By Jack Messmer
Source: tvnewscheck.com, November 2019
“The category that is phenomenal in its growth — and it continues to be unabated — is the legal category,” the group’s CEO, Perry Sook, told analysts today. He noted that legal is already the top category reported by another group owner in at least two markets, surpassing auto. “We’re not there yet, and there’s a long way to go for us to get there, but legal is now our No. 2 category, supplanting fast food, furniture and some of the other perennially strong categories. They’re strong, it’s just that the growth curve on legal advertising continues unabated,” Sook said.
While automotive advertising has long been the top advertising segment for TV station owners, the auto industry’s decline from recent record sales years may not send broadcasters reeling. In his Q&A session with Wall Street analysts Wednesday following the announcement of third quarter results, Nexstar Media Group Chairman, President and CEO Perry Sook acknowledged the auto decline, but noted a hot growth category that is now Nexstar’s number two ad revenue segment: legal advertising.
Asked about 3Q ad sales in the two traditional big sectors, Sook said that auto was down by a low single digit —about 2%— and retail was off by a high single digit percentage. But Sook added that attorney advertising (that legal category) was up almost double-digits, home repair was up double-digits, cable advertising was up a high single digit, and insurance was up almost 25%.
And while auto may not be what it once was, Sook noted that it is still going to be a major ad sales driver for television. “Our sense is that automotive is settling in where it is. It’s maybe not 26% or 27% of our business, but it is 23 or 24 percent of our business. We think that’s going to be a fairly steady state,” Sook told the analyst.
So, what’s filling the gap? “The category that is phenomenal in its growth — and it continues to be unabated — is the legal category,” Sook said. He noted that legal is already the top category reported by another group owner in at least two markets, surpassing auto. “We’re not there yet, and there’s a long way to go for us to get there, but legal is now our No. 2 category, supplanting fast food, furniture and some of the other perennially strong categories. They’re strong, it’s just that the growth curve on legal advertising continues unabated,” Sook said.
Now that Nexstar has true national scale with its recent Tribune acquisition, analyst Jim Goss of Barrington Research wanted to know if the company plans any changes in its advertising sales strategy to boost national sales. Certainly Nexstar is assessing its options, Sook answered, noting that his company now has the largest local station group, reaching 69 million households, recently added WGN America in the Tribune acquisition, reaching 70 million households, and has 106 million unique monthly digital users across its platforms.
“It seems to me that if we can find a way to bundle that, there would be people who would like to buy that — the sheer reach of those different linear and digital platforms,” said Sook. “So, there’s a lot of conversation about that from an ad sales perspective.”
The Wall Street analysts also had a lot of interest in whether Nexstar plans to exercise its option to buy back WPIX New York, which was divested to E.W. Scripps when the Tribune deal closed. Even with the Fox deal announced Tuesday to sell stations in Seattle and Milwaukee while acquiring a duopoly in Charlotte, N.C., Sook noted that Nexstar won’t have enough headroom under the FCC’s national cap to reclaim WPIX.
“We continue to lobby for elimination of the cap,” Sook noted, or to at minimum set the cap at 78% of U.S households to eliminate the impact of the UHF discount. That would also allow for the acquisition of WPIX, a VHF station. With the option running through the end of 2021, Sook remains hopeful that Nexstar will be able to acquire WPIX. Meanwhile, he’s gung-ho on bragging about the audience of Nexstar’s biggest station, KTLA Los Angeles, which joined the portfolio in the Tribune deal.
