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Item 5. Market for Registrant’s Common Equity

2023-02-28 compared with 2022-02-28 · 257 added, 328 removed, 341 unchanged (63% of the section changed)

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Record Holders and Dividends

Our Class A common stock trades on The NASDAQ Global Select Market (“NASDAQ”) under the symbol “NXST.”

As of February 25, 2022, there were approximately 83,000 shareholders of record of our Class A common stock, including shares held in nominee names by brokers and other institutions.

Pursuant to our current dividend policy, our board of directors declared in 2021, 2020 and 2019 total annual cash dividends of $2.80 per share, $2.24 per share and $1.80 per share, respectively, with respect to outstanding shares of our Class A common stock.

Our common stock (f/k/a Class A common stock) trades on The NASDAQ Global Select Market (“NASDAQ”) under the symbol “NXST.”

As of February 27, 2023, there were approximately 107,000 shareholders of record of our common stock, including shares held in nominee names by brokers and other institutions.

Pursuant to our current dividend policy, our board of directors declared in 2022, 2021 and 2020 total annual cash dividends of $3.60 per share, $2.80 per share and $2.24 per share, respectively, with respect to outstanding shares of our common stock.

The dividends were paid in equal quarterly installments.

On January 27, 2022, our board of directors approved a 29% increase in the quarterly cash dividend to $0.90 per share of outstanding Class A common stock beginning with the first quarter of 2022.

On January 26, 2023, our board of directors approved a 50% increase in the quarterly cash dividend to $1.35 per share of outstanding common stock beginning with the first quarter of 2023.

Dividend determinations will depend upon, among other things, our future operations and earnings, targeted future acquisitions, capital requirements and surplus, general financial condition, contractual restrictions and other factors as our board of directors may deem relevant.

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Issuer Purchases of Equity Securities

The following is a summary of Nexstar’s repurchases of its Class A common stock by month during the fourth quarter of 2021:

The following is a summary of Nexstar’s repurchases of its common stock by month during the fourth quarter of 2022 (in millions, except for share and per share information):

Total Number of Shares

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December 7 - 29, 2022

On January 27, 2021, our Board of Directors approved a new share repurchase program authorizing the Company to repurchase up to an additional $1.0 billion of its Class A common stock, increasing the Company’s share repurchase authorization to a total capacity of $1.175 billion when combined with the remaining available amount under its prior authorization and before reduction for any repurchases in 2021.

During the year ended December 31, 2021, Nexstar repurchased a total of 3.6 million shares of its Class A common stock for $536.7 million, funded by cash on hand.

As of December 31, 2021, the remaining available amount under the share repurchase authorization was $638.2 million.

On July 27, 2022, our board of directors approved a new share repurchase program authorizing the Company to repurchase up to an additional $1.5 billion of its common stock.

During the year ended December 31, 2022, Nexstar repurchased a total of 5.1 million shares of its common stock for $880.7 million, funded by cash on hand, which were accounted for as treasury stock.

As of December 31, 2022, the remaining available amount under the share repurchase authorization was $1.258 billion.

Securities Authorized for Issuance Under Equity Compensation Plans as of December 31, 2022

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Equity compensation plans not approved by security holders

(1) The 2,245,025 number of securities to be issued consist of 1,025,343 outstanding stock options, with a weighted average exercise price of $23.40 and 1,219,682 time-based and performance-based restricted stock units.

(1) The 1,458,616 securities to be issued consist of 337,136 outstanding stock options, with a weighted average exercise price of $46.87 and 1,121,480 time-based and performance-based restricted stock units.

For a more detailed description of our equity plans and grants, we refer you to Note 13 to the Consolidated Financial Statements included in Part IV, Item 15(a) of this Annual Report on Form 10-K.

Comparative Stock Performance Graph

The following graph compares the total return of our Class A common stock based on closing prices for the period from December 31, 2016 through December 31, 2021 with the total return of the NASDAQ Composite Index and our peer index of comparable television companies.

Our new peer group index consists of the following publicly traded companies:

Gray Television, Inc., Tegna, Inc., Sinclair, The E.W.

Scripps Company, Fox Corporation and Paramount Global (the "New Peer Group").

Our old peer index consists of the following publicly traded companies:

Gray Television, Inc., Tegna, Inc.

and Sinclair (the "Old Peer Group").

We believe the New Peer Group provides a more meaningful comparison to our common stock’s performance.

The graph assumes the investment of $100 in our Class A common stock and in both of the indices on December 31, 2016, with the reinvestment of dividends into shares of our Class A common stock or the indices, as applicable.

The following graph compares the total return of our common stock based on closing prices for the period from December 31, 2017 through December 31, 2022 with the total return of the NASDAQ Composite Index and our peer index of comparable television companies.

Our peer group index consists of the following publicly traded companies:

Gray Television, Inc., Tegna, Inc., Sinclair Broadcast Group, Inc.

(“Sinclair”), The E.W.

Scripps Company, Fox Corporation and Paramount Global.

The graph assumes the investment of $100 in our common stock and in both of the indices on December 31, 2017, with the reinvestment of dividends into shares of our common stock or the indices, as applicable.

The performance shown is not necessarily indicative of future performance.

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NASDAQ Composite Index

New Peer Group

Old Peer Group

Management’s Discussion and Analysis of Financial Condition and Results of Operations

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2022 Highlights

Net revenue during 2021 increased by $147.1 million, or 3.3%, compared to the same period in 2020.

The increase was primarily due to (i) an increase in revenue from core advertising of our legacy stations of $141.0 million, primarily due to recovery from the effects of the COVID-19 pandemic and growth in new business, (ii) incremental revenue from the stations and digital businesses we acquired in 2021 and 2020 of $243.3 million, (iii) an increase in distribution revenue of our legacy stations of $222.0 million, and (iv) a net increase in digital revenue of our legacy stations and other digital businesses of $34.6 million.

These increases were partially offset by a decrease in revenue from political advertising of our legacy stations of $462.3 million, as 2021 was not a nationwide election year, and a decrease in net revenue from station divestitures of $35.1 million.

During the year ended December 31, 2021, we received a total of $239.5 million in cash distributions from our 31.3% equity investment in TV Food Network.

During 2021, our Board of Directors declared and paid quarterly dividends of $0.70 per share of our outstanding common stock, or total dividend payments of $118.2 million.

During 2021, we repurchased a total of 3,575,568 shares of our Class A common stock for $536.7 million, funded by cash on hand.

During 2021, we deployed NEXTGEN TV (or ATSC 3.0), a new technology standard enabling us to provide high speed data transmission services and improve the speed, capacity and quality of our existing television transmissions, in 17 markets expanding our reach to approximately 29% of all U.S.

In 2021, in addition to its prime time national newscast (NewsNationPrime), NewsNation successfully launched additional programs, including Morning in America, Rush Hour, The Donlon Report, On Balance, Dan Abrams Live and Banfield.

NewsNation currently airs 13 hours of original news programming per day reaching over 75 million U.S.

television households.

On April 16, 2021, Nexstar Inc.

(formerly Nexstar Broadcasting, Inc.), a wholly-owned subsidiary of Nexstar, filed a Certificate of Amendment with the Secretary of State of Delaware to change its name to Nexstar Media Inc.

2021 Acquisition of The Hill

On August 20, 2021, pursuant to a merger agreement, we acquired 100% of the outstanding equity of NCI for a total cash consideration of approximately $137.7 million, including working capital adjustments, funded by cash on hand.

NCI is the owner of “The Hill,”

an independent, political digital media platform.

This acquisition marks a continuation of Nexstar’s content-first strategy, focused primarily on news, designed to further leverage and monetize its expansive digital reach.

2021 Transactions with VIEs

During 2021, Nexstar acquired certain television stations owned by Mission and White Knight.

Mission also acquired WNAC-TV, the Fox affiliate in the Providence, Rhode Island market, from Super Towers and the license assets of television station KGBT-TV serving the Harlingen-Weslaco-Brownsville-McAllen, Texas market from Sinclair, which Mission subsequently sold to Nexstar in 2021.

Effective June 30, 2021, as a result of a Supreme Court ruling, the FCC television JSA attribution rule was eliminated.

On July 1, 2021, Mission entered into JSAs with Nexstar for Mission-owned stations KMSS, KPEJ, KLJB, KASY, KWBQ and KRWB.

On July 1, 2021, Mission also granted Nexstar options to purchase stations KMSS, KPEJ and KLJB from Mission, subject to FCC consent.

Achieved record $5.2 billion of net revenue for 2022, surpassing the $5.0 billion milestone for the first time, including a record $505.6 million of non-presidential election year political advertising revenue.

Returned over $1.0 billion of capital to shareholders through repurchases of common stock of $880.7 million and dividends of $142.2 million, funded by cash on hand.

Successfully renewed distribution agreements with over half our subscriber base.

Successfully extended affiliation agreement with ABC to 2026.

Acquired a 75% ownership interest in The CW Network for no consideration which acquisition was strategically important to support our CW-affiliated stations and to drive the overall growth of our national platform.

Expanded news programming at NewsNation, America’s fastest growing cable news network, to 17 hours per weekday of national news, analysis, and talk.

Launched FAST channels for The Hill and CTV/OTT apps for NewsNation on a variety of platforms.

Deployed NEXTGEN TV (or ATSC 3.0) in an additional 20 markets to a total of 37 markets.

Completed the $3.05 billion refinancing of near-term maturities while reducing interest expense.

Net reduction in debt of $477.6 million, funded by cash on hand.

Eliminated Nexstar’s Class B and Class C common stock via an amendment to Nexstar’s certificate of incorporation approved by Nexstar shareholders on June 13, 2022.

2022 Acquisition of The CW

On September 30, 2022, Nexstar acquired a 75.0% ownership interest in The CW from the Sellers for no purchase consideration.

Each of the Sellers retained a 12.5% ownership interest and will produce 12 original, scripted series for The CW primarily to air during the 2022/2023 broadcast season.

The Sellers have granted Nexstar a call right and Nexstar has granted each of the Sellers a put right for such Seller’s ownership interest beginning in August 2024 and June 2026, respectively.

The acquisition solidifies Nexstar’s revenue opportunities as the largest owner of The CW-affiliated stations, diversifies its content outside of news, improves its national advertising opportunities, establishes it as a participant in advertising video-on-demand services via The CW App and creates value by improving The CW’s ratings, revenue, and profitability.

As a result of the acquisition, Nexstar recognized a gain on bargain purchase of $55.6 million representing the excess of the fair value of the net assets acquired over the $0 purchase consideration and the fair value of noncontrolling interests.

For additional information on this acquisition, see Note 3, “Acquisitions and Dispositions”

to our Consolidated Financial Statements included in Part IV, Item 15(a) of this Annual Report on Form 10-K.

2022 Debt Transactions

On June 3, 2021, Mission amended its senior secured credit facility.

The amendment provides for a $300.0 million Term Loan B borrowing, issued at 99.50%, maturing on June 3, 2028 (“Term Loan B, due June 3, 2028”).

The net proceeds from the Term Loan B, due June 2028 were used to pay down $268.0 million of Mission’s then outstanding loans under its revolving credit facility, pay fees to Nexstar under the shared services agreements between Nexstar and Mission and for Mission’s general corporate purposes.

Concurrently with the closing of the Term Loan B, due June 3, 2028, Mission reallocated $255.0 million of its unused revolving credit facility to Nexstar.

During 2021, we prepaid a total of $280.0 million in principal balance under our Term Loan B due 2024, funded by cash on hand.

During 2021, we repaid scheduled principal maturities of $21.4 million under our Term Loan A due 2024.

In August 2021, we and Mission borrowed $20.0 million and $2.5 million, respectively, under our and Mission’s respective revolving credit facilities.

In September 2021, we repaid in full our $20.0 million outstanding debt under our revolving credit facility, funded by cash on hand.

Update on COVID-19 Pandemic

The Company is leveraged, which makes it vulnerable to changes in general economic conditions.

The Company’s ability to repay or refinance its debt will depend on, among other things, financial, business, market, competitive and other conditions, many of which are beyond the Company’s control.

For instance, uncertainties surrounding the business outlook caused by the COVID-19 pandemic.

In March 2020, the World Health Organization declared COVID-19 a pandemic and the United States government declared a national emergency.

The ongoing effect of the COVID-19 pandemic had an adverse impact on the Company’s financial results mostly in the first part of the second quarter in 2020.

Since then, the Company’s business operations, financial results and cash flows have significantly improved.

In 2021, the mass distribution of COVID-19 vaccines, the U.S.

government’s stimulus programs, the reopening of states for business and consumer spending by an increasingly vaccinated public drove the continued U.S.

economic recovery.

In 2021, the Company continued to be profitable and continued to generate positive cash flows from its operations.

Its financial results in 2021 were also higher than the comparable prior year and its market capitalization continued to increase and exceed the carrying amount of its equity by a substantial amount.

These favorable financial results are reflective of the economic recovery as well as the incremental operating results from the Company’s acquisitions in 2020 and 2021.

Overall, the ongoing COVID-19 pandemic did not have a material impact on the Company’s liquidity.

As of December 31, 2021, the Company was in compliance with the financial covenants contained in the amended credit agreements governing its senior secured credit facilities.

The Company believes it has sufficient unrestricted cash on hand, positive working capital, and availability to access additional cash under its revolving credit facilities to meet its business operating requirements, its capital expenditures and to continue to service its debt for at least the next 12 months as of the filing date of this Annual Report on Form 10-K.

The extent to which the COVID-19 pandemic impacts the Company’s business, its results of operations and its financial condition will depend on future developments, which remain highly uncertain and cannot be reasonably predicted, including future surges and the severity of any resurgence of the virus, the length of time that the pandemic continues, current challenges to increase vaccination rates in the U.S.

and continued disruptions to supply chains.

On March 11, 2021, the American Rescue Plan Act of 2021 (“ARPA”) was signed into law.

The ARPA includes changes to the employer funding requirements for single-employer pension plans and is designed to reduce the amounts of required contributions as a relief.

The ARPA also includes multi-employer pension plan funding relief but had no significant impact on Nexstar.

The two key aspects of the ARPA funding relief for single-employer plans are extended amortization of funding shortfalls and extended funding interest rate stabilization.

The interest rate relief under ARPA eliminated the plans’

funding shortfalls for the 2020 and 2021 plan years and eliminated cash funding requirements for fiscal 2021.

Under this relief, Nexstar currently expects no required contribution to its qualified pension benefit plans in 2022.

On June 21, 2022, Nexstar amended its credit agreement (also herein referred to as senior secured credit facility) which provided for a $2.425 billion Nexstar Term Loan A, due June 2027, and a $550.0 million Nexstar revolving credit facility, due June 2027, of which no amount was drawn as of December 31, 2022.

During 2022, Nexstar repaid a total of $2.902 billion of its debt, including refinancing of certain term loans of $2.414 billion funded by the new Nexstar Term Loan A, $417.2 million repayments of term loans funded by cash on hand, and repurchased and cancelled $71.2 million (at a weighted average purchase price of 94.2%) of its senior unsecured notes.

On June 21, 2022, Mission, an independently owned VIE consolidated by Nexstar, also amended its credit agreement (also herein referred to as senior secured credit facility) which provided for a $75.0 million Mission revolving credit facility, of which $61.5 million was drawn and the proceeds used to repay the outstanding Mission revolving loan of $61.5 million.

Overview of Operations

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Through various local service agreements, we provided sales, programming and other services to 36 full power television stations owned by independent third parties, of which 35 full power television stations are VIEs that are consolidated into our financial statements.

See Note 2 to our Consolidated Financial Statements in Part IV, Item 15(a) of this Annual Report on Form 10-K for a discussion of the local service agreements we have with these independent third parties.

We also own NewsNation (formerly WGN America), a live daily national news and general entertainment cable network, two digital multicast networks and other multicast network services, various digital products, services and content, a 31.3% ownership stake in TV Food Network, and a portfolio of real estate assets.

On April 16, 2021, Nexstar Inc.

(formerly Nexstar Broadcasting, Inc.), a wholly-owned subsidiary of Nexstar, filed a Certificate of Amendment with the Secretary of State of Delaware to change its name to Nexstar Media Inc.

The operating revenue of our stations and cable and multicast networks is derived substantially from broadcast and digital advertising revenue, which is affected by a number of factors, including the economic conditions of the markets in which we operate, the demographic makeup of those markets and the marketing strategy we employ in each market.

Most advertising contracts are short-term and generally run for a few weeks.

In 2021, we generated 37.9% of our net revenue from core advertising (local and national advertising revenue).

Local advertising time is sold by each stations’

local sales staff via advertising agencies and directly to local businesses.

All national and political revenue is derived from advertisements placed through advertising agencies.

While the majority of local spot revenue is placed by local agencies, some advertisers place their schedules directly with the local sales force, thereby eliminating the agency commission.

Our stations and cable network have various agreements with national representative firms which provides sales representation for national or large regional accounts that advertise in several markets simultaneously.

National representative commission rates vary within the industry and are governed by each agreement.

Another source of revenue for the Company that has grown significantly in recent years is its distribution revenue which relates to retransmission of Company stations’

signals and the carriage of NewsNation by cable, satellite and other MVPDs and OVDs.

See Note 2 to our Consolidated Financial Statements included in Part IV, Item 15(a) of this Annual Report on Form 10-K for a discussion of the local service agreements we have with these independent third parties.

We also own NewsNation, a national cable news network, a recently acquired 75.0% ownership interest in The CW, the fifth major broadcast network in the U.S., two digital multicast networks, Antenna TV and Rewind TV, multicast network services provided to third parties, and a 31.3% ownership stake in TV Food Network.

Our digital assets include more than 140 local websites, 280 mobile applications, 22 connected television applications, and six free-ad supported television channels representing products of our local television stations, The CW, NewsNation, The Hill, and BestReviews and a suite of advertising solutions.

Together, our other digital properties attracted almost 100 million unique visitors in December 2022 according to Comscore.

The largest portion of operating revenue of our Company is derived from distribution revenue which relates to retransmission of Company stations’

signals and the carriage of our cable and broadcast networks by cable, satellite and other MVPDs and OVDs and, in the case of The CW, its local affiliates.

For the year ended December 31, 2022, the Company’s distribution revenue represented 49.3% of total net revenue.

MVPDs generally pay for retransmission rights on a rate per subscriber basis.

The growth of this revenue stream was primarily due to increases in the subscriber rates paid by MVPDs resulting from contract renewals (retransmission consent and carriage agreements generally have a three-year term), scheduled annual escalation of rates per subscriber, and the establishment of distribution agreements with OVDs.

Additionally, the rates per subscriber of acquired television stations are converted into our terms which are typically higher than those of other companies because we have been negotiating such agreements for a longer period of time and are, therefore, approximately one full negotiating cycle ahead of our competitors.

Nexstar anticipates that retransmission fees will continue to increase until there is a more balanced relationship between viewers delivered and fees paid for delivery of such viewers.

We also generate revenue from core television advertising and digital advertising revenue.

For the year ended December 31, 2022, the Company generated 33.0% of our net revenue from core advertising and 7.0% from digital advertising revenue.

Core television and digital advertising is affected by a number of factors, including the economic conditions of the markets in which we operate, the demographic makeup of those markets, the marketing strategy we employ in each market and the health of the overall national advertising market.

Most advertising contracts (other than national advertising contracts placed with our national networks at the beginning of the broadcast season) are short-term and generally run for a few weeks.

Local advertising time is sold by each station’s local sales staff via advertising agencies and directly to local businesses.

National core television advertising revenue is derived from advertisements placed through advertising agencies.

While the majority of local spot revenue is placed by local agencies, some advertisers place their schedules directly with the local sales force, thereby eliminating the agency commission.

Our stations, cable and broadcast networks have various agreements with national representative firms which provide sales representation for national or large regional accounts that advertise in several markets simultaneously.

National representative commission rates vary within the industry and are governed by each agreement.

In addition, we generate digital advertising revenue from the sale of advertising on third party sites and other local and national services.

In even years, we generate a substantial amount of revenue from political advertising.

For the year ended December 31, 2022, the Company generated 9.7% of our net revenue from political advertising.

Political advertising is affected by the number of competitive races there are and the location of the Company’s station in the relevant competitive markets, the amount of funds raised by candidates, PACs and others, the availability and pricing of television advertising inventory as well as the availability of alternative media.

Because of the scale of Nexstar, we typically have a presence in the substantial majority of markets with competitive political races.

All national revenue is derived from advertisements placed through advertising agencies pursuant to the agreements described above.

Most of our stations have a network affiliation agreement pursuant to which the network provides programming to the station during specified time periods, including prime time, in exchange for affiliation fees paid to the networks, in most cases, and the right to sell a substantial majority of the advertising time during these broadcasts.

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The latter practice is referred to as barter broadcast rights.

Our primary operating expenses include employee salaries, commissions and benefits, newsgathering and programming costs.

Our majority owned broadcast network, The CW, acquires licenses to broadcast programs from affiliates of Paramount Global and Warner Bros.

Discovery, among others.

Our primary operating expenses include programming costs, newsgathering, employee salaries, and commissions and benefits.

A large percentage of the costs involved in the operation of our stations and the stations we provide services to remains relatively fixed.

We guarantee full payment of all obligations incurred under Mission’s senior secured credit facility in the event of its default.

Mission is a guarantor of our senior secured credit facility, our 5.625% Notes due 2027 and our 4.75% Notes due 2028.

We (excluding The CW) guarantee full payment of all obligations incurred under Mission’s senior secured credit facility in the event of its default.

Mission is a guarantor of our senior secured credit facility, our 5.625% Notes, due July 2027 and our 4.75% Notes, due November 2028.

In consideration of our guarantee of Mission’s senior secured credit facility, Mission has granted us purchase options to acquire the assets and assume the liabilities of each Mission station, subject to FCC consent.

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However, we are deemed under U.S.

GAAP to have controlling financial interests for financial reporting purposes in these entities because of (1) the local service agreements we have with their stations, (2) our guarantee of the obligations incurred under Mission’s senior secured credit facility, (3) our power over significant activities affecting the VIEs’

economic performance, including budgeting for advertising revenue, advertising sales and, in some cases, hiring and firing of sales force personnel and (4) purchase options granted by each consolidated VIE which permit us to acquire the assets and assume the liabilities of each of these VIEs’

GAAP to have controlling financial interests for financial reporting purposes in these entities because of (i) the local service agreements we have with their stations, (ii) our (excluding The CW) guarantee of the obligations incurred under Mission’s senior secured credit facility, (iii) our power over significant activities affecting the VIEs’

economic performance, including budgeting for advertising revenue, advertising sales and, in some cases, hiring and firing of sales force personnel and (iv) purchase options granted by each consolidated VIE which permit us to acquire the assets and assume the liabilities of each of these VIEs’

stations, subject to FCC consent.

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On April 1, 2021, the U.S.

Supreme Court issued a decision that reversed a lower court of appeals ruling and upheld the FCC’s elimination of certain of its media ownership rules in the agency’s 2010/2014 quadrennial review of those rules.

Among the regulations eliminated in 2021 as a result of the Supreme Court ruling were a rule providing that a television station licensee which sells more than 15 percent of the weekly advertising inventory of another television station in the same DMA under a JSA is deemed to have an attributable ownership interest in that station, and a requirement that at least eight independently owned television stations remain in a local television market for a party to acquire a second station in that market.

While these restrictions are no longer in effect, the FCC’s 2018 quadrennial media ownership review is currently pending, and the agency could reinstitute these or other limitations in the 2018 review or any future reviews.

Supreme Court issued a decision that reversed a lower court of appeals ruling and upheld the FCC’s elimination or modification of certain of its media ownership rules in the agency’s 2010/2014 quadrennial review of those rules.

Among the regulations eliminated in 2021 as a result of the Supreme Court ruling was a rule providing that a television station licensee which sells more than 15 percent of the weekly advertising inventory of another television station in the same market under a JSA is deemed to have an attributable ownership interest in that station, as well as a requirement that at least eight independently owned television stations remain in a local television market for a party to acquire a second station in that market.

While these restrictions are no longer in effect, the FCC’s 2018 quadrennial media ownership review is currently pending and the 2022 quadrennial review has also commenced.

An FCC proceeding is also pending to review the current national limit on television station ownership.

The FCC could reinstitute its earlier restrictions or impose other limitations in these or any future reviews.

The FCC has repurposed a portion of the broadcast television spectrum for wireless broadband use.

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into the frequency band still remaining for television broadcast use.

The Company has received payment for eleven television stations that accepted bids and have either moved to different channels or (in one case) discontinued operation.

The Company has received payment for eleven television stations that accepted bids and either moved to different channels or (in one case) discontinued operations.

Seventy-four (74) full power stations owned by Nexstar and 17 full power stations owned by VIEs were assigned to new channels in the reduced post-auction television band.

These stations have commenced operation on their new assigned channels and have ceased operating on their former channels.

The Company is in the final stages of requesting and receiving reimbursements for the costs of repacking these stations, as the FCC is now closing out its process for such reimbursements.

The Company is in the final stages of obtaining reimbursements for the costs of repacking these stations.

Advertising revenue is positively affected by national and regional political election campaigns and certain events such as the Olympic Games or the Super Bowl.

Advertising revenue is generally highest in the second and fourth quarters of each year, due in part to increases in consumer advertising in the spring and retail advertising in the period leading up to, and including, the holiday season.

In addition, advertising revenue is generally higher during even-numbered years, when state, congressional and presidential elections occur and from advertising aired during the Olympic Games.

2021 was not a nationwide election year, and the 2020 Summer Olympics were rescheduled and held in July 2021.

In addition, advertising revenue is generally higher during even-numbered years, when congressional and/or presidential elections occur and from advertising aired during the Olympic Games.

Historical Performance

The following table sets forth the amounts of the Company’s principal types of revenue (dollars in thousands) and each type of revenue as a percentage of total net revenue for the years ended December 31:

Core advertising (local and national)

The following table sets forth the amounts of the Company’s principal types of revenue (dollars in millions) and each type of revenue as a percentage of total net revenue for the years ended December 31:

Core advertising

Political advertising

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Results of Operations

The following table sets forth a summary of the Company’s operations for the years ended December 31 (dollars in thousands), and each component of operating expense as a percentage of net revenue:

The following table sets forth a summary of the Company’s operations for the years ended December 31 (dollars in millions), and each component of operating expense as a percentage of net revenue:

Operating expenses (income):

Corporate expenses

Direct operating expenses, net of trade

Direct operating expenses

Selling, general and administrative expenses, excluding corporate

Depreciation of property and equipment

Amortization of intangible assets

Amortization of broadcast rights

Trade and barter expense

Corporate expenses

Depreciation and amortization expense

Goodwill and other long-lived asset impairments

Reimbursement from the FCC related to station repack

Change in the fair value of contingent consideration attributable to a past merger

Gain on relinquishment of spectrum

Goodwill and intangible assets impairment

Assets held for sale impairment

Gain on disposal of stations and business units, net

Total operating expenses

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The period-to-period comparability of our consolidated operating results is affected by acquisitions.

For each quarter we present, our legacy stations include those stations that we owned or provided services to for the complete quarter in the current and prior years.

For our annual and year to date presentations, we combine the legacy stations’

amounts presented in each quarter.

Core advertising revenue was $1.762 billion for the year ended December 31, 2021 compared to $1.571 billion for the same period in 2020, an increase of $190.7 million, or 12.1%.

For each quarter we present, our legacy business units include those business units that we owned or consolidated into our financial statements for the complete quarter in the current and prior years.

For our annual and year to date presentations, we combine the legacy business unit amounts presented in each quarter.

Core advertising revenue was $1,718.3 million for the year ended December 31, 2022 compared to $1,761.7 million for the same period in 2021, a decrease of $43.4 million, or 2.5%, primarily due to a weaker national advertising market, the absence of third quarter advertising revenue from the Olympics on our NBC affiliate stations and changes in the mix between our core and political advertising revenues of $70.1 million, partially offset by incremental revenue from our acquisition of The CW of $26.6 million.

Key categories driving the decrease were direct response, insurance, gaming/sports betting, government services and radio/tv/cable/newspaper partially offset by increases in entertainment, home repair/manufacturing, drug stores/medication, travel, and attorneys.

Automotive, our largest advertiser category, represented approximately 15.4% in 2022 and 15.5% in 2021 of our core advertising revenue for each of the years ended December 31, 2022 and 2021.

Overall, automotive advertising revenues decreased by approximately 0.8% in 2022 compared to 2021, primarily due to the shortage in supply of chips and semiconductors which impacted the availability of automobiles for sale and the need by automotive dealers to advertise.

Political advertising revenue was $505.6 million for the year ended December 31, 2022 compared to $45.2 million for the same period in 2021, an increase of $460.4 million, as 2022 was a mid-term election year.

Distribution revenue was $2,571.3 million for the year ended December 31, 2022 compared to $2,472.9 million for the same period in 2021, an increase of $98.4 million, or 4.0%.

The increase was primarily due to scheduled annual escalation of rates per subscriber, renewals of contracts in 2021 providing for higher rates per subscriber and incremental revenue from our acquisition of The CW of $17.2 million, partially offset by continued MVPD subscriber attrition, a few periods during the negotiation of new contracts with our MVPD partners where our partners’

stations were not available and a settlement of a dispute in connection with a new contract with one of our distributors.

We anticipate continued increase of retransmission fees until there is a more balanced relationship between viewers delivered and fees paid for delivery of such viewers.

Digital revenue, representing advertising revenue on our stations’

web and mobile sites and other internet-based revenue, was $364.6 million for the year ended December 31, 2022 compared to $322.6 million for the same period in 2021, an increase of $42.0 million, or 13.0%, primarily due to growth in our television stations digital advertising and services revenue, incremental revenue from our acquisitions of The CW in September 2022 of $17.0 million and a digital business we acquired in the third quarter of 2021 of $22.1 million, offset by weakness in the national digital advertising market and ecommerce.

Operating Expenses

Direct operating expenses, consisting primarily of news, engineering and programming, and selling, general and administrative expenses were $2,908.3 million for the year ended December 31, 2022 compared to $2,710.8 million for the same period in 2021, an increase of $197.5 million, or 7.3%.

This was primarily due to an increase in cost related to incremental operating expenses from our acquisitions of The CW in September 2022 of $70.2 million and a digital business we acquired in the third quarter of 2021 of $16.1 million, an increase in variable costs associated with the increase in net revenue, an increase in station programming costs due to network affiliation renewals and annual increases in network affiliation costs, increased promotion costs, partially offset by a reversal of an accrual in connection with a settlement of a dispute in connection with a new contract with one of our distributors and some administrative savings, primarily related to healthcare.

Corporate expenses, related to costs associated with the centralized management of our stations, were $198.4 million for the year ended December 31, 2022 compared to $175.8 million for the same period in 2021, an increase of $22.6 million, or 12.9% primarily due to an increase in stock-based compensation of $14.9 million.

Depreciation and amortization expense were $662.1 million for the year ended December 31, 2022 compared to $588.6 million for the same period in 2021, an increase of $73.5 million, or 12.5%.

Depreciation and amortization expense consists of the following:

Amortization of broadcast rights was $192.9 million for the year ended December 31, 2022 compared to $121.1 million for the same period in 2021, an increase of $71.8 million, or 59.3%.

The increase was primarily due to incremental amortization from our acquisition of The CW of $89.8 million, partially offset by a reduction in NewsNation ’s costs of $9.4 million as it continues to shift its focus from syndicated programming to national news programs .

Amortization of intangible assets was $309.3 million for the year ended December 31, 2022 compared to $300.9 million for the same period in 2021, an increase of $8.4 million, or 2.8% (no significant change).

Depreciation of property and equipment was $159.9 million for the year ended December 31, 2022 compared to $166.6 million for the same period in 2021, a decrease of $6.7 million, or 4.0% (no significant change).

In the fourth quarter of 2022, we recorded a $96.1 million goodwill and intangible assets impairment on our product review and recommendation platform reporting unit.

The Company’s assessment indicated that the reporting unit’s carrying amount exceeded its fair value, and therefore an impairment loss was identified.

In 2022 and 2021, certain real estate properties located in Chicago were classified as held for sale.

Due to designations as held for sale assets, the properties’

carrying amounts were written down to their estimated fair value, less estimated cost to sell resulting to the Company’s recognition of impairment charges of $36.8 million and $23.0 million in the fourth quarter of 2022 and 2021, respectively.

Gain on bargain purchase

Gain on bargain purchase of $55.6 million for the year ended December 31, 2022 pertains to our acquisition of The CW representing the excess of the fair value of the net assets acquired over the $0 purchase consideration and the fair value of noncontrolling interests.

For additional information on this acquisition, see Note 3, “Acquisitions and Dispositions”

to our Consolidated Financial Statements included in Part IV, Item 15(a) of this Annual Report on Form 10-K.

Income from equity method investments, net

Income from equity method investments, net was $153.4 million for the year ended December 31, 2022, compared to $124.6 million for the same period in 2021, an increase of $28.8 million, primarily due to a decrease in the amortization of basis difference associated with our investment in TV Food Network of $55.7 million, partially offset by a lower equity in TV Food Network’s net income of $26.7 million.

For additional information on basis difference in our investment in TV Food Network, refer to Note 6 to our Consolidated Financial Statements.

Interest Expense, net

Interest expense, net was $336.6 million for the year ended December 31, 2022 compared to $282.7 million for the same period in 2021, an increase of $53.9 million, or 19.1%, primarily due to increases in interest rates in the Company’s outstanding loans under its senior secured credit facilities, partially offset by decreases in interest expense from debt repayments and lower interest rates obtained in connection with the refinancing of certain of our term loans in June 2022.

Interest rates on outstanding loans under the Company’s senior secured credit facilities ranged from 5.86% to 6.89% as of December 31, 2022, compared to interest rates ranging from 1.60% to 2.60% as of December 31, 2021.

These interest rates were a mixture of SOFR plus CSA, or credit spread adjustment used to account for the difference between SOFR and LIBOR, plus applicable margin and U.S.

LIBOR plus applicable margin in 2022 compared to U.S.

LIBOR plus applicable margin only in 2021.

Loss on Extinguishment of Debt

Loss on extinguishment of debt was $2.9 million for the year ended December 31, 2022 compared to $3.2 million for the same period in 2021, a decrease of $0.3 million (no significant change).

Pension and other postretirement plans credit, net

Pension and other postretirement plans credit, net was $43.1 million for the year ended December 31, 2022 compared to $80.9 million for the same period in 2021, a decrease of $37.8 million, primarily due to lower estimated expected return on plan assets of $18.6 million, higher estimated interest cost of $6.7 million and a $12.5 million settlement gain from the purchase of an annuity contract related to certain participants of a qualified pension plan during the fourth quarter of 2021.

Income tax expense was $273.6 million for the year ended December 31, 2022 compared to an income tax expense of $262.9 million for the same period in 2021, an increase of $10.7 million.

The effective tax rates during the years ended December 31, 2022 and 2021 were 22.5% and 24.1%, respectively.

The decrease in the effective tax rate is primarily related to changes in the valuation allowance resulted in an incremental income tax benefit of $23.8 million, or 2.1% decrease to the effective tax rate in 2022.

The gain on bargain purchase arising from the acquisition of The CW resulted in a 1.1% decrease to the effective tax rate.

Year Ended December 31, 2021 Compared to Year Ended December 31, 2020

The period-to-period comparability of our consolidated operating results is affected by acquisitions.

For our annual and year to date presentations, we combine the legacy business unit amounts presented in each quarter.

Core advertising revenue was $1,761.7 million for the year ended December 31, 2021 compared to $1,571.1 million for the same period in 2020, an increase of $190.6 million, or 12.1%.

The increase was primarily due to an increase in our legacy stations’

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Political advertising revenue was $45.2 million for the year ended December 31, 2021 compared to $507.6 million for the same period in 2020, a decrease of $462.4 million, as 2021 was not a nationwide election year.

Distribution revenue was $2.473 billion for the year ended December 31, 2021 compared to $2.153 billion for the same period in 2020, an increase of $320.3 million, or 14.9%.

Distribution revenue was $2,472.9 million for the year ended December 31, 2021 compared to $2,152.6 million for the same period in 2020, an increase of $320.3 million, or 14.9%.

Our legacy stations’

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Operating Expenses

Corporate expenses, related to costs associated with the centralized management of our stations, were $175.8 million for the year ended December 31, 2021 compared to $183.0 million for the same period in 2020, a decrease of $7.1 million, or 3.9%.

Station direct operating expenses, consisting primarily of news, engineering, programming and station selling, general and administrative expenses (net of trade expense) were $2.698 billion for the year ended December 31, 2021 compared to $2.437 billion for the same period in 2020, an increase of $260.7 million, or 10.7%.

Direct operating expenses, consisting primarily of news, engineering, programming and selling, general and administrative expenses were $2,710.8 million for the year ended December 31, 2021 compared to $2,449.6 million for the same period in 2020, an increase of $261.2 million, or 10.7%.

This increase was primarily due to expenses associated with our television stations and digital businesses we acquired in 2021 and 2020 of $177.8 million, partially offset by station divestitures of $22.6 million.

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other operating expenses increased by $50.1 million, primarily due to recovery from the COVID-19 pandemic, an increase in sales and promotional costs to drive revenue and an increase in NewsNation’s news related operating costs as it continues to shift its focus from syndicated programming to national newscast programs.

Depreciation of property and equipment was $166.6 million for the year ended December 31, 2021 compared to $147.7 million for the same period in 2020, an increase of $18.9 million, or 12.8%.

The increase was primarily due to newly capitalized assets and incremental depreciation from business acquisitions.

Depreciation and amortization expense were $588.6 million for the year ended December 31, 2021 compared to $564.9 million for the same period in 2020, an increase of $23.7 million, or 4.2%.

Depreciation and amortization expense consists of the following:

Amortization of broadcast rights was $121.1 million for the year ended December 31, 2021 compared to $137.5 million for the same period in 2020, a decrease of $16.4 million, or 11.9%.

The decrease was primarily due to the reduction of NewsNation’s costs by $17.5 million as it continues to shift its focus from syndicated programming to national news programs.

Amortization of intangible assets was $300.9 million for the year ended December 31, 2021 compared to $279.7 million for the same period in 2020, an increase of $21.2 million, or 7.6%.

This increase was primarily due to incremental amortization from business acquisitions.

Amortization of broadcast rights was $121.1 million for the year ended December 31, 2021 compared to $137.5 million for the same period in 2020, a decrease of $16.4 million, or 11.9%.

The decrease was primarily due to the reduction of NewsNation ’s film rights costs by $17.5 million as it continues to shift its focus from syndicated programming to national news programs .

Depreciation of property and equipment was $166.6 million for the year ended December 31, 2021 compared to $147.7 million for the same period in 2020, an increase of $18.9 million, or 12.8%.

The increase was primarily due to newly capitalized assets and incremental depreciation from business acquisitions.

Certain of the Company’s stations were repacked in connection with the FCC’s process of repurposing a portion of the broadcast television spectrum for wireless broadband use.

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Income from equity method investments, net

Income from equity method investments, net was $124.6 million for the year ended December 31, 2021, compared to $70.2 million for the same period in 2020, an increase of $54.4 million, primarily attributable to higher equity in income from our investment in TV Food Network, net of the amortization of basis difference of $55.1 million.

Income from equity method investments, net was $124.6 million for the year ended December 31, 2021, compared to $70.2 million for the same period in 2020, an increase of $54.4 million, primarily attributable to higher equity in TV Food Network’s net income, net of the amortization of basis difference of $55.1 million.

Interest Expense, net

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Loss on extinguishment of debt was $3.2 million for the year ended December 31, 2021 compared to $50.7 million for the same period in 2020, a decrease of $47.5 million.

In 2021, we made $280.0 million prepayments on our term loan B resulting in recognition of loss of $3.2 million.

In 2021, we made $280.0 million in prepayments on our term loan B resulting in recognition of loss of $3.2 million.

In 2020, we redeemed our $900.0 million 5.625% Notes due 2024 and prepaid $1.0 billion of our outstanding term loans.

These transactions resulted in a premium paid on bond redemption of $25.3 million and write-off of unamortized debt discount/premiums and debt financing costs of $25.7 million associated with these extinguished debt obligations.

These transactions resulted in a premium paid on bond redemption of $25.3 million and a write-off of unamortized debt discount/premiums and debt financing costs of $25.7 million associated with these extinguished debt obligations.

Pension and other postretirement plans credit, net

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These decreases to the effective tax rate were offset by an increase in the valuation allowance of $18.9 million resulting in a 1.3% increase to the effective rate.

Year Ended December 31, 2020 Compared to Year Ended December 31, 2019

The period-to-period comparability of our consolidated operating results is affected by acquisitions.

For each quarter we present, our legacy stations include those stations that we owned or provided services to for the complete quarter in the current and prior years.

For our annual and year to date presentations, we combine the legacy stations’

amounts presented in each quarter.

Core advertising revenue was $1.571 billion for the year ended December 31, 2020 compared to $1.335 billion for the same period in 2019, an increase of $236.0 million, or 17.5%.

The increase was primarily due to our incremental revenue generated from the Tribune acquisition in September 2019 of $419.1 million and station acquisitions in 2020 of $24.7 million, partially offset by a decrease in revenue from station divestitures of $66.5 million.

Our legacy stations’

core advertising revenue decreased by $141.3 million, primarily due to the business disruptions caused by COVID-19 and changes in the mix between our core and political advertising.

Our largest advertiser category, automotive, represented approximately 18% and 22% of our local and national advertising revenue for each of the years ended December 31, 2020 and 2019, respectively.

Overall, including past results of our newly acquired stations, revenues from our automotive category decreased by approximately 30% in 2020 compared to 2019.

The other categories representing our top five were attorneys, medical/healthcare, radio/TV/cable/newspaper and home repair/manufacturing, which decreased in 2020, and insurance, which increased in 2020.

Political advertising revenue was $507.6 million for the year ended December 31, 2020 compared to $51.9 million for the same period in 2019, an increase of $455.7 million as 2020 was a federal election year.

Of this increase, $147.4 million was attributable to the incremental revenue from the Tribune stations we acquired in 2019, $17.3 million was attributable to current year station acquisitions and $293.6 million was attributable to our legacy stations.

Distribution revenue was $2.153 billion for the year ended December 31, 2020 compared to $1.369 billion for the same period in 2019, an increase of $783.7 million, or 57.3%.

The increase was primarily due to incremental revenue in 2020 generated from the Tribune acquisition in September 2019 of $571.3 million and station acquisitions of $47.0 million, partially offset by a decrease in revenue from station divestitures of $81.6 million.

Our legacy stations’

revenue also increased by $247.1 million due to the combined effect of scheduled annual escalation of rates per subscriber, renewals of contracts providing for higher rates per subscriber (contracts generally have a three-year term), contributions from distribution agreements with OVDs and a net increase in revenue in 2020 resulting from the 2019 (July and August) temporary disruption of a distribution agreement with a certain customer, partially offset by temporary disruption of a certain customer in the month of December 2020.

We anticipate continued increase in distribution revenue until there is a more balanced relationship between viewers delivered and fees paid for delivery of such viewers.

Digital revenue, representing advertising revenue on our stations’

web and mobile sites and revenue from our other digital operations, was $223.4 million for the year ended December 31, 2020 compared to $241.5 million for the same period in 2019, a decrease of $18.1 million, or 7.5%.

Our digital revenue from our legacy stations and other digital businesses decreased by $29.5 million primarily due to the business disruption caused by COVID-19 and realigned digital business operations.

These decreases were partially offset by incremental revenue from the Tribune acquisition in September 2019 of $10.8 million, net of a decrease in revenue from station divestitures.

Operating Expenses

Corporate expenses, related to costs associated with the centralized management of our stations, were $183.0 million for the year ended December 31, 2020 compared to $189.5 million for the same period in 2019, a decrease of $6.6 million, or 3.5%.

Station direct operating expenses, consisting primarily of news, engineering, programming and selling, general and administrative expenses (net of trade expense) were $2.437 billion for the year ended December 31, 2020 compared to $1.872 billion for the same period in 2019, an increase of $565.0 million, or 30.2%.

This was primarily due to expenses associated with the Tribune stations and other businesses we acquired in 2019 of $511.1 million (including network and programming costs of $343.4 million), and expenses associated with our station acquisitions of $47.3 million.

In addition, our legacy stations’

programming costs increased by $118.2 million, primarily due to network affiliation renewals and annual increases in our network affiliation costs.

In 2020, we also recorded $19.9 million in provision for uncollectible amounts associated with transactions among entities for which we have or had variable interests.

These increases were partially offset by a decrease in expense from our station divestitures of $84.3 million and a $60.3 million decrease in the operating expenses of our digital products due to lower revenue.

Depreciation of property and equipment was $147.7 million for the year ended December 31, 2020 compared to $123.4 million for the same period in 2019, an increase of $24.3 million, or 19.7%.

The increase was primarily due to incremental depreciation from the Tribune stations we acquired in September 2019 of $29.4 million.

Amortization of intangible assets was $279.7 million for the year ended December 31, 2020 compared to $200.3 million for the same period in 2019, an increase of $79.4 million, or 39.6%.

This was primarily due to increased amortization from the Tribune stations we acquired in September 2019 of $95.3 million, net of decreases in amortization from certain fully amortized assets and divested stations.

Amortization of broadcast rights was $137.5 million for the year ended December 31, 2020 compared to $85.0 million for the same period in 2019, an increase of $52.5 million, or 61.7%.

The increase was primarily due to incremental amortization from the Tribune stations we acquired in 2019 of $54.0 million, net of decreases from station divestitures.

This increase was partially offset by a reduction in amortization costs on our legacy stations due to renegotiation of certain film contracts which resulted in reduced distribution rates.

Certain of the Company’s stations, including certain Tribune stations, were repacked in connection with the FCC’s process of repurposing a portion of the broadcast television spectrum for wireless broadband use.

These stations have vacated their former channels and spent costs, mainly capital expenditures, to construct and license the necessary technical modifications to permanently operate on their newly assigned channels.

Subject to fund limitations, the FCC reimburses television broadcasters, MVPDs and other parties for costs reasonably incurred due to the repack.

In 2020 and 2019, we received a total of $57.3 million and $70.4 million, respectively, in reimbursements from the FCC which we recognized as operating income.

In April 2020, we completed a station’s conversion to a VHF channel representing our final relinquishment of spectrum pursuant to the FCC’s incentive auction conducted in 2016-2017.

Accordingly, the associated spectrum asset with a carrying amount of $67.2 million and liability to surrender spectrum of $78.0 million were derecognized, resulting in a non-cash gain on relinquishment of spectrum of $10.8 million.

This gain was partially offset by a $3.9 million increase (expense) in the estimated fair value of contingent consideration liability related to a merger and spectrum auction.

In 2019, we recorded a $63.3 million goodwill and intangible assets impairment on our digital reporting unit due to deterioration in customer relationships, mainly driven by marketplace changes on select demand-side platform customers, that led to a long-term projected decrease in operating results.

In 2020, we sold two Fox affiliate television stations and our sports betting information website business for total proceeds of $362.8 million in cash.

These disposals resulted in a total gain on sale of $7.1 million.

In 2019, in connection with the Tribune merger, we sold the assets of 21 full power television stations in 16 markets, eight of which were previously owned by us and 13 of which were previously owned or operated by Tribune.

We sold the Tribune stations for $1.008 billion in cash, including working capital adjustments, and we sold our stations for $358.6 million in cash, including working capital adjustments.

These divestitures resulted in a net gain on disposal of $96.1 million.

Income from equity method investments, net

Income from equity method investments, net was $70.2 million for the year ended December 31, 2020 compared to $17.9 million for the same period in 2019, an increase of $52.1 million.

This was primarily attributable to an increase in income on equity investment from our 31.3% investment in TV Food Network, less amortization of basis difference.

For the year ended December 31, 2020, we recognized our full year’s share in equity income of TV Food Network compared to last year’s share from September 19, 2019, the date we acquired our 31.3% ownership stake in this investment, to December 31, 2019.

Interest Expense, net

Interest expense, net was $335.3 million for the year ended December 31, 2020 compared to $304.4 million for the same period in 2019, an increase of $30.9 million, or 10.2%, primarily due to the issuance of debt in September 2019 (term loans and $1.785 billion Notes due 2027) associated with the financing of our merger with Tribune.

These increases were partially offset by decreases in interest expense primarily due to prepayments and scheduled repayments of term loans, a reduction in LIBOR funding costs on our senior secured loans and the refinancing of certain bonds in September 2020 for a lower interest rate (issuance of $1.0 billion 4.75% Notes due 2028 and redemption of $900 million 5.625% Notes due 2024).

Loss on Extinguishment of Debt

Loss on extinguishment of debt was $50.7 million for the year ended December 31, 2020 compared to $10.3 million for the same period in 2019, an increase of $40.4 million.

In 2020, we made various prepayments of our outstanding term loans, redeemed our $900.0 million 5.625% Notes due 2024 and amended our and Mission’s credit agreements, resulting in a loss on extinguishment of debt of $50.7 million.

In November 2019, we redeemed our $400.0 million 5.875% Notes due 2022 and our $275.0 million 6.125% Notes due 2022.

We also made prepayments of our outstanding term loans during 2019.

These 2019 transactions resulted in a total loss on extinguishment of debt of $10.3 million.

Pension and other postretirement plans credit, net

Pension and other postretirement plans credit, net was $46.0 million for the year ended December 31, 2020 compared to $15.6 million for the same period in 2019, an increase of $30.4 million, primarily attributable to an increase in expected return on pension plan assets partially offset by an increase in interest costs on projected benefit obligations.

Income tax expense was $296.5 million for the year ended December 31, 2020 compared to an income tax expense of $137.0 million for the same period in 2019, an increase in income tax expense of $159.5 million.

The effective tax rates during the years ended December 31, 2020 and 2019 were 26.9% and 36.8%, respectively.

The decrease to the effective tax rate was driven primarily by a consolidated VIE’s establishment of a valuation allowance on its deferred tax assets in 2019 and a decrease in non-deductible goodwill associated with divestitures and impairment loss incurred in 2019.

In 2020, certain of our consolidated VIEs recorded a valuation allowance on deferred tax assets of $5.3 million, compared to the $19.9 million valuation allowance on deferred tax assets recorded in 2019, including a newly established valuation allowance of $18.1 million by a consolidated VIE.

This resulted in a decrease to the effective tax rate of 4.9%.

In 2020, the effective tax rate also decreased by 5.15% as a result of a decrease in the amount of non-deductible goodwill associated with divestitures and an impairment loss incurred in 2019.

Liquidity and Capital Resources

The Company is leveraged, which makes it vulnerable to changes in general economic conditions.

The Company’s ability to meet future cash requirements depends on its ability to generate cash from its future operations, which is subject to general economic, financial, competitive, legislative, regulatory and other conditions, many of which are beyond the Company’s control.

For instance, uncertainties surrounding the business outlook caused by the COVID-19 pandemic.

In March 2020, the World Health Organization declared COVID-19 a pandemic and the United States government declared a national emergency.

The ongoing effect of the COVID-19 pandemic had an adverse impact on the Company’s financial results mostly in the first part of the second quarter in 2020.

Since then, the Company’s business operations, financial results and cash flows have significantly improved.

In 2021, the mass distribution of COVID-19 vaccines, the U.S.

government’s stimulus programs, the reopening of states for business and consumer spending by an increasingly vaccinated public drove the continued U.S.

economic recovery.

In 2021, the Company continued to be profitable and continued to generate positive cash flows from its operations.

Its financial results in 2021 were also higher than the comparable prior year and its market capitalization continued to increase and exceed the carrying amount of its equity by a substantial amount.

These favorable financial results are reflective of the economic recovery as well as the incremental operating results from the Company’s acquisitions in 2020 and 2021.

Overall, the ongoing COVID-19 pandemic did not have a material impact on the Company’s liquidity.

The Company believes it has sufficient unrestricted cash on hand, positive working capital, and availability to access additional cash under its revolving credit facilities (with a maturity date of June 2027) to meet its business operating requirements, its capital expenditures and to continue to service its debt for at least the next 12 months as of the filing date of this Annual Report on Form 10-K.

As of December 31, 2022, the Company was in compliance with the financial covenants contained in the amended credit agreements governing its senior secured credit facilities.

The Company believes it has sufficient unrestricted cash on hand, positive working capital and availability to access additional cash under its revolving credit facilities to meet its business operating requirements, its capital expenditures and to continue to service its debt for at least the next 12 months as of the filing date of this Annual Report on Form 10-K.

and continued disruptions to supply chains.

Any future adverse economic conditions, including those resulting from the COVID-19 pandemic, heightened and sustained inflation and higher interest rates, could adversely affect the Company’s future operating results, cash flows and financial condition.

Cash Flow Summary

The following tables present the Company’s total operating, investing and financing activity cash flows for the three years ended December 31 (in thousands):

The following tables present the Company’s total operating, investing and financing activity cash flows for the three years ended December 31 (in millions):

Net cash provided by operating activities

Net cash used in investing activities (1)

Net cash provided by (used in) financing activities

Net cash provided by (used in) investing activities (1)

Net cash used in financing activities

Net increase (decrease) in cash, cash equivalents and restricted cash

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(1) In 2022, 2021 and 2020, the investing activities included total capital expenditures of $157.3 million, $150.7 million and $217.0 million, respectively, of which $0.8 million, $10.0 million and $54.7 million, respectively, were reimbursed from the FCC in connection with the station repack.

In 2020 and 2019, $4.9 million and $7.2 million of such capital expenditures were also funded by the incentive auction proceeds received from the FCC in 2017.

(2) Income taxes paid, net of refunds, includes (i) $82.7 million in tax payments during 2020 related to various sales of stations and cash consideration received to settle a litigation and (ii) $199.5 million in tax payments during 2019 related to various sales of stations.

In 2020, $4.9 million of such capital expenditures were also funded by the incentive auction proceeds received from the FCC in 2017.

(2) In 2022, income taxes paid, net of refunds, includes $48.0 million in tax payments related to various sales of real estate properties.

In 2020, income taxes paid, net of refunds, includes $82.7 million in tax payments related to various sales of stations and cash consideration received to settle a litigation.

As of December 31,

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Operating Activities

Net cash provided by operating activities decreased by $39.3 million during the year ended December 31, 2021 compared to the same period in 2020.

This was primarily due to decrease in operating income (excluding non-cash transactions) of $136.3 million and uses of cash resulting from timing of accounts receivable collections of $102.5 million.

These decreases were partially offset by lower interest payments of $51.1 million, timing of payments to our vendors of $46.8 million, collection of copyright royalty receivables of $35.0 million, lower payments for broadcast rights of $26.2 million, lower tax payments of $31.9 million and an increase in distribution from our equity investment in TV Food Network of $15.8 million.

Cash paid for interest decreased by $51.1 million during the year ended December 31, 2021 compared to the same period in 2020, primarily due to a reduction in outstanding principal debt balance due to prepayments and scheduled repayments of term loans and reductions in LIBOR and portion of certain interest rates that is based on the Company’s consolidated first lien net leverage ratio.

Net cash provided by operating activities increased by $188.2 million during the year ended December 31, 2022 compared to the same period in 2021.

This was primarily attributable to an increase in operating income (excluding non-cash transactions) of $928.7 million, an increase in distributions from our equity investments, primarily in TV Food Network, of $208.4 million, and the collection of copyright royalty receivables of $13.9 million.

These increases were partially offset by higher interest payments of $73.7 million, higher income tax payments of $36.7 million, an increase in payments for broadcast rights of $93.0 million, use of cash from timing of accounts receivable collections of $18.2 million, and use of cash from timing of payments made to our vendors of $99.8 million.

Cash paid for interest increased by $73.7 million during the year ended December 31, 2020 compared to the same period in 2019, primarily due to the issuance of debt in September 2019 (term loans and $1.785 billion Notes due 2027) associated with the financing of our merger with Tribune.

This was primarily due to an increase in operating income (excluding non-cash transactions) of $356.9 million, sources of cash resulting from timing of accounts receivable collections of $108.2 million, and an increase in distributions from our equity investment in TV Food Network of $10.1 million.

These increases were partially offset by an increase in payments for broadcast rights of $76.9 million, use of cash from timing of payments to our vendors of $107.0 million, higher interest payments of $56.9 million, and higher tax payments of $50.0 million and other items.

The increase in payments for broadcast rights was due to incremental payments from our acquisition of The CW of $118.5 million, partially offset by a decrease in payments for our syndicated programming of $41.6 million.

Cash paid for interest increased primarily due to increases in the effective interest rates in the Company’s outstanding floating rate loans under its senior secured credit facilities due to the increase in SOFR and LIBOR, partially offset by decreases in interest expense from debt repayments and lower interest rates obtained in connection with the refinancing of certain of our term loans in June 2022.

The increase in tax payments was primarily due to the sale of certain real estate properties in 2022 resulting in tax payments of $48.0 million.

Net cash provided by operating activities decreased by $39.3 million during the year ended December 31, 2021 compared to the same period in 2020.

This was primarily due to a decrease in operating income (excluding non-cash transactions) of $136.3 million and uses of cash resulting from timing of accounts receivable collections of $102.5 million.

These decreases were partially offset by lower interest payments of $51.1 million, timing of payments to our vendors of $46.8 million, collection of copyright royalty receivables of $35.0 million, lower payments for broadcast rights of $26.2 million, lower tax payments of $31.9 million and an increase in distributions from our equity investment in TV Food Network of $15.8 million.

Cash paid for interest decreased by $51.1 million during the year ended December 31, 2021 compared to the same period in 2020, primarily due to a reduction in outstanding principal debt balance due to prepayments and scheduled repayments of term loans and reductions in LIBOR and a portion of certain interest rates that is based on the Company’s consolidated first lien net leverage ratio.

Cash Flows –

Investing Activities

Net cash used in investing activities during the years ended December 31, 2021, 2020 and 2019 were $234.0 million, $39.8 million and $4.702 billion, respectively.

Net cash provided by investing activities during the year ended December 31, 2022 was $125.2 million.

Net cash used in investing activities during the years ended December 31, 2021 and 2020 was $232.1 million and $39.8 million, respectively.

In 2022, the Company received proceeds from the sale of certain real estate properties of $241.8 million, received a deposit associated with a proposed sale of real estate property of $10.0 million and recorded cash acquired from The CW acquisition of $28.9 million, partially offset by capital expenditures of $157.3 million.

In 2021, we spent a total of $150.7 million in capital expenditures and $138.4 million to acquire television stations, a digital business and certain license assets.

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Our capital expenditures for the year ended December 31, 2020 were $217.0 million, including $54.7 million related to station repack.

We also made an equity investment in a live 24/7 streaming network business of $7.0 million.

These uses of cash were partially offset by the proceeds from the disposal of two television stations and our sports betting information website business for $349.9 million and $12.9 million in cash, respectively, and reimbursements received from the FCC related to station repack of $57.3 million.

We also received $98.0 million of cash proceeds from settlement of litigation between Sinclair and Tribune and Mission collected a loan receivable of $49.0 million from Marshall Broadcasting Group, Inc.

(“Marshall”).

In September 2019, we completed our acquisition of Tribune for a total cash purchase price of $7.187 billion, less $1.306 billion of cash and restricted cash acquired.

This was partially offset by the proceeds from the sale of 21 full power television stations in 16 markets for a total cash consideration of $1.353 billion which occurred concurrently with the Tribune acquisition.

On November 29, 2019, Mission, a consolidated VIE, paid the outstanding principal balances of Marshall’s loans to third party bank lenders totaling $48.9 million.

After making the payment, Mission became Marshall’s new lender.

Marshall is a deconsolidated VIE due to its filing for bankruptcy protection in December 2019.

As such, Marshall’s cash balance of $5.0 million was excluded from our consolidated financial statements.

During the year ended December 31, 2019, we spent $197.5 million in capital expenditures, including $79.3 million related to station repack and $7.2 million related to relinquishment of certain spectrum.

These investing cash outflows were partially offset by the proceeds from reimbursements of spectrum repack amounting to $70.4 million, proceeds from asset disposals of $4.4 million and distribution from our equity investments of $2.2 million.

We also received $98.0 million of cash proceeds from the settlement of litigation between Sinclair and Tribune and Mission collected a loan receivable of $49.0 million from Marshall Broadcasting Group, Inc.

Cash Flows –

Financing Activities

Net cash used in financing activities for the years ended December 31, 2021 and 2020 were $945.5 million and $1.294 billion, respectively.

During the year ended December 31, 2019, net cash provided by financing activities was $4.388 billion.

In 2021, we prepaid a portion of the outstanding principal balance of our Term Loan B due 2024 of $280.0 million and made scheduled principal payments on our Term Loan A due 2024 of $21.4 million, paid dividends to our common stockholders of $118.2 million ($0.70 per share during each quarter), repurchased common shares of $536.8 million, paid cash for taxes in exchange for shares of common stock withheld of $10.9 million resulting from net share settlements of certain stock-based compensation, and paid finance lease and software obligations of $18.0 million.

Net cash used in financing activities for the years ended December 31, 2022, 2021 and 2020 was $1,515.0 million, $945.5 million and $1,293.8 million, respectively.

In 2022, we received $2,420.2 million (net of $4.8 million discount) from our new Term Loan A, due June 2027 and utilized $2,414.3 million to repay outstanding principal balances of our Term Loan A, due October 2023, Term Loan A, due September 2024, Term Loan B, due January 2024 and a portion of Term Loan B, due September 2026.

Nexstar prepaid an additional $333.0 million in principal balance under its Term Loan B, repaid scheduled principal maturities of $84.2 million of its term loans, and repurchased and cancelled $71.2 million of its senior unsecured notes all funded by cash on hand.

We paid dividends to our common stockholders of $142.2 million ($0.90 per share per quarter), repurchased 5.1 million shares of our common stock for total payments of $880.7 million, paid for software obligations of $16.3 million, paid contingent consideration in connection with a past acquisition of $13.9 million, and paid cash for taxes in exchange for shares of common stock withheld of $12.6 million resulting from net share settlements of certain stock-based compensation.

These decreases were partially offset by contribution from noncontrolling interests of $30.4 million.

Mission also borrowed $61.5 million in a revolving loan, due June 2027 and utilized the proceeds to repay all of its outstanding borrowings under its revolving loan, due October 2023 of $61.5 million.

In 2021, we prepaid a portion of the outstanding principal balance of our Term Loan B, due January 2024 of $280.0 million and made scheduled principal payments on our Term Loan A, due September 2024 of $21.4 million, paid dividends to our common stockholders of $118.2 million ($0.70 per share during each quarter), repurchased common shares of $536.8 million, paid cash for taxes in exchange for shares of common stock withheld of $10.9 million resulting from net share settlements of certain stock-based compensation, and paid finance lease and software obligations of $18.0 million.

These outflows were partially offset by the proceeds from the exercise of stock options during the year amounting to $8.2 million.

Mission also received $298.5 million (net of $1.5 million discount) from its new Term Loan B due 2028 and utilized $268.0 million to repay a portion of its revolving loans.

Mission also received $298.5 million (net of $1.5 million discount) from its new Term Loan B, due June 2028 and utilized $268.0 million to repay a portion of its revolving loans.

We also borrowed $20.0 million under our revolving credit facilities which was repaid in full in 2021.

In 2020, the Company made payments on the outstanding principal balance of its term loans of $1.284 billion (including $980.0 million in Nexstar’s debt prepayments, Mission’s full repayment of its term loan B of $226.2 million and Shield Media, LLC's full repayment of its term loan A of $20.7 million).

In 2020, the Company made payments on the outstanding principal balance of its term loans of $1.284 billion (including $980.0 million in Nexstar debt prepayments, Mission’s full repayment of its term loan B of $226.2 million and Shield Media, LLC’s full repayment of its term loan A of $20.7 million).

Also, we redeemed our $900.0 million 5.625% Notes due 2024 and paid a $25.1 million premium on such redemption.

Additionally, we repurchased shares of our Class A common stock for a total price of $281.9 million, paid dividends to our common stockholders of $101.0 million ($0.56 per share during each quarter), paid deferred financing costs of $10.7 million associated with our new $1.0 billion 4.75% Notes due 2028, paid cash for taxes in exchange for shares of common stock withheld of $6.8 million resulting from net share settlements of certain stock-based compensation and paid finance lease and software obligations of $14.5 million.

Additionally, we repurchased shares of our common stock for a total price of $281.9 million, paid dividends to our common stockholders of $101.0 million ($0.56 per share during each quarter), paid deferred financing costs of $10.7 million associated with our new $1.0 billion 4.75% Notes, due November 2028, paid cash for taxes in exchange for shares of common stock withheld of $6.8 million resulting from net share settlements of certain stock-based compensation and paid finance lease and software obligations of $14.5 million.

These decreases were offset by the proceeds from the issuance of our new $1.0 billion senior unsecured notes issued at par and from Mission’s drawing from its revolving credit facility of $327.0 million.

In 2019, we issued term loans, net of debt discount, of $3.711 billion, issued an initial $1.120 billion in 5.625% Notes due 2027 at par, and issued an additional $665.0 million in 5.625% Notes due 2027, plus a premium of $27.4 million.

We incurred and paid total financing costs of $72.1 million for issuing these loans in 2019.

The proceeds from the term loans and the initial 5.625% Notes due 2027 were used to partially fund our merger with Tribune in September 2019.

The proceeds from the additional 5.625% Notes due 2027 were used to redeem in full our two senior unsecured notes with a total principal balance of $675.0 million, plus total premium of $10.1 million.

The Company also made prepayments and scheduled principal payments of its existing term loans totaling $227.3 million, funded by cash on hand.

In 2019, we paid dividends to our common stockholders of $82.8 million ($0.45 per share each quarter), repurchased our treasury shares for $45.1 million, made payments on our finance lease and capitalized software obligations of $9.2 million, paid taxes in exchange for shares of common stock withheld of $9.8 million and purchased a noncontrolling interest of $6.4 million.

These outflows were partially offset by the proceeds from the exercise of stock options during the year amounting to $2.4 million.

Subsequent Investing and Financing Activities

From January 1, 2023 to February 27, 2023, we repurchased 171,208 shares of our common stock for $32.9 million, funded by cash on hand.

As of the date of filing this Annual Report on Form 10-K, the total remaining available amount under the existing and new share repurchase authorizations was $1.225 billion.

On January 26, 2023, our board of directors approved a 50% increase in the quarterly cash dividend to $1.35 per share of our common stock beginning with the dividend declared for the first quarter of 2023.

The dividend was paid on February 24, 2023 to stockholders of record on February 10, 2023.

Our senior secured credit facilities and the indentures governing our existing notes may limit the amount of dividends we may pay to stockholders and share repurchases we may make over the term of the agreement.

Long-term debt

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Mission senior secured credit facility

5.625% Notes due 2027

4.75% Notes due 2028

5.625% Notes, due July 2027

4.75% Notes, due November 2028

Unamortized financing costs, discounts and premium, net

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______________________________________________

(1) Based on the covenant calculations as of December 31, 2021, all of the $349.7 million and $13.5 million unused revolving loan commitments under the respective Nexstar and Mission senior secured credit facilities were available for borrowing.

We guarantee full payment of all obligations incurred under Mission’s senior secured credit facility in the event of its default.

Mission is a guarantor of our senior secured credit facility, our 5.625% Notes due 2027 and our 4.75% Notes due 2028.

We make semiannual interest payments on the 5.625% Notes due 2027 on January 15 and July 15 of each year.

We make semiannual interest payments on our 4.75% Notes due 2028 on May 1 and November 1 of each year.

(1) Based on the covenant calculations as of December 31, 2022, all of the $529.1 million (net of outstanding standby letters of credit of $20.9 million) and $13.5 million unused revolving loan commitments under the respective Nexstar and Mission senior secured credit facilities were available for borrowing.

We (excluding The CW) guarantee full payment of all obligations incurred under Mission’s senior secured credit facility in the event of its default.

Mission is a guarantor of our senior secured credit facility, our 5.625% Notes, due July 2027 and our 4.75% Notes, due November 2028.

We make semiannual interest payments on the 5.625% Notes, due July 2027 on January 15 and July 15 of each year.

We make semiannual interest payments on our 4.75% Notes, due November 2028 on May 1 and November 1 of each year.

Interest payments on our and Mission’s senior secured credit facilities are generally paid every one to three months and are payable based on the type of interest rate selected.

The terms of our and Mission’s senior secured credit facilities, as well as the indentures governing our 5.625% Notes due 2027 and 4.75% Notes due 2028, limit, but do not prohibit us or Mission, from incurring substantial amounts of additional debt in the future.

The terms of our and Mission’s senior secured credit facilities, as well as the indentures governing our 5.625% Notes, due July 2027 and 4.75% Notes, due November 2028, limit, but do not prohibit us or Mission, from incurring substantial amounts of additional debt in the future.

The Company does not have any rating downgrade triggers that would accelerate the maturity dates of its debt.

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Any additional drawings under the senior secured credit facilities will reduce the Company’s future borrowing capacity and the amount of total unused revolving loan commitments.

The ultimate outcome of the COVID-19 pandemic remains uncertain at this time and may significantly impact our future operating performance, liquidity and financial position.

Any adverse impact of the COVID-19 pandemic may cause us to seek alternative sources of funding, including accessing capital markets, subject to market conditions.

Any adverse impact of the COVID-19 pandemic or any future adverse economic conditions, including those resulting from heightened and sustained inflation and higher interest rates could adversely affect our future operating results and cash flows and may cause us to seek alternative sources of funding, including accessing capital markets, subject to market conditions.

Such alternative sources of funding may not be available on commercially reasonable terms or at all.

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As of December 31, 2022, we were in compliance with our financial covenant.

We believe the Company will be able to maintain compliance with all covenants contained in the credit agreements governing its senior secured facilities and the indentures governing Nexstar’s 5.625% Notes due 2027 and Nexstar’s 4.75% Notes due 2028 for a period of at least the next 12 months from December 31, 2021.

We believe the Company will be able to maintain compliance with all covenants contained in the credit agreements governing its senior secured facilities and the indentures governing Nexstar’s 5.625% Notes, due July 2027 and Nexstar’s 4.75% Notes, due November 2028 for a period of at least the next 12 months from December 31, 2022.

Off-Balance Sheet Arrangements

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Certain contractual obligations are recorded on the Consolidated Balance Sheet as of December 31, 2022, while others are considered future commitments.

The following summarizes the Company’s contractual obligations as of December 31, 2021, and the effect such obligations are expected to have on the Company’s short-term and long-term liquidity and capital resource needs (in thousands):

The following summarizes the Company’s contractual obligations as of December 31, 2022, and the effect such obligations are expected to have on the Company’s short-term and long-term liquidity and capital resource needs (in millions):

Payments Due by Period

Less than 1 year

More than 5 years

Recorded contractual obligations:

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(3) As of December 31, 2022, we had $216.8 million and $21.3 million of funding obligations with respect to our pension benefit plans and other postretirement benefit plans, respectively, which are not included in the table above.

See Note 10 to our Consolidated Financial Statements for further information regarding our funding obligations for these benefit plans.

See Note 10 to our Consolidated Financial Statements included in Part IV, Item 15(a) of this Annual Report on Form 10-K for further information regarding our funding obligations for these benefit plans.

(4) Estimated interest payments due as if all debt outstanding as of December 31, 2022 remained outstanding until maturity, based on interest rates in effect at December 31, 2022.

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(6) Future minimum payments for license agreements for which the license period has not commenced and no liability has been recorded.

From January 1 to February 25, 2022, we repurchased 466,825 shares of our Class A common stock for $76.3 million, funded by cash on hand.

As of the date of filing this Annual Report on Form 10-K, the remaining available amount under the share repurchase authorization was $561.9 million.

On January 27, 2022, our Board of Directors declared a quarterly dividend of $0.90 per share of our Class A common stock.

The dividend is scheduled to be paid on February 28, 2022 to stockholders of record on February 11, 2022.

Issuer and Guarantor Summarized Financial Information

Nexstar Media Inc.’s (a wholly-owned subsidiary of Nexstar and herein referred to as the “Issuer”) 5.625% Notes due 2027 and 4.75% Notes due 2028 are fully and unconditionally guaranteed (the “Guarantees”), jointly and severally, by Nexstar Media Group, Inc.

(“Parent”), Mission (a consolidated VIE) and certain of Nexstar Media Inc.’s restricted subsidiaries (collectively, the “Guarantors”

and, together with the Issuer, the “Obligor Group”).

The Guarantees are subject to release in limited circumstances upon the occurrence of certain customary conditions set forth in the indentures governing the 5.625% Notes due 2027 and the 4.75% Notes due 2028.

The Issuer’s 5.625% Notes due 2027 and 4.75% Notes due 2028 are not registered with the SEC.

The following combined summarized financial information is presented for the Obligor Group after elimination of intercompany transactions between Parent, Issuer and Guarantors in the Obligor Group and amounts related to investments in any subsidiary that is a non-guarantor.

Nexstar Media Inc.

(the “Issuer”) is the issuer of 5.625% Notes, due July 2027 and 4.75% Notes, due November 2028.

These notes are fully and unconditionally guaranteed, jointly and severally, by Nexstar Media Group, Inc.

(“Parent”) and Mission (a consolidated VIE) and the Subsidiary Guarantors (as defined below).

The Issuer, Subsidiary Guarantors, Parent and Mission are collectively referred to as the “Obligor Group”

for the 5.625% Notes, due July 2027 and 4.75% Notes, due November 2028.

“Subsidiary Guarantors”

refers to certain of the Issuer’s restricted subsidiaries (excluding The CW) that guarantee these notes.

The guarantees of the notes are subject to release in limited circumstances upon the occurrence of certain customary conditions set forth in the indentures governing the 5.625% Notes, due July 2027 and the 4.75% Notes, due November 2028.

The 5.625% Notes, due July 2027 and 4.75% Notes, due November 2028 are not registered with the SEC.

The following combined summarized financial information is presented for the Obligor Group after elimination of intercompany transactions between Parent, Issuer, Subsidiary Guarantors and Mission in the Obligor Group and amounts related to investments in any subsidiary that is a non-guarantor.

This information is not intended to present the financial position or results of operations of the consolidated group of companies in accordance with U.S.

Summarized Balance Sheet Information for the Obligor Group as of December 31 (in thousands):

Summarized Balance Sheet Information for the Obligor Group as of December 31 (in millions):

Current assets - external (1)

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Noncontrolling interests

(1) Excludes Nexstar Media Inc.’s equity investments of $1.219 billion and $1.334 billion as of December 31, 2021 and 2020, respectively, in unconsolidated investees.

These unconsolidated investees do not guarantee the 4.75% Notes due 2028 and 5.625% Notes due 2027.

(1) Excludes the assets and liabilities of The CW as it is not a guarantor of the 4.75% Notes due November 2028 and 5.625% Notes due July 2027.

On September 30, 2022, Nexstar acquired a 75.0% ownership interest in The CW (see Note 3, “Acquisitions and Dispositions”

to our Consolidated Financial Statements included in Part IV, Item 15(a) of this Annual Report on Form 10-K for additional information).

(2) Excludes Issuer’s equity investments of $1,119.0 million and $1,218.8 million as of December 31, 2022 and 2021, respectively, in unconsolidated investees.

These unconsolidated investees do not guarantee the 4.75% Notes due November 2028 and 5.625% Notes due July 2027.

For additional information on equity investments, refer to Note 6 to our Consolidated Financial Statements.

Summarized Statements of Operations Information for the Obligor Group (in thousands):

Summarized Statements of Operations Information for the Obligor Group (in millions):

December 31, 2022

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Net income attributable to Obligor Group

Income on equity method investments

Income from equity method investments, net

Critical Accounting Policies and Estimates

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GAAP, which requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the Consolidated Financial Statements and reported amounts of revenue and expenses during the period.

On an ongoing basis, we evaluate our estimates, including those related to business acquisitions, goodwill and intangible assets, property and equipment, broadcast rights, distribution revenue, pension and postretirement benefit plans and income taxes.

On an ongoing basis, we evaluate our estimates, including those related to business acquisitions, goodwill, indefinite-lived intangible assets, definite-lived intangible assets and other long-lived assets, equity investments, distribution revenue, pension and postretirement benefit plans and income taxes.

We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

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model must be an ongoing process and may alter as facts and circumstances change.

Mission and the other consolidated VIEs are included in our Consolidated Financial Statements because we are deemed to have controlling financial interests in these entities as VIEs for financial reporting purposes as a result of (1) local service agreements we have with the stations they own, (2) our guarantee of the obligations incurred under Mission’s senior secured credit facility, (3) our power over significant activities affecting these entities’

economic performance, including budgeting for advertising revenue, advertising sales and, in some cases, hiring and firing of sales force personnel and (4) purchase options granted by each consolidated VIE which permit Nexstar to acquire the assets and assume the liabilities of all of these VIEs’

Mission and the other consolidated VIEs are included in our Consolidated Financial Statements because we are deemed to have controlling financial interests in these entities as VIEs for financial reporting purposes as a result of (i) local service agreements we have with the stations they own, (ii) Nexstar’s (excluding The CW) guarantee of the obligations incurred under Mission’s senior secured credit facility, (iii) our power over significant activities affecting these entities’

economic performance, including budgeting for advertising revenue, advertising sales and, in some cases, hiring and firing of sales force personnel and (iv) purchase options granted by each consolidated VIE which permit Nexstar to acquire the assets and assume the liabilities of all of these VIEs’

stations at any time, subject to FCC consent.

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Intangible assets represented $8.305 billion, or 65.5%, of our total assets as of December 31, 2022.

Intangible assets consist primarily of goodwill, FCC licenses, network affiliation agreements, developed technology, brand value, and customer relationships arising from acquisitions.

The purchase prices of acquired businesses are allocated to the assets and liabilities acquired at estimated fair values at the date of acquisition using various valuation techniques, including discounted projected cash flows, the cost approach and other.

The estimated fair value of an FCC license acquired in a business combination is calculated using a discounted cash flow model referred to as the Greenfield Method.

Intangible assets consist primarily of goodwill, indefinite-lived intangible assets (such as FCC licenses), and definite-lived intangible assets (such as network affiliation agreements).

The estimated fair value of an FCC license acquired in a business combination is calculated using a discounted projected cash flow model referred to as the Greenfield Method.

The Greenfield Method attempts to isolate the income that is attributable to the license alone.

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The Greenfield Method assumes annual cash flows over a projection period model.

Inputs to this model include, but are not limited to, (i) a four-year build-up period for a start-up station to reach a normalized state of operations, (ii) market long-term revenue growth rate over a projection period, (iii) estimated market revenue share for a typical market participant without a network affiliation, (iv) estimated profit margins based on industry data, (v) capital expenditures based on the size of market and the type of station being constructed, (vi) estimated tax rates in the appropriate jurisdiction, and (vii) an estimated discount rate using a weighted average cost of capital analysis.

Inputs to this model include, but are not limited to, (i) a four-year build-up period for a start-up station to reach a normalized state of operations, (ii) television market long-term revenue growth rate over a projection period, (iii) estimated market revenue share for a typical market participant without a network affiliation, (iv) estimated profit margins based on industry data, (v) capital expenditures based on the size of market and the type of station being constructed, (vi) estimated tax rates in the appropriate jurisdiction, and (vii) an estimated discount rate using a weighted average cost of capital analysis.

The Greenfield Method also includes an estimated terminal value by discounting an estimated annual cash flow with an estimated long-term growth rate.

The assumptions used in estimating the fair value of a network affiliation agreement acquired in a business combination are similar to those used in the valuation of an FCC license.

The Greenfield Method is also utilized in this valuation except that the estimated market revenue share, estimated profit margins, capital expenditures and other assumptions reflect a market participant premium based on the programming of a network affiliate relative to an independent station.

This approach would result in an estimated fair value of the collective FCC license and a network affiliation agreement.

Goodwill represents the excess of the purchase price of a business over the fair value of net assets acquired.

The Greenfield Method is also utilized in the valuation of network affiliation agreements except that the estimated market revenue share, estimated profit margins, capital expenditures and other assumptions reflect a market participant premium based on the programming of a network affiliate relative to an independent station.

This approach would result in an estimated collective fair value of the FCC license and a network affiliation agreement.

The excess of the estimated fair value in this model over the estimated value of an FCC license of an independent station under the Greenfield Method represents the estimated fair value of a network affiliation agreement.

Goodwill represents the excess of the purchase price of a business over the fair value of the net assets acquired.

For purposes of goodwill impairment tests, the Company has one aggregated television stations reporting unit, because of the stations’

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however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit.

The quantitative impairment test for FCC licenses consists of a market-by-market comparison of the carrying amounts of FCC licenses with their fair value, using the Greenfield Method of discounted cash flow analysis.

The quantitative impairment test for FCC licenses consists of a market-by-market comparison of the carrying amounts of FCC licenses with their fair values, using the Greenfield Method of discounted cash flow analysis.

An impairment is recorded when the carrying value of an FCC license exceeds its fair value.

We test our finite-lived intangible assets to be held and used whenever events or circumstances indicate that their carrying amount may not be recoverable, relying on certain factors including operating results, business plans, economic projections and anticipated future cash flows.

The carrying value of a long-lived asset or asset group is considered impaired when the projected future undiscounted cash flows to be generated from the asset or asset group over its remaining life are less than its carrying value.

We test our definite-lived intangible assets and other long-lived assets to be held and used for impairment whenever events or circumstances indicate that their carrying amount may not be recoverable, relying on certain factors including operating results, business plans, economic projections and anticipated future cash flows.

The Company measures impairment based on the amount by which the carrying value exceeds the estimated fair value of the long-lived asset or asset group.

The fair value is determined primarily by using the projected future cash flows discounted at a rate commensurate with the risk involved as well as market valuations.

In the fourth quarter of 2021, using the qualitative impairment test, the Company performed its annual impairment test on goodwill attributable to its aggregated television stations reporting unit, one cable network reporting unit and one digital business reporting unit.

Based on the results of such qualitative impairment tests, the Company concluded that it was more likely than not that the fair value would sufficiently exceed the carrying amount.

Thus, no impairment was recorded on these reporting units.

For one of the digital reporting units with a goodwill balance of $110.0 million, representing approximately 4% of the consolidated carrying amount, the Company elected to perform a quantitative impairment test due to actual and projected decreases in operating profit and cash flows.

The Company’s assessment indicated that the reporting unit’s fair value exceeded the carrying amount by over 10%, and therefore no goodwill impairment was identified.

Fair value was estimated using a combination of an income approach, which employs a discounted cash flow model, and market approaches, which consider net revenue multiples of comparable publicly traded businesses and recent market transactions.

In the fourth quarter of 2021, the Company also performed its annual impairment test on FCC licenses for each station market using the qualitative impairment test.

The Company concluded that it was more likely than not that their fair values have exceeded the respective carrying amounts.

Thus, no impairment was recorded.

We also performed qualitative tests to determine whether our finite-lived assets are recoverable.

Based on our estimate of undiscounted future pre-tax cash flows expected to result from the use of these assets, we determined that the carrying amounts are recoverable as of December 31, 2021.

In the fourth quarter of 2022, using the qualitative impairment test, the Company performed its annual impairment assessment on goodwill attributable to its aggregated television stations reporting unit and cable network reporting unit.

Based on the results of such qualitative impairment tests, the Company concluded that it was more likely than not that each reporting unit’s fair value would sufficiently exceed the related carrying amount.

The Company also performed its annual impairment assessment on FCC licenses for each television station market using the qualitative impairment test and concluded that it was more likely than not that their fair values exceeded the respective carrying amounts.

Thus, no impairment was recorded on the associated goodwill and FCC licenses.

With respect to the Company’s digital reporting units, the Company elected to perform quantitative impairment tests due to uncertain economic conditions in the fourth quarter of 2022.

The Company’s assessment indicated that the fair value of one digital reporting unit exceeded the carrying amount by over 19%, and therefore no goodwill impairment was identified.

Goodwill associated with this reporting unit was $69.1 million as of December 31, 2022.

In the second digital reporting unit, which was tested for impairment, quantitatively, in the fourth quarter of 2021 with an identified fair value exceeding the carrying value of the reporting unit by approximately 10%, the Company identified a partial goodwill impairment of $90.8 million.

The impairment was identified in the fourth quarter of 2022 given the operating performance of the reporting unit, the seasonality of the business and changes in the outlook of the business.

The fair value was estimated using a combination of an income approach, which employs a discounted cash flow model, and market approaches.

The significant assumptions used in estimating fair value included:

(i) compound annual growth rates for revenues ranging from 6.1% to 8.1%, (ii) operating profit margins ranging from 8.3% to 15.0%, (iii) an income tax rate of 26.0% based on statutory federal and blended state tax rates, (iv) a discount rate of 14.5% based on an analysis of e-commerce companies, (v) a terminal growth rate of 1.5% based on a mature company in the e-commerce industry, and (vi) market net revenue and earnings multiples of comparable publicly traded businesses.

As of December 31, 2022, this second digital reporting unit has an immaterial remaining goodwill balance.

We also performed qualitative tests to determine whether our definite-lived intangible assets and other long-lived assets are recoverable.

Based on our estimate of undiscounted future pre-tax cash flows expected to result from the use and eventual disposition of these assets, we determined that the carrying amounts are recoverable except for an immaterial impairment on definite-lived intangible assets of one digital reporting unit recorded in the fourth quarter of 2022.

No other events or circumstances were noted in 2022 that would indicate impairment.

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We cannot accurately predict the amount and timing of any impairment of goodwill or other intangible assets.

While the COVID-19 pandemic did not have a material impact on overall aspects of our business during 2021, the Company will continue to actively monitor and evaluate its indefinite-lived intangible assets, long-lived assets and goodwill to determine if an impairment triggering event will occur in future periods.

Any further adverse impact of COVID-19 or the general market conditions on the Company’s operating results could reasonably be expected to negatively impact the fair value of the Company’s indefinite-lived intangible assets and its reporting units as well as the recoverability of its long-lived assets and may result in future impairment charges which could be material .

Valuation of Investments

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We evaluate our equity method investments for other-than temporary impairment (“OTTI”) on at least a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation.

In each of the quarters of 2021, the Company evaluated its equity method investments for OTTI due to the events and circumstances surrounding the COVID-19 pandemic.

Based on the results of the review, the Company determined that an impairment does not exist.

The Company will continue to evaluate its equity method investments in future periods to determine if an OTTI has occurred.

In each of the quarters of 2022, the Company evaluated its equity method investments for OTTI and determined that an impairment did not exist.

The Company will continue to evaluate its equity method investments for OTTI in future periods.

Pension plans and other postretirement benefits

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As of December 31, 2022, our pension plans’

benefit obligations was $2.257 billion.

benefit obligations were $1.779 billion.

For the year ended December 31, 2022, our pension plans’

net periodic benefit credit was $68.3 million, excluding a $12.5 million settlement gain from the purchase of an annuity contract for certain participants of a qualified pension plan.

As of December 31, 2021, a 1% change in the discount rates would have the following effects (in thousands):

net periodic benefit credit was $37.6 million.

As of December 31, 2022, a 1% change in the discount rates would have the following effects (in millions):

Projected impact on net periodic benefit credit

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Distribution Revenue

We earn revenues from local cable providers, DBS services and other MVPDs and OVDs for the retransmission of our broadcasts and the carriage of NewsNation.

We earn revenues from MVPDs and OVDs for the retransmission of our broadcasts and the carriage of NewsNation.

These revenues are generally earned based on a price per subscriber of the distributor within the retransmission or carriage area.

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The determination is based on the technical merits of the position and presumes that each uncertain tax position will be examined by the relevant taxing authority that has full knowledge of all relevant information.

The estimate of the Company's tax liabilities relating to uncertain tax positions requires management to assess uncertainties and to make judgements about the application of complex tax laws and regulations.

The estimate of the Company’s tax liabilities relating to uncertain tax positions requires management to assess uncertainties and to make judgements about the application of complex tax laws and regulations.

We recognize interest and penalties relating to income taxes as components of income tax expense.

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Our exposure to market risk for changes in interest rates relates primarily to our long-term debt obligations.

The term loan borrowings under the Company’s senior credit facilities bear interest at rates ranging from 1.60% to 2.60% as of December 31, 2021, which represented the base rate, or LIBOR, plus the applicable margin, as defined.

The revolving loans bear interest at LIBOR plus the applicable margin, of 1.60% at December 31, 2021.

The term loan borrowings under the Company’s senior credit facilities bear interest at rates ranging from 5.86% to 6.89% as of December 31, 2022, which represent (i) the base rate, the SOFR or the US LIBOR plus (ii) a credit spread adjustment in the case of SOFR-based loans, and (iii) the applicable margin, as defined.

Interest is payable in accordance with the credit agreements.

If LIBOR were to increase by 100 basis points, or one percentage point, from the December 31, 2021 level, the Company’s annual interest expense would increase and cash flow from operations would decrease by $46.9 million, based on the outstanding balance of its credit facilities as of December 31, 2021.

An increase in LIBOR of 50 basis points (one-half of a percentage point) would result in a $23.4 million increase in the Company’s annual interest expense and decrease in cash flows from operations.

If LIBOR were to decrease either by 100 basis points or 50 basis points, the Company’s annual interest would decrease and cash flows from operations would increase by $4.7 million.

Our 5.625% Notes due 2027 and 4.75% Notes due 2028 are fixed rate debt obligations and therefore are not exposed to market interest rate changes.

As of December 31, 2021, we have no financial instruments in place to hedge against changes in the benchmark interest rates on our senior credit facilities.

Based on the outstanding balances of the Company’s senior secured credit facilities (term loans and revolving loans) as of December 31, 2022, an increase in each of SOFR and US LIBOR by 100 basis points would increase our annual interest expense and decrease our cash flow from operations by $42.8 million (excluding tax effects).

A decrease in each of SOFR and US LIBOR by 100 basis points would decrease our annual interest expense and increase our cash flow from operations by $42.8 million (excluding tax effects).

Our 5.625% Notes due July 2027 and 4.75% Notes due November 2028 are fixed rate debt obligations and therefore are not exposed to market interest rate changes.

As of December 31, 2022, the Company has no financial instruments in place to hedge against changes in the benchmark interest rates on its senior secured credit facilities.

Financial Statemen ts and Supplementary Data

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity