate on behalf of both the Nexstar stations and the Mission stations in those affected markets.

Okay, perfect. Thanks for that color. And then on the balance sheet, the target leverage you took up a little bit to 3.8 times just given what the timing of these acquisitions closing, but Tom, you have been good about giving us some idea about balance sheet capacity for M&A. Does that change with this target leverage or not target leverage, but leverage outcome?

No really the leverage outcome is more – the creeping up of the leverage at year end ’14 is more a function of the fact that we are not going to have access to the free cash flow. If you go back to the April 2012 announcement of CCA, we thought we were going to have that beginning in the fourth quarter of 2012. Well, now it looks like we are going to miss at least nine months of that free cash flow and similar kinds of timelines affect Hoak as well as Grant. So really the creep up in leverage is $30 million to $40 million of lack of free cash flow from some of those properties. What I will say Dave is with the passing of time and the fact that we do have not insubstantial free cash flow as evidenced by the fact that we paid for the $22 million second payment on Citadel and $20 million for internet broadcasting out of free cash flow. And we haven’t even seen the beginning of the strongest free cash flow months and quarters for 2014 yet. So with the passage of time what historically has been kind of roughly characterized as $200 million to $300 million of acquisition capacity is going to increase just naturally through organic free cash flow.

Okay. Last question for me on political one of your peers took up their full year guidance saying that political season could actually be a little bit more robust than they have thought, just curious if you are seeing that in any of your markets? And thanks for taking the question.

Well, I think we had guided to a continuation of about a 20% CAGR over our reported 2012 results, which would give you a number in the mid-50s. I think we are very confident with that number and we are probably betting people we probably bet the over. But given that 60% of the political comes in six weeks in – of a 52 week year, it’s pretty hard to be much more finite than that. I can tell you that we booked $1 million in political this week and that’s just for primary season in some states. So yes I think that it would be a very active political year for the company given its footprint.

Okay thanks a lot.

We will now move to Edward Atorino with Benchmark.

Hi. Are you seeing – you mentioned mobile, mobile is one of the great promises of broadcasting that sort of hasn’t happened and in fact the NAB that ’14 is going to be the year of mobile, could you discuss whether you are seeing mobile build, is this a strategic move, is the if NAB talking through its hat?

Well, the mobile that we are experiencing now is basically our mobile video basically through our websites and it’s not true broadcasting to handsets. I probably think that’s a a laser way and we will most likely require a change in transmission standard to get there fully. But the thing that’s intriguing to me is when you hear Comcast talk about building 8 million hotspots for Wi-Fi and then we then can communicate with mobile devices without really blowing up data plans as well as our video is available real time right now. So it is arguable as to what the transmissions schema is going to be, but we still see a huge gap in just our digital revenues mobile views, page views approximately 40% of all of our page views and mobile revenue as a percent of our digital revenue was about 10%. So we are like just about everybody else running down the street trying to catch up with viewer adoption trends and planning ways to monetize them.

Is the problem technology, not enough whatever they are out there to receive the signal or is the problem with TV having the – I am not engineer having the ability to send the signals to a mobile device?

Yes, I mean.

Or both?

Well, their handsets are not currently equipped and by and large to receive television transmission that would require a chip.

Or both?

And so I think that’s the first step. But again there is a potential opportunity to change the transmission standard that would make all of that easier and I think that’s where a lot of us are focused on the future of being able to monetize ancillary spectrum as well as monetize mobile.

Yes. It sounds like the NAB is ahead of the curve or behind the curve I mean. Thank you.

Thank you.

(Operator Instructions) We will now move to (indiscernible).

Good morning. So, in light of the recent FCC rulings on JSAs, I am trying to get a sense for the exposure in your existing stations. So, the question is if you have had to exit your JSA agreements effective say January 1, 2014, what percent of first quarter EBITDA would have gone away?

Well, let me just be clear that at no point would we have to exit those JSA agreements. We would have to modify them to comply with the current rules that rather than selling approximately 70% of the airtime of the stations, we can now only sell up to 15% of those – of the airtime of the Mission stations. So, we will modify agreements to come in compliance, but at no point do those agreements go away.

And with regards to contribution….

Go ahead.

No, you were saying with regards to contribution from those – the EBITDA impact if it you modify those stations?

Well, again, every quarter we publish consolidating financial statements in our public filings. And you can go back and see under the Mission category, the revenue between consolidated entities in Q1 of 2014 was $6.9 million in revenue of $133.8 million of revenue. That’s the amount of revenue that was associated with the JSAs. Mission’s total revenue was $18.5 million. So you can – you would have to make assumptions with regard to expenses, because Nexstar incurs expenses to provide these services to Mission. So, it is not a – it’s not a material profit center for Nexstar.

Got it. And in any case as far as revenue goes, only that $6.9 million would be subject to the modification?

Right. And it’s $9.6 million to be clear.

$9.6 million, okay, great. Also on spectrum, do you intend to try to monetize any of your spectrum in the incentive options coming up next year?

We will keep an open mind as to the process, but I find it hard to believe that anyone who has a going concern television station is going to find the spectrum auction more lucrative, but again, we will keep an open mind and review the process, once the guidelines are established and determine if that is still valid, but that’s our initial impression is that we probably will not participate, but you never want to say never.

Got it. Great, thank you.

(Operator Instructions) We will now move back to Edward Atorino [Benchmark].

Yes, I am probably just far from an engineer as anybody on the phone. Could you use that excess spectrum to do something else instead of selling it, I mean it’s unused? Can you add – I mean, can you add stations? I am sorry it’s probably a stupid question, but…

No, not at all, Ed.

Would you mind tolerating me?

No, no, I am happy to do so. I mean, right now, people are multiplexing and putting digital multicasts on the air. We have done that in certain circumstances and we have inherited a bunch in acquisitions, but by and large we have kept our powder dry if you believe that the demand curve for core television advertising which is how these things would be funded is a low single-digit grower, then our view is that you don’t want to introduce more supply. Now, we have put – we just recently this year put a Telemundo D2 on the air in Abilene, Texas, where there was no other Telemundo affiliate over the air. And that makes perfect sense. We have put Bounce multicast which is a network geared at African-American audiences on air in markets where we had a high African-American viewing population. So we have done some of that. I will just remind you back during the analog to digital transition when the Qualcomm was generating and starting their media flow project, we leased spectrum to them in a couple of markets on Channel 55 where they were building their nationwide media flow footprint and that was very lucrative to the company, it was several million dollars over a several year period of time., But didn’t require the government to have a thumb on the scale or a part in negotiations. And I think you will see more of those kinds of discussions and opportunities once we get on the other side of an auction process. And then I think just naturally the market will bring parties together.

Thank you very much. Really I appreciate the time. Thank you.

You bet Ed.

And it appears there are no further questions.

Thanks everyone for joining us. And until next time take care. Bye now.