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Item 9A. Controls and Procedures

2023-02-28 compared with 2022-02-28 · 489 added, 590 removed, 1383 unchanged (44% of the section changed)

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Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2022 based upon the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework (2013) .

As of December 31, 2022, we have excluded from the scope of our assessment of internal control over financial reporting The CW which we acquired on September 30, 2022 in a purchase business combination.

As of December 31, 2022 and for the period from September 30, 2022 through December 31, 2022, the total assets and total net revenues of The CW that are excluded from our assessment of internal control over financial reporting represent approximately 2.3% and 1.2%, respectively, of the related consolidated total assets and consolidated net revenues of Nexstar as of and for the year ended December 31, 2022.

Based on management’s assessment, we have concluded that our internal control over financial reporting was effective as of December 31, 2022.

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Information concerning directors that is required by this Item 10 will be set forth in the Proxy Statement to be provided to stockholders in connection with our 2023 Annual Meeting of Stockholders (the “Proxy Statement”) or in an amendment to this Annual Report on Form 10-K under the headings “Directors,”

“Corporate Governance,”

and “Delinquent Section 16(a) Report,”

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Principal Accountant Fees and Services

Information required by this Item 14 will be set forth in the Proxy Statement under the heading “Ratification of the Selection of Independent Registered Public Accounting Firm,”

Information required by this Item 14 will be set forth in the Proxy Statement under the heading “Independent Registered Public Accounting Firm Fees and Other Matters,”

which information is incorporated herein by reference.

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on January 17, 2017).

Amended and Restated Bylaws of Nexstar Media Group, Inc.

Certificate of Amendment No.

2 to Amended and Restated Certificate of Incorporation of Nexstar Media Group, Inc.

(Incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K (File No.

000-50478) filed by Nexstar Media Group, Inc.

on June 28, 2022).

Conformed Copy of Amended and Restated Certificate of Incorporation of Nexstar Media Group, Inc., as amended through August 5, 2022.

(Incorporated by reference to Exhibit 3.1 to Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 (File No.

000-50478) filed by Nexstar Media Group, Inc.).

Second Amended and Restated Bylaws of Nexstar Media Group, Inc.

(Incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K (File No.

000-50478) filed by Nexstar Media Group, Inc.

on January 30, 2023).

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on September 9, 2020).

Amendment No.

5, dated as of June 21, 2022, to Credit Agreement, dated as of January 17, 2017, by and among Nexstar Media Inc.

(f/k/a Nexstar Broadcasting, Inc.), Nexstar Media Group, Inc., Bank of America, N.A.

and the several lenders party thereto (Incorporated by reference to Exhibit 10.1 to Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 (File No.

000-50478) filed by Nexstar Media Group, Inc.).

Credit Agreement, dated as of January 17, 2017, by and among Mission Broadcasting, Inc., as the borrower and Bank of America, N.A., as the administrative agent and the collateral agent and other financial institutions from time to time party thereto (Incorporated by reference to Exhibit 10.8 to Annual Report on Form 10-K for the period ended December 31, 2016 (File No.

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on June 4, 2021).

Amendment No.

6, dated as of June 21, 2022, to Credit Agreement, dated as of January 17, 2017, by among Mission Broadcasting, Inc., Bank of America, N.A.

and the several lenders party thereto (Incorporated by reference to Exhibit 10.1 to Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 (File No.

000-50478) filed by Nexstar Media Group, Inc.).

Executive Employment Agreement, dated as of January 5, 1998, by and between Perry A.

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on January 22, 2019).

Amendment to Executive Employment Agreement, dated as of August 1, 2022 between Perry A.

Sook and Nexstar Media Group, Inc.

(Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K (File No.

000-50478) filed by Nexstar Media Group, Inc.

on August 4, 2022.

Executive Employment Agreement, dated as of July 13, 2009, by and between Thomas E.

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000-50478) filed by Nexstar Media Group, Inc.).

Executive Employment Agreement, dated June 1, 2021 between Andrew Alford and Nexstar Media Group, Inc.

(Incorporated by reference to Exhibit 10.1 to Quarterly Report on Form 10-Q for the quarter ended March 31, 2022 (File No.

000-50478) filed by Nexstar Media Group, Inc.).

Executive Employment Agreement, dated August 26, 2019 between Sean Compton and Nexstar Media Group, Inc.

(Incorporated by reference to Exhibit 10.2 to Quarterly Report on Form 10-Q for the quarter ended March 31, 2022 (File No.

000-50478) filed by Nexstar Media Group, Inc.).

Amendment to Executive Employment Agreement, dated November 1, 2020 between Sean Compton and Nexstar Media Group, Inc.

(Incorporated by reference to Exhibit 10.3 to Quarterly Report on Form 10-Q for the quarter ended March 31, 2022 (File No.

000-50478) filed by Nexstar Media Group, Inc.).

Nexstar Media Group, Inc.

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Inline XBRL Instance Document –

the XBRL Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.*

the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

Inline XBRL Taxonomy Extension Schema Document.

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Inline XBRL Taxonomy Extension Label Linkbase Document.

Inline XBRL Taxonomy Extension Presentation Loinkbase Document.*

Inline XBRL Taxonomy Extension Presentation Linkbase Document.

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

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Lisbeth McNabb

/s/ DENNIS A.

MARTIN POMPADUR

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equity and of cash flows for each of the three years in the period ended December 31, 2022, including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

We also have audited the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022 in conformity with accounting principles generally accepted in the United States of America.

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Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A.

Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits.

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A.

Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’s internal control over financial reporting based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

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We believe that our audits provide a reasonable basis for our opinions.

As described in Management’s Report on Internal Control Over Financial Reporting, management has excluded The CW Network, LLC from its assessment of internal control over financial reporting as of December 31, 2022, because it was acquired by the Company in a purchase business combination during 2022.

We have also excluded The CW Network, LLC from our audit of internal control over financial reporting.

The CW Network, LLC is a consolidated subsidiary whose total assets and total net revenues excluded from management’s assessment and our audit of internal control over financial reporting represent 2.3% and 1.2%, respectively, of total assets and total net revenues as of and for the year ended December 31, 2022.

Definition and Limitations of Internal Control over Financial Reporting

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As described in Notes 14 and 16 to the consolidated financial statements, the Company has recorded liabilities for uncertain tax positions of $28.0 million as of December 31, 2022.

As disclosed by management, the estimate of the Company's tax liabilities relating to uncertain tax positions requires management to assess uncertainties and to make judgments about the application of complex tax laws and regulations.

As disclosed by management, the estimate of the Company’s tax liabilities relating to uncertain tax positions requires management to assess uncertainties and to make judgments about the application of complex tax laws and regulations.

On June 28, 2016, the Internal Revenue Service (“IRS”) issued Tribune Media Company (a subsidiary of the Company, “Tribune”) a Notice of Deficiency which presented the IRS’s position that a gain with respect to a contribution of certain assets and liabilities related to the businesses of the Chicago Cubs Major League Baseball franchise (“the Chicago Cubs Transactions”) should have been included in Tribune’s 2009 taxable income.

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CONSOLIDATED B ALANCE SHEETS

(in thousands, except for share and per share information)

(in millions, except for share and per share information)

Current assets:

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Restricted cash and cash equivalents

Accounts receivable, net of allowance for doubtful accounts of $ 23,129 and $ 34,922 , respectively

Accounts receivable, net of allowance for credit losses of $ 18.4 and $ 23.1 , respectively

Broadcast rights

Prepaid expenses and other current assets

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none issued and outstanding at each of December 31, 2022 and December 31, 2021

Class A Common stock - $ 0.01 par value, 100,000,000 shares authorized;

Common stock - $ 0.01 par value, 100,000,000 shares authorized;

47,282,823 shares issued, 36,810,186 shares outstanding as of December 31, 2022 and 47,291,463 shares issued, 40,757,429 shares outstanding as of December 31, 2021

Class B Common stock - $ 0.01 par value, 20,000,000 shares authorized;

none issued and outstanding at each of December 31, 2021 and December 31, 2020

Class C Common stock - $ 0.01 par value, 5,000,000 shares authorized;

none issued and outstanding at each of December 31, 2021 and December 31, 2020

Additional paid-in capital

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CONSOLIDATED STATEMENTS OF OPER ATIONS AND COMPREHENSIVE INCOME

(in thousands, except per share information)

(in millions, except for share and per share information)

Years Ended December 31,

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Selling, general and administrative expenses, excluding depreciation and amortization

Amortization of broadcast rights

Amortization of intangible assets

Depreciation of property and equipment

Depreciation and amortization expense

Goodwill and other long-lived asset impairments

Reimbursement from the FCC related to station repack

Assets held for sale impairment

Goodwill and intangible assets impairment

Gain on disposal of stations and business units, net

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

Gain on relinquishment of spectrum

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Income from operations

Gain on bargain purchase

Income from equity method investments, net

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Income tax expense

Net loss (income) attributable to noncontrolling interests

Net loss attributable to noncontrolling interests

Net income attributable to Nexstar Media Group, Inc.

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Weighted average number of common shares outstanding:

Other comprehensive income:

Change in unrecognized amounts included in pension and other postretirement benefit obligations, net of tax expense of $ 36,710 in 2021, $ 5,007 in 2020, and $ 11,723 in 2019

Basic (in thousands)

Diluted (in thousands)

Other comprehensive income (loss):

Change in unrecognized amounts included in pension and other postretirement benefit obligations, net of tax benefit (expense) of $ 39.3 in 2022, ($ 36.7 ) in 2021, and ($ 5.0 ) in 2020

Total comprehensive income

Total comprehensive (income) loss attributable to noncontrolling interests

Total comprehensive loss attributable to noncontrolling interests

Total comprehensive income attributable to Nexstar Media Group, Inc.

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For the Three Years Ended December 31, 2022

(in thousands, except for share and per share information)

(in millions, except for share and per share information)

Comprehensive

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Stockholdersʼ

(Loss) Income

Balances as of December 31, 2019

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Dividends declared on common stock ($ 2.24 per share)

Purchase of noncontrolling interest from a consolidated variable interest entity

Noncontrolling interest from a business combination

Deconsolidation of a variable interest entity

Contribution from a noncontrolling interest

Change in reporting entity resulting from common control transactions (Note 3)

Payments resulting from common control transactions (Note 3)

Disposal of an entity

Change in pension and other postretirement benefit obligations, net of tax

Net income (loss)

Balances as of December 31, 2020

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Change in reporting entity resulting from common control transactions (Note 3)

Payments resulting from common control transactions (Note 3)

Disposal of an entity

Change in pension and other postretirement benefit obligations, net of tax

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Dividends declared on common stock ($ 3.60 per share)

Contribution from a noncontrolling interest

Change in reporting entity resulting from common control transactions (Note 3)

Contribution from noncontrolling interests

Noncontrolling interests from a business combination (see Note 3)

Distribution to a noncontrolling interest

Change in pension and other postretirement benefit obligations, net of tax

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CONSOLIDATED STATEME NTS OF CASH FLOWS

(in thousands)

(in millions)

Years Ended December 31,

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Adjustments to reconcile net income to net cash provided by operating activities:

Amortization of intangible assets

Amortization of broadcast rights

Depreciation of property and equipment

Goodwill and intangible assets impairment

Assets held for sale impairment

Depreciation and amortization expense

Goodwill and other long-lived asset impairments

Stock-based compensation expense

Provision for bad debt

Amortization of debt financing costs, debt discounts and premium

Loss on extinguishment of debt

(Gain) loss on asset disposal, net

Deferred income taxes

Gain on relinquishment of spectrum

Gain on disposal of stations and business units, net

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

Spectrum repack reimbursements

Payments for broadcast rights

Gain on bargain purchase

Income from equity method investments, net

Unrealized gain on an equity investment measured at fair value

Loss on write-off of an equity investment

Distribution from equity method investments - return on capital

Other operating activities, net

Changes in operating assets and liabilities, net of acquisitions and dispositions:

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Purchases of property and equipment

Proceeds from disposals of assets

Cash acquired on business acquisition

Deposits received associated with the sale of real estate assets

Spectrum repack reimbursements

Payments for acquisitions, net of cash acquired

Proceeds from sale of stations and business units

Deposits received associated with the sale of real estate assets

Proceeds from resolution of acquired contingency

Spectrum repack reimbursements

Collection of (payment for) investment in a loan receivable

Proceeds from disposals of assets

Acquisition of investments in equity securities

Distribution from an equity investment - return of capital

Deconsolidation of the cash of Marshall

Collection of investment in loans receivable

Other investing activities, net

Net cash used in investing activities

Net cash provided by (used in) investing activities

Cash flows from financing activities:

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Common stock dividends paid

Payments for finance lease

Contribution from noncontrolling interests

Payments for capitalized software obligations

Cash paid for shares withheld for taxes

Proceeds from exercise of stock options

Purchase of noncontrolling interests

Payments for contingent consideration in connection with a past acquisition

Other financing activities, net

Net cash provided by (used in) financing activities

Net cash used in financing activities

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

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Non-cash investing and financing activities:

Accrued purchases of property and equipment

Noncash purchases of property and equipment

Accrued and noncash purchases of property and equipment

Right-of-use assets obtained in exchange for operating lease obligations

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The accompanying Notes are an integral part of these Consolidated Financial Statements.

_______________________________________________________

(1) Amounts for the year ended December 31, 2019 include the transition adjustment of $ 112.8 million for the adoption of ASC 842.

NEXSTAR MEDIA GROUP, INC.

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Organization and Business Operations

Nexstar Media Group, Inc., a Delaware corporation, together with its wholly-owned subsidiary, Nexstar Media Inc.

(formerly known as Nexstar Inc.

and Nexstar Broadcasting, Inc.), a Delaware corporation (collectively referred to as “Nexstar”, “we”, “our”, “ours”, and “us”), is a television broadcasting and digital media company focused on the acquisition, development and operation of television stations and interactive community websites and digital media services.

As of December 31, 2021 , we owned, operated, programmed or provided sales and other services to 199 full power television stations and one AM radio station, including those television stations owned by variable interest entities (“VIEs”), in 116 markets in 39 states and the District of Columbia.

The stations are affiliates of ABC, NBC, FOX, CBS, The CW, MyNetworkTV (“MNTV”), and other broadcast television networks.

As used in these Consolidated Financial Statements and unless the context indicates otherwise, “Nexstar”

refers to Nexstar Media Group, Inc., a Delaware corporation, and its consolidated wholly-owned and majority-owned subsidiaries;

the “Company”

refers to Nexstar and the variable interest entities (“VIEs”) required to be consolidated in our financial statements under authoritative guidance related to the consolidation of VIEs;

and all references to “we,”

“our,”

“ours,”

and “us”

refer to Nexstar.

Nexstar is a leading diversified media company with television broadcasting, television network and digital media assets operating in the United States.

As of December 31, 2022 , we owned, operated, programmed or provided sales and other services to 199 full power television stations and one AM radio station, including those television stations owned by VIEs, in 116 markets in 39 states and the District of Columbia.

The stations are affiliates of CBS, FOX, NBC, ABC, The CW, MyNetworkTV, and other broadcast television networks.

As of December 31, 2022 , the stations reached approximately 39 % of all U.S.

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Through various local service agreements, we provided sales, programming, and other services to 35 television stations owned by consolidated VIEs and one television station owned by an unconsolidated VIE.

Nexstar also owns 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 Television Food Network, G.P.

(“TV Food Network”), and a portfolio of real estate assets.

On April 16, 2021, Nexstar Inc.

filed a Certificate of Amendment with the Secretary of State of Delaware to change its name to Nexstar Media Inc.

Nexstar also owns a 75.0 % ownership in The CW Network, LLC, the fifth major broadcast network in the U.S.

(“The CW”) (see Note 3), NewsNation, a national cable news network, two digital multicast networks, Antenna TV and Rewind TV, and multicast network services provided to third parties, and a 31.3 % ownership stake in Television Food Network, G.P.

(“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, NewsNationNow, The Hill and BestReviews and a suite of advertising solutions.

Summary of Significant Accounting Policies

Principles of Consolidation

The Consolidated Financial Statements include the accounts of Nexstar and the accounts of VIEs for which we are the primary beneficiary (See “Variable Interest Entities”

The Consolidated Financial Statements include the accounts of Nexstar, subsidiaries consolidated through voting interests and the accounts of VIEs for which we are the primary beneficiary (See “Variable Interest Entities”

section below).

Nexstar and the consolidated VIEs are collectively referred to as the “Company.”

Noncontrolling interests represent the VIE owners’

share of the equity in the consolidated VIEs and are presented as a component separate from Nexstar’s stockholders’

Noncontrolling interests represent the minority owners’

share in profit or loss and equity of The CW and the VIE owners’

share in profit or loss and equity of the consolidated VIEs.

Noncontrolling interests are presented as a component separate from Nexstar’s stockholders’

equity in the accompanying Consolidated Balance Sheets and Consolidated Statements of Changes in Stockholders’

All intercompany account balances and transactions have been eliminated in consolidation.

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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 Coronavirus Disease 2019 (“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.

T he 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.

Variable Interest Entities

Nexstar may determine that an entity is a VIE as a result of local service agreements entered into with an entity.

The term local service agreement generally refers to a contract between two separately owned television stations serving the same market, whereby the owner-operator of one station contracts with the owner-operator of the other station to provide it with administrative, sales and other services required for the operation of its station.

The term local service agreement generally refers to a contract whereby the owner-operator of a television station contracts with a third party (typically another television station owner-operator) to provide it with administrative, sales and other services required for the operation of its station.

Nevertheless, the owner-operator of each station retains control and responsibility for the operation of its station, including ultimate responsibility over all programming broadcast on its station.

A local service agreement can be (1) a time brokerage agreement (“TBA”) or a local marketing agreement (“LMA”) which allows Nexstar to program most of a station’s broadcast time, sell the station’s advertising time and retain the advertising revenue generated in exchange for monthly payments, based on the station’s monthly operating expenses, (2) a shared services agreement (“SSA”) which allows the Nexstar station in the market to provide services including news production, technical maintenance and security, in exchange for Nexstar’s right to receive certain payments as described in the SSA, or (3) a joint sales agreement (“JSA”) which permits Nexstar to sell certain of the station’s advertising time and retain a percentage of the related revenue, as described in the JSA.

A local service agreement can be (i) a time brokerage agreement (“TBA”) or a local marketing agreement (“LMA”) which allows Nexstar to program most of a station’s broadcast time, sell the station’s advertising time and retain the advertising revenue generated in exchange for monthly payments, based on the station’s monthly operating expenses, (ii) a shared services agreement (“SSA”) which allows Nexstar to provide services to a station including news production, technical maintenance and security, in exchange for Nexstar’s right to receive certain payments as described in the SSA, or (iii) a joint sales agreement (“JSA”) which permits Nexstar to sell certain of the station’s advertising time and retain a percentage of the related revenue, as described in the JSA.

Consolidated VIEs

Nexstar consolidates entities in which it is deemed under accounting principles generally accepted in the United States (“U.S.

GAAP”) to have controlling financial interests for financial reporting purposes as a result of (1) local service agreements Nexstar has with the stations owned by these entities, (2) Nexstar’s guarantee of the obligations incurred under Mission Broadcasting, Inc.’s (“Mission”) senior secured credit facility (see Note 8), (3) Nexstar having power over significant activities affecting these VIEs’

economic performance, including budgeting for advertising revenue, certain 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 each of these VIEs’

GAAP”) to have controlling financial interests for financial reporting purposes as a result of (i) local service agreements Nexstar has with the stations owned by these entities, (ii) Nexstar’s (excluding The CW) guarantee of the obligations incurred under Mission Broadcasting, Inc.’s (“Mission”) senior secured credit facility (see Note 8), (iii) Nexstar having power over significant activities affecting these VIEs’

economic performance, including budgeting for advertising revenue, certain advertising sales and 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 each of these VIEs’

stations, subject to FCC consent.

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WFXP, KHMT and KFQX

SSA & JSA (1)(2)

KJTL, KLRT, KASN, KOLR, KCIT, KAMC, KRBC, KSAN, WUTR, WAWV, WYOU, KODE, WTVO, KTVE, WTVW, WVNY, WXXA, WLAJ, KMSS, KPEJ, KLJB, KASY, KWBQ and KRWB

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White Knight Broadcasting (“White Knight”)

SSA & JSA (3)

WVLA and KFXK

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WBDT, WYTV and KTKA

____________________________________________

(1) On July 1, 2021, Mission executed JSAs with Nexstar for stations KMSS, KPEJ, KLJB, KASY, KWBQ and KRWB in addition to the existing SSAs with these stations.

Prior to entering these JSAs, Nexstar provided services to these stations under SSAs only.

(2) On June 17, 2021, Mission acquired WNAC-TV, the Fox-affiliated full power television station serving the Providence, Rhode Island market, from Super Towers, Inc.

(“Super Towers”).

Mission also assumed the existing LMA with Nexstar for WNAC.

On May 24, 2021, Mission acquired the license assets of television station KGBT-TV serving the Harlingen-Weslaco-Brownsville-McAllen, Texas market from Sinclair Broadcast Group, Inc.

(“Sinclair”) and executed a JSA on July 1, 2021 and an SSA with Nexstar for the station.

The total price for both transactions was $ 8.4 million in cash.

On September 15, 2021, Nexstar acquired KGBT-TV’s license assets from Mission for the same price Mission paid Sinclair.

Effective September 15, 2021, KGBT-TV is no longer a VIE and the JSA and SSA were terminated.

(3) On October 1, 2021, Nexstar acquired television station KSHV serving the Shreveport, Louisiana market from White Knight for a nominal price.

Effective October 1, 2021, KSHV is no longer a VIE and the JSA and SSA between Nexstar and White Knight for the station were terminated.

As Nexstar is the primary beneficiary of the television stations described above, the purchases of stations between parties within the consolidated Nexstar group were deemed common control transactions in accordance with FASB ASC 805-50, “Business Combinations—Common Control Transactions.”

Therefore, the acquirer in those transactions recorded the net assets at historical book values, rather than at estimated fair values.

The excess of purchase price over carrying values of net assets was accounted for as a net reduction to equity in the accompanying Consolidated Statements of Changes in Stockholders’

For financial reporting purposes, Nexstar continued to include the stations’

net assets and financial results at historical amounts for all periods presented in the accompanying Consolidated Financial Statements, except KGBT’s license assets were only included beginning on May 24, 2021.

On June 16, 2021, Mission granted Nexstar an option to purchase station WNAC from Mission, subject to FCC consent.

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

As of December 31, 2021, Nexstar has been granted an option to purchase each station owned by consolidated VIEs, subject to FCC consent.

Nexstar’s ability to receive cash from Mission and the other consolidated VIEs is governed by the local service agreements.

Nexstar’s ability to receive cash from the consolidated VIEs is governed by the local service agreements.

Under these agreements, Nexstar has received substantially all of the consolidated VIEs’

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In compliance with FCC regulations for all the parties, each VIE maintains complete responsibility for and control over programming, finances, personnel and operations of its stations.

As of December 31, the carrying amounts and classification of the assets and liabilities, excluding intercompany amounts, of the VIEs which have been included in the Consolidated Balance Sheets were as follows (in thousands):

Current assets:

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Network affiliation agreements, net

Other intangible assets, net

Other noncurrent assets, net

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Current portion of debt

Interest payable

Other current liabilities

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Total liabilities

As of December 31, the following are assets of consolidated VIEs, excluding intercompany amounts, that are not available to settle the obligations of Nexstar and the liabilities of consolidated VIEs, excluding intercompany amounts, for which their creditors do not have recourse to the general credit of Nexstar (in thousands):

Current assets

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Nexstar has determined that it has a variable interest in WYZZ.

Nexstar has evaluated its arrangements with Cunningham and has determined that it is not the primary beneficiary of the variable interest in this station because it does not have the ultimate power to direct the activities that most significantly impact the station’s economic performance, including developing the annual operating budget, programming and oversight and control of sales management personnel.

Nexstar has also evaluated its arrangements with Cunningham and has determined that it is not the primary beneficiary of the variable interest in this station because it does not have the ultimate power to direct the activities that most significantly impact the station’s economic performance, including developing the annual operating budget, programming and oversight and control of sales management personnel.

Therefore, Nexstar has not consolidated WYZZ under authoritative guidance related to the consolidation of VIEs.

Under the outsourcing agreement for WYZZ, Nexstar pays for certain operating expenses, and therefore may have unlimited exposure to any potential operating losses.

Nexstar’s management believes that Nexstar’s minimum exposure to loss under the WYZZ agreement consists of the fees paid to Cunningham.

Additionally, Nexstar indemnifies the owners of Cunningham from and against all liability and claims arising out of or resulting from its activities, acts or omissions in connection with the agreement.

The maximum potential amount of future payments Nexstar could be required to make for such indemnification is undeterminable at this time.

There were no significant transactions arising from Nexstar’s outsourcing agreement with Cunningham.

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GAAP requires management to make estimates and use assumptions that affect the reported amounts of assets and liabilities and the disclosure for contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.

The more significant estimates made by management include, but are not limited to, those relating to allowance for doubtful accounts, valuation of assets acquired and liabilities assumed in business combinations, distribution revenue recognized, income taxes, the recoverability of goodwill, FCC licenses and long-lived assets, pension and postretirement obligations, the recoverability of investments, the recoverability of broadcast rights and the useful lives of property and equipment and intangible assets.

The more significant estimates made by management include, but are not limited to, those relating to allowance for credit losses, valuation of assets acquired and liabilities assumed in business combinations, distribution revenue recognized, deferred income tax asset valuation allowances, fair value of stock-based compensation, the recoverability of goodwill, FCC licenses and long-lived assets, pension and postretirement obligations, the recoverability of investments, the recoverability of broadcast rights and the useful lives of property and equipment and intangible assets.

As of December 31, 2022, the Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or revision of the carrying value of its assets or liabilities.

However, these estimates and judgments may change as new events occur and additional information is obtained, which may result in changes being recognized in the Company’s consolidated financial statements in future periods.

While the Company considered the effects of COVID-19 in its estimates and assumptions, due to the current level of uncertainty over the economic and operational impacts of COVID-19 on its business, there may be other judgments and assumptions that were not currently considered.

Such judgments and assumptions could result in a meaningful impact on the Company’s consolidated financial statements in future periods.

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The Company considers all highly liquid investments purchased with an original maturity of ninety days or less to be cash equivalents.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts Receivable and Allowance for Credit Losses

The Company’s accounts receivable consist primarily of billings to its customers for advertising broadcast on its stations or placed on its websites, for retransmission consent or network carriage by cable or satellite operators, and for digital publishing and content management, digital video advertising, social media advertising and related services.

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The Company does not require collateral from its customers but maintains reserves for potential credit losses.

Management believes that the allowance for doubtful accounts is adequate, but if the financial condition of the Company’s customers were to deteriorate, additional allowances may be required.

Management believes that the allowance for credit losses is adequate, but if the financial condition of the Company’s customers were to deteriorate, additional allowances may be required.

The Company has not experienced significant losses related to receivables from individual customers or by geographical area.

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The lag between billing the customers and when the payment is due is not significant.

Advertising Revenues —The Company generates revenue by delivering advertising on the Company’s television stations, cable network, digital multicast network services and radio station.

Core and Political Advertising Revenues —The Company generates revenue by delivering advertising on the Company’s television stations, cable and broadcast networks, and radio station.

The advertising contracts are short-term in nature and include a number of spots that are delivered over the term of the arrangement.

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Each performance obligation is satisfied over time as the advertiser receives and consumes benefits when its commercial is aired.

For station digital advertising, the performance obligation is a station’s promise to place an advertisement on its website and is satisfied either based on impressions or the placement of ads over an agreed period of time.

Advertising revenue is recognized, for the amount the Company is entitled to receive, when the advertisements are broadcast or delivered on the stations’

Distribution Revenues —The Company’s retransmission consent and carriage agreements with MVPDs and OVDs generally have a three-year term and provide revenue based on a monthly amount the Company is entitled to receive per subscriber.

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Adjustments associated with the resolution of such estimates have, historically, been inconsequential.

Other Digital Revenues —Revenue from the Company’s other digital businesses includes revenue from video and display advertising platforms that are delivered locally or nationally through our own and various third party websites and mobile applications, a consumer product reviews platform, and other digital media solutions to media publishers and advertisers.

Revenue is recognized at the time advertising is delivered or upon performance of services.

Other distribution revenue includes affiliate compensation revenue in accordance with certain affiliation agreements, which is recognized ratably over the term of the agreement.

Digital Revenues —For station digital advertising, the performance obligation is a station’s promise to place an advertisement on its website and is satisfied either based on impressions or the placement of ads over an agreed period of time.

Advertising revenue is recognized, for the amount the Company is entitled to receive, when the advertisements are broadcast or delivered on the stations’

Other digital advertising includes revenue from video and display advertising platforms that are delivered locally or nationally through our own and various third party websites and mobile applications.

Revenue is recognized at the time advertising is delivered through these platforms.

Revenue from other digital businesses includes a consumer product reviews platform, which is recognized upon performance of services.

The Company applies the right to invoice practical expedient to certain transactions where the invoice amount corresponds directly with the value to its customers.

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In accordance with generally accepted accounting principles, assets held for sale are not depreciated or amortized.

In the fourth quarter of 2021, certain non-depreciable real estate property located in Chicago was classified as held for sale due to the expected consummation of a contract to sell within one year.

As of December 31, 2021, the property’s previous carrying amount of $ 68.3 million was written down to its estimated fair value, less estimated cost to sell, of $ 45.3 million, resulting in a $ 23.0 million impairment charge.

On June 1, 2022, Nexstar completed the sale of a real estate asset located in Chicago for gross cash proceeds of $ 45.3 million.

The asset was classified as held for sale in the accompanying Consolidated Balance Sheet as of December 31, 2021 .

On October 19, 2022, a real estate property located in Chicago was reclassified as held for sale due to the buyer’s exercise of its option to purchase.

Upon designation as an asset held for sale, it was written down to its estimated fair value, less estimated cost to sell, of $ 199.5 million, resulting in a $ 36.8 million impairment charge.

The sale closed on November 18, 2022.

The Company accounts for investments in which it owns at least 20 % of an investee’s voting securities or has significant influence over an investee under the equity method of accounting.

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See Note 8 for additional information.

The Company determines if a contract is an operating lease or a finance lease at inception for which a right-of-use (“ROU”) asset and a lease liability is recognized.

At the commencement date of the lease, ROU assets and lease liabilities are both measured and recorded at the present value of the future lease payments over the lease term.

The Company determines if a contract is a lease at inception.

We determine that a contract contains a lease if we obtain substantially all of the economic benefits of, and the right to direct the use of, an asset identified in the contract.

For leases with terms greater than 12 months, we record right-of-use (“ROU”) asset and lease liability which are both measured at the present value of the future lease payments over the lease term.

The lease payments exclude any executory costs as they are not significant.

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When determining if a renewal option is reasonably certain of being exercised, the Company considers several factors, including but not limited to the significance of leasehold improvements incurred on the property, whether the asset is difficult to replace, and specific characteristics unique to the particular lease that would make it reasonably certain that the Company would exercise such option.

As most of the Company’s leases do not provide an implicit rate, the incremental borrowing rate was used based on the information available at the commencement date in determining the present value of future lease payments.

As most of the Company’s leases do not provide an implicit rate, the incremental borrowing rate was used in determining the present value of future lease payments.

The discount rate represents a risk-adjusted rate on a secured basis and is the rate at which the Company would borrow funds to satisfy the scheduled lease liability payment streams commensurate with the lease term.

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Broadcast Rights and Broadcast Rights Payable

The Company records broadcast rights contracts as an asset and a liability when the following criteria are met:

(1) the license period has begun, (2) the cost of each program is known or reasonably determinable, (3) the program material has been accepted in accordance with the license agreement, and (4) the program is produced and available for broadcast.

The Company acquires licenses to broadcast programs from national program syndicators and from certain production companies.

The Company records these contracts as an asset and a liability when the following criteria are met:

(i) the license period has begun, (ii) the cost of each program is known or reasonably determinable, (iii) the program material has been accepted in accordance with the license agreement, and (iv) the program is produced and available for broadcast.

Broadcast rights are initially recorded at the contract cost and are amortized on a straight-line basis over the period the programming airs.

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The Company periodically evaluates the net realizable value, calculated using the average historical rates for the programs or the time periods the programming will air, of broadcast rights and adjusts the amortization for any deficiency calculated.

As of December 31, 2022, programming costs included $ 66.2 million of costs that was contractually due related to episodes that had been completed by certain production companies but not yet delivered to the Company.

Such episodes are typically delivered within a few weeks of completion.

For the years ended December 31, 2022, 2021 and 2020, amortization of broadcast rights of $ 192.9 million, $ 121.1 million and $ 137.5 million, respectively, were included in Depreciation and amortization expense in the accompanying Consolidated Statements of Operations and Comprehensive Income.

Property and Equipment, Net

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The Company accounts for acquired businesses using the acquisition method of accounting, which requires that purchase prices, including any contingent consideration, are measured at acquisition date fair values.

These purchase prices are allocated to the assets acquired and liabilities assumed at estimated fair values at the date of acquisition using various valuation techniques, including the income approach, such as 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 projected cash flow model referred to as the Greenfield Method.

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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 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 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.

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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 fair value of the collective FCC license and a network affiliation agreement.

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 over the fair value of identifiable net assets acquired.

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

During the measurement period, which may be up to one year from the acquisition date of a business, the Company records adjustments related to the assets acquired and liabilities assumed with the corresponding offset to goodwill.

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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.

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revenue growth, operating profit margins, capital expenditures, discount rates) used to calculate the fair value of reporting units, the Company evaluates the reasonableness of its assumptions by comparing the total fair value of all its reporting units to its total market capitalization and by comparing the fair values of its reporting units to recent market sale transactions.

The Company tests finite-lived intangible assets and other long-lived assets to be held and used for impairment whenever events or changes in 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.

The Company tests definite-lived intangible assets and other long-lived assets to be held and used for impairment whenever events or changes in 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.

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The amount by which the projected benefit obligation exceeds the fair value of the pension plan assets is recorded in other noncurrent liabilities in the accompanying Consolidated Balance Sheets.

The net periodic benefit credit, which consists of interest costs and expected return on plan assets, is disclosed on a separate line item below income from operations in the accompanying Consolidated Statements of Operations and Comprehensive Income.

The net periodic benefit credit, which consists of expected return on plan assets and interest costs, is disclosed on a separate line item below income from operations in the accompanying Consolidated Statements of Operations and Comprehensive Income.

Stock-Based Compensation

Nexstar maintains stock-based employee and non-employee compensation plans which are described more fully in Note 13 .

The Company calculates the grant-date fair value of employee and non-employee stock options using the Black-Scholes model.

The fair values of time-based and performance-based restricted stock units are based on the number of shares awarded and market price of the stock on the date of award.

These amounts are recognized into selling, general and administrative expense over the vesting period of the options and the time-based restricted stock units, and for performance-based restricted stock units, when it is probable that the performance conditions will be achieved.

These amounts are recognized into selling, general and administrative expense over the vesting period of the time-based restricted stock units and when it is probable that the performance conditions will be achieved for performance-based restricted stock units.

The excess or shortage of tax deductions over the compensation cost of stock-based payments is recognized as income tax benefit or income tax expense, respectively.

The Company calculates the grant-date fair value of employee and non-employee stock options using the Black-Scholes model, but no compensation expense was recorded during the years 2022, 2021 and 2020 as the options are fully vested and there were no additional stock option grants during these years.

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and tax basis of assets and liabilities.

A valuation allowance is applied against net deferred tax assets if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

Nexstar and its subsidiaries file a consolidated federal income tax return.

Nexstar files a consolidated federal income tax return.

Mission, White Knight and 54 Broadcasting, Inc.

(a subsidiary of Vaughan and owner of station KNVA) file their own separate federal income tax returns.

Vaughan is a disregarded entity for tax purposes and does not incur tax within the consolidated financial statements.

The CW and Vaughan are disregarded entities for tax purposes and do not incur tax within the consolidated financial statements.

The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities.

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Income Per Share

Basic income per share is computed by dividing the net income by the weighted-average number of common shares outstanding during the period.

Basic income per share is computed by dividing the net income attributable to Nexstar by the weighted-average number of common shares outstanding during the period.

Diluted income per share is computed using the weighted-average number of common shares and potentially dilutive common shares outstanding during the period.

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Segment Presentation

The Company assesses its operating segments in accordance with ASC Topic 280, “Segment Reporting.”

The Company assesses its operating segments in accordance with Accounting Standards Codification (“ASC”) Topic 280, “Segment Reporting.”

Nexstar operates in one reportable broadcast segment.

The other activities of the Company include corporate functions, the management of certain real estate assets, including revenues from leasing certain owned office and production facilities, digital businesses and eliminations.

The other activities of the Company include operating Nexstar’s recently acquired The CW (see Note 3), digital businesses, corporate functions, the management of certain real estate assets, including revenues from leasing certain owned office and production facilities, and eliminations.

See Note 17 for additional segment information.

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New Accounting Standards Adopted

On November 19, 2020, the SEC issued Final Rule Release No.

33-10890, “

Management’s Discussion and Analysis, Selected Financial Data, and Supplementary Financial Information”

(“SEC Rule 33-10890”), which amends certain sections of Regulation S-K to modernize, simplify, and enhance Management’s Discussion and Analysis (“MD&A”), streamline supplementary financial information and eliminate the requirement to provide certain selected financial data.

Key changes include:

(i) enhancement and clarification of the disclosure requirements for liquidity and capital resources;

(ii) elimination of five years of Selected Financial Data;

(iii) replacement of the current requirement for two years of quarterly tabular disclosure only when there are material retrospective changes;

(iv) codification of prior SEC guidance on critical accounting estimates;

(v) elimination of tabular disclosure of contractual obligations;

and (vi) confirming amendments for foreign private issuers.

SEC Rule 33-10890 was effective on February 10, 2021.

Registrants are required to comply with the new rules beginning with the first fiscal year ending on or after August 9, 2021.

Registrants may early adopt the amended rules at any time after the effective date (on an item-by-item basis), as long as they provide disclosure responsive to an amended item in its entirety.

The Company updated its disclosures throughout this Annual Report on Form 10-K to comply with these amendments.

Upon adoption of SEC Rule 33-10890, the Company no longer presents quarterly financial data in the accompanying Notes to Consolidated Financial Statements.

In January 2020, the FASB issued ASU 2020-01, “Investments—Equity securities (Topic 321)”

(“ASU 2020-01”), which clarifies the interaction of the accounting for equity securities under Topic 321 and investments under the equity method of accounting in Topic 323 and the accounting for certain forward contracts and purchased options accounted for under Topic 815.

The amendments in ASU 2020-01 clarify that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting for the purposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method.

The amendments in ASU 2020-01 are effective for all entities for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years.

In July 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2021-05, “Leases (Topic 842):

Lessors—Certain leases with variable payments”

(“ASU 2021-05”).

Under the ASU, a lessor would classify a lease with variable lease payments that do not depend on an index or rate as an operating lease at lease commencement if the lease would have been classified as a sales-type lease or direct financing lease under ASC 842 classification criteria and the lessor would have otherwise recognized a day one loss.

The ASU is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years.

Early adoption is permitted.

The Company adopted ASU 2021-05 effective January 1, 2022 .

The adoption did not have a material impact on the Company’s Consolidated Financial Statements and related disclosures.

In December 2019, the FASB issued ASU 2019-12, “Income taxes (Topic 740)—Simplifying the accounting for income taxes”

(“ASU 2019-12”), which is intended to simplify various aspects related to accounting for income taxes.

ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application.

The Company adopted this standard effective January 1, 2021 .

The adoption of this standard did not have a material impact on the Company’s Consolidated Financial Statements and related disclosures.

In March 2020, the FASB issued ASU No.

2020-04, “Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting”

(“ASU 2020-04”).

In January 2021, the FASB issued ASU 2021-01, “Reference Rate Reform (Topic 848):

Scope”

(“ASU 2021-01”).

Together, these accounting updates provide optional expedients and exceptions for applying U.S.

GAAP to contract modifications and hedging relationships that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.

ASU 2020-04 provides, among other things, guidance that modifications of contracts within the scope of Topic 470, Debt, should be accounted for by prospectively adjusting the effective interest rate;

modifications of contracts within the scope of Topic 842, Leases, should be accounted for as a continuation of the existing contract;

and changes in the critical terms of hedging relationships caused by reference rate reform should not result in the de-designation of the instrument, provided certain criteria are met.

ASU 2021-01 clarifies the scope and application of ASU 2020-04 and among other things, permits entities to elect certain optional expedients and exceptions when accounting for derivative contracts and certain hedging relationships affected by changes in the interest rates used for discounting cash flows.

ASU 2020-04 was amended by ASU No.

2022-06, “Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848”

issued by FASB in December 2022, which defers the sunset date of Topic 848 from December 31, 2022 to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848.

In June 2022, the Company applied the optional expedients provided by these accounting updates for contract modifications to the amendment of its senior credit facilities.

The adoption of these accounting updates did not have a material impact on the Company’s Consolidated Financial Statements and related disclosures.

New Accounting Standards Not Yet Adopted

In October 2021, the FASB issued ASU No.

2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.

2021-08, “Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers”

(“ASU 2021-08”).

The amendments in this ASU require that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606.

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Early adoption is permitted.

The Company will evaluate the potential impacts the adoption of ASU 2021-08 may have on its Consolidated Financial Statements upon its adoption as it relates to future acquisitions.

In July 2021, the FASB issued ASU No.

2021-05, Leases (Topic 842):

Lessors—Certain leases with variable payments.

The ASU is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years.

Early adoption is permitted.

The Company does not expect the standard to have a material impact on its Consolidated Financial Statements upon its adoption effective on January 1, 2022.

In March 2020, FASB issued ASU No.

2020-04, “Reference Rate Reform (Topic 848)”

(“ASU 2020-04”) , which provides optional guidance for a limited period of time to ease potential accounting impacts associated with transitioning away from reference rates that are expected to be discontinued, such as the London Interbank Offered Rate ("LIBOR").

The amendments in ASU 2020-04 apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued.

The amendments in ASU 2020-04 are effective through December 31, 2022.

The Company is currently assessing the potential impacts the adoption of ASU 2020-04 may have on its Consolidated Financial Statements upon its adoption.

The Company will evaluate the potential impacts ASU 2021-08 may have on its Consolidated Financial Statements upon its adoption on effective date as it relates to future acquisitions.

Acquisitions and Dispositions

2022 Acquisition of The CW

On September 30, 2022 , Nexstar completed its acquisition of a 75.0 % ownership interest in The CW from affiliates of Paramount Global and Warner Bros.

Discovery (collectively 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 interests 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 is expected to create value by improving The CW’s ratings, revenue, and profitability.

The transaction was accounted for under the acquisition method of accounting.

Subject to final determination, which is expected to occur within twelve months of the acquisition date, the provisional fair values of the assets acquired, liabilities assumed and the noncontrolling interests at the acquisition date are as follows (in millions):

Assets acquired

Cash and cash equivalents

Accounts receivable

Prepaid expenses and other current assets

Broadcast rights

Intangible assets

Other noncurrent assets

Total assets acquired

Liabilities assumed:

Accounts payable and accrued expenses

Broadcast rights payable

Deferred tax liabilities

Other liabilities

Total liabilities assumed

Net assets acquired

Consideration paid

Noncontrolling interests

Gain on bargain purchase

Programming costs and accrued programming costs pertain to The CW’s costs of acquiring programming from the Sellers and were valued using the replacement cost method as of Nexstar’s acquisition due to their short-term nature.

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 paid and the fair value of the noncontrolling interests.

This gain is presented as a separate line item in the accompanying Consolidated Statements of Operations and Comprehensive Income during the year ended December 31, 2022.

Nexstar believes it was able to acquire The CW for $0 purchase consideration due to the recurring losses of The CW and Nexstar’s position as the largest owner of The CW-affiliated television stations which it believes limited the number of interested acquirers, Nexstar’s agreement to commit The CW to acquire additional programming from the Sellers for the 2022/2023 broadcast season, and Nexstar’s agreement to allow the Sellers to distribute certain short and long-term accounts receivable related to previously-aired programming to the Sellers prior to closing.

The intangible assets are amortized over an estimated useful life of 4.5 years beginning in the fourth quarter of 2022.

The CW’s net revenue of $ 66.4 million and operating loss of $ 94.9 million from the acquisition date to December 31, 2022 has been included in the accompanying Consolidated Statements of Operations and Comprehensive Income.

Transaction costs related to this acquisition, including severance costs, retention bonuses and legal and professional fees totaling $ 33.0 million were included in selling, general and administrative expense, excluding depreciation and amortization in the accompanying Consolidated Statements of Operations and Comprehensive Income.

2021 Acquisitions

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On August 27, 2021, NCI received approval for its conversion from a Nevada corporation to a Delaware corporation.

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.

Subject to final determination, which is expected to occur within twelve months of the acquisition date, the provisional fair values of the assets acquired and liabilities assumed are as follows (in thousands):

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

The fair values of the assets acquired and liabilities assumed are as follows (in millions):

Assets acquired

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The fair value assigned to goodwill is attributable to operating expense reductions and revenue synergies.

The carryover tax basis in goodwill, other intangible assets and property and equipment are deductible for tax purposes but are not significant.

The carryover tax bases in goodwill, other intangible assets and property and equipment are deductible for tax purposes but are not significant.

Other intangible assets are amortized over an estimated weighted average useful life of 6.7 years.

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The operating income and transaction costs from the acquisition date to December 31, 2021 have also been included in the accompanying Consolidated Statements of Operations and Comprehensive Income but were not material.

2021 Common Control Transactions

On June 17, 2021 , Mission acquired WNAC-TV, the Fox affiliate in the Providence, Rhode Island market, from Super Towers.

Mission also assumed the existing LMA with Nexstar and granted Nexstar an option to purchase the station from Mission, subject to FCC consent.

On May 24, 2021 , Mission acquired the license assets of television station KGBT-TV serving the Harlingen-Weslaco-Brownsville-McAllen, Texas market from Sinclair.

The total price for both transactions was $ 8.4 million in cash.

On September 15, 2021, Nexstar acquired the license assets of KGBT-TV from Mission for the same price Mission paid Sinclair.

Effective September 15, 2021, KGBT-TV is no longer a VIE and the JSA and SSA between Nexstar and Mission for the station were terminated.

On October 1, 2021, Nexstar acquired KJBO-LP, a low power television station in the Wichita Falls, Texas market, and KCPN-LP, a low power television station in the Amarillo, Texas market, from Mission.

On the same date, Nexstar also acquired KSHV, a full power television station in the Shreveport, Louisiana market and KTPN-LD, a low power television station in the Tyler-Longview, Texas market, from White Knight.

The television stations are affiliates of MNTV, and the total purchase price paid by Nexstar for these stations was nominal.

As Nexstar is the primary beneficiary of the television stations described in the transactions above (see Note 2 for discussion of variable interest entities), the purchases of stations between parties within the consolidated Nexstar group were deemed common control transactions in accordance with FASB ASC 805-50, “Business Combinations—Common Control Transactions.”

Therefore, the acquirer in those transactions recorded the net assets at historical book values, rather than at estimated fair values.

The excess of purchase price over carrying values of net assets was accounted for as a net reduction to equity in the accompanying Consolidated Statements of Changes in Stockholders’

For financial reporting purposes, Nexstar continued to include the stations’

2020 Acquisitions and Dispositions

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BestReviews engages in the business of testing, researching and reviewing consumer products.

The acquisition of BestReviews diversifies Nexstar’s digital portfolio while presenting the Company with new revenue channels by leveraging its media content, national reach, and consumer digital usage across multiple platforms.

The acquisition of BestReviews diversified Nexstar’s digital portfolio.

Other 2020 Nexstar Acquisitions

On September 17, 2020 , Nexstar acquired WDKY-TV, the Fox affiliate in the Lexington, KY market, from Sinclair for $ 18.0 million in cash, funded by cash on hand.

On September 17, 2020 , Nexstar acquired WDKY-TV, the Fox affiliate in the Lexington, KY market, from Sinclair Broadcast Group, Inc.

(“Sinclair”) for $ 18.0 million in cash, funded by cash on hand.

This acquisition allowed Nexstar’s entry into this market.

Based on the purchase price allocation, the fair values of identifiable net assets acquired were $ 37.0 million which led to a bargain purchase gain of $ 19.0 million.

The bargain purchase gain was recognized as a result of Sinclair’s motivation to sell the station to Nexstar as part of a resolution to settle a lawsuit between Tribune Media Company (“Tribune”), a subsidiary of Nexstar, and Sinclair .

T he bargain purchase gain, net of tax effects, was recorded as a measurement period adjustment to the Tribune acquisition and reduced goodwill in 2020.

On March 2, 2020 , Nexstar acquired the Fox affiliate television station WJZY and the MNTV affiliate television station WMYT in the Charlotte, NC market from Fox Television Stations, LLC (“Fox”), a Delaware limited liability company, for $ 45.3 million in cash.

On March 2, 2020 , Nexstar acquired the Fox affiliate television station WJZY and the MNTV affiliate television station WMYT in the Charlotte, NC market from Fox Television Stations, LLC, a Delaware limited liability company, for $ 45.3 million in cash.

This acquisition allowed Nexstar’s entry into this market.

Simultaneous with this acquisition, Nexstar sold certain of its television stations to Fox as described in more detail in “2020 Nexstar Dispositions”

Simultaneous with this acquisition, Nexstar sold certain of its television stations to Fox as described in “2020 Nexstar Dispositions”

On January 27, 2020 , Nexstar acquired from Sinclair certain non-license assets associated with television station KGBT-TV in the Harlingen-Weslaco-Brownsville-McAllen, Texas market for $ 17.9 million in cash funded by cash on hand.

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acquisition dates to December 31, 2020 have been included in the accompanying Consolidated Statements of Operations and Comprehensive Income.

The transaction costs related to these acquisitions from the acquisition date to December 31, 2020 were not material.

The transaction costs related to these acquisitions from the acquisition dates to December 31, 2020 were not material.

2020 Mission Acquisitions

On December 30, 2020 , Mission acquired the CW affiliate station WPIX in the New York, NY market from Scripps.

On December 30, 2020 , Mission acquired CW affiliate station WPIX in the New York, NY market from The E.W Scripps Company.

Mission funded the purchase price of $ 85.1 million in cash through a combination of borrowing from its revolving credit facility and cash on hand .

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On September 1, 2020, Mission entered into SSAs with Nexstar for the stations.

As discussed in Note 2, on July 1, 2021, Mission executed JSAs with Nexstar for stations KMSS, KPEJ and KLJB.

The 2020 acquisitions’

O n July 1, 2021, Mission executed JSAs with Nexstar for stations KMSS, KPEJ and KLJB.

The 2020 Mission acquisitions’

combined net revenue of $ 11.9 million and combined operating income of $ 2.6 million from the stations’

acquisition dates to December 31, 2020 have been included in the accompanying Consolidated Statements of Operations and Comprehensive Income.

Transaction costs related to the 2020 acquisitions, including legal and professional fees, were $ 7.8 million during the year ended December 31, 2020.

These costs were included in selling, general and administrative expense, excluding depreciation and amortization in the accompanying Consolidated Statements of Operations and Comprehensive Income.

The fair values of the assets acquired and liabilities assumed from the above acquisitions in 2020 are as follows (in thousands):

Other 2020 Nexstar Acquisitions

2020 Mission Acquisitions

Assets acquired

Cash and cash equivalents

Accounts receivable, net

Prepaid expenses and other current assets

Property and equipment

Network affiliation agreements

Other intangible assets

Other noncurrent assets

Total assets acquired

Accounts payable

Broadcast rights payable

Accrued expenses and other current liabilities

Operating lease liabilities

Other noncurrent liabilities

Bargain purchase gain

Total Purchase Price

For BestReviews, the fair value assigned to goodwill is attributable to future economic benefits expected to arise from other intangible assets acquired that do not qualify for separate recognition, including non-binding relationships with suppliers, ecommerce partners and users of the BestReviews platform, as well as expected future cost and revenue synergies.

For each acquired television station, the fair value assigned to goodwill is attributable to future expense reductions utilizing management’s leverage in programming and other station operating costs.

The entire goodwill and FCC licenses from the acquisitions are deductible for tax purposes.

The intangible assets related to the network affiliation agreements are amortized over 15 years .

Other intangible assets are amortized over an estimated weighted average useful life of 6 years .

The other noncurrent assets acquired and the other noncurrent liabilities assumed primarily relate to operating right-of-use assets and lease liabilities associated with Mission’s acquisition of WPIX.

2020 Common Control Transactions

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KASY (an MNTV affiliate), KWBQ (a CW affiliate) and KRWB (a CW affiliate) are full power television stations serving the Albuquerque, New Mexico market.

On November 23, 2020 , Mission acquired WXXA, the Fox affiliate in the Albany, NY market, and WLAJ, the ABC affiliate in the Lansing, MI market, from Shield Media, LLC.

On November 23, 2020 , Mission acquired WXXA, the Fox affiliate in the Albany, NY market, and WLAJ, the ABC affiliate in the Lansing, MI market, from Shield Media, LLC (“Shield Media”).

In connection with these transactions, Mission assumed the stations’

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net assets and financial results at their historical amounts for all periods presented in the accompanying Consolidated Financial Statements.

In accordance with the change in reporting entity, Shield's repayment of its outstanding term loans in November 2020 were included in the caption “Repayments of long-term debt”

In accordance with the change in reporting entity, Shield Media’s repayment of its outstanding term loans in November 2020 were included in the caption “Repayments of long-term debt”

under financing activities in the accompanying Consolidated Statements of Cash Flows, as if Mission was the debtor of such loans as of the earliest period presented.

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On March 2, 2020, Nexstar completed the sale of Fox affiliate television station KCPQ and MNTV affiliate television station KZJO in the Seattle, WA market, as well as Fox affiliate television station WITI in the Milwaukee, WI market, to Fox for approximately $ 349.9 million in cash, including working capital adjustments.

These transactions resulted in a $ 7.0 million total net gain from disposals .

The proceeds from the sale of the stations were partially used to prepay a portion of Nexstar’s term loans in 2020.

The net gain that resulted from divestitures was recorded in the Gain on disposal of stations and entities, net in the accompanying Consolidated Statements of Operations and Comprehensive Income.

2019 Acquisitions and Dispositions

Merger with Tribune

On September 19, 2019 (the “Closing Date”), Tribune, a Delaware corporation, became a wholly owned subsidiary of Nexstar as a result of the merger of Titan Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Nexstar (“Merger Sub”), with and into Tribune (the “Merger”).

The Merger was effected pursuant to a merger agreement by and among Nexstar, Merger Sub and Tribune.

The Merger created the nation’s largest pure-play local broadcast television and digital company, with national coverage and reach to approximately 39 % of U.S.

television households (applying the FCC’s UHF discount).

As a result of the Merger, Nexstar acquired 31 full power stations and one AM radio station in 23 markets (net of divestitures of 13 Tribune full power television stations in 11 markets).

Nexstar also acquired WGN America, a national general entertainment cable network, which it subsequently reprogrammed and rebranded as NewsNation, a 31.3 % ownership stake in TV Food Network and a portfolio of real estate assets.

The full power television stations and the radio station acquired by Nexstar as a result of the Merger, net of divestitures, are as follows:

Full Power Stations

Primary Affiliation

Los Angeles, CA

Philadelphia, PA

Washington, DC

Fort Collins, CO

Cleveland, OH

Sacramento, CA

Indianapolis, IN

San Diego, CA

Kansas City, MO

Milwaukee, WI

Oklahoma City, OK

High Point, NC

New Orleans, LA

Des Moines, IA

Huntsville, AL

Eureka Springs, AR

The following table summarizes the components of the total consideration paid upon closing of the Merger (in thousands):

Cash consideration and related taxes

Warrants replacement awards

Repayment of Tribune debt, including premium and accrued interest

Gross purchase price

Gross selling price of Tribune Divestitures, including working capital adjustments

Net purchase price

Substantially concurrently with the Merger, Nexstar completed the sale of the assets of 21 full power television stations in 16 markets to TEGNA, Inc., E.W.

Scripps Company and Circle City Broadcasting I, Inc.

The total consideration of these divestitures was approximately $ 1.36 billion (inclusive of working capital adjustments).

These divestitures were previously agreed upon by Nexstar and Tribune to comply with the FCC’s local television ownership rule and the FCC’s national ownership cap and to facilitate Department of Justice (“DOJ”) approval of the Merger.

Eight of the divested television stations were previously owned by Nexstar and were sold for an estimated $ 358.6 million in cash, including working capital adjustments (the “Nexstar Divestitures”).

Nexstar recognized a $ 105.9 million gain on the Nexstar Divestitures.

The other 13 television stations, which were previously owned or operated by Tribune, were sold for an estimated $ 1.008 billion in cash, including working capital adjustments (the “Tribune Divestitures”).

Nexstar recognized a $ 9.8 million loss on disposal on the Tribune Divestitures, representing selling costs incurred with their disposition.

The net gain that resulted from the Nexstar Divestitures and the Tribune Divestitures was recorded in the Gain on disposal of stations and business units, net in the Consolidated Statements of Operations and Comprehensive Income.

The cash consideration, the repayment of then-existing indebtedness of Tribune and the related fees and expenses were funded through a combination of proceeds from station divestitures, proceeds from the $ 1.120 billion 5.625 % senior unsecured notes due 2027 (“5.625% Notes due 2027”) (see Note 8), Term Loan A and Term Loan B borrowings at the Closing Date and cash on hand of Nexstar and Tribune.

Tribune’s net revenue of $ 471.6 million and operating income of $ 78.4 million from September 19, 2019 to December 31, 2019 have been included in the accompanying Consolidated Statements of Operations and Comprehensive Income.

Transaction costs relating to the Merger, including legal and professional fees and severance costs of $ 3.4 million and $ 54.5 million, were expensed as incurred during the years ended December 31, 2020 and 2019, respectively.

These costs were included in selling, general and administrative expense, excluding depreciation and amortization in the accompanying Consolidated Statements of Operations and Comprehensive Income.

Unaudited Pro Forma Information

Other than the Tribune acquisition and related divestitures completed in 2019, the acquisitions and dispositions during 2021, 2020, and 2019 are not significant for pro forma financial information reporting purposes, both individually and in aggregate.

Therefore, pro forma financial information has not been provided for those transactions.

The following unaudited pro forma financial information has been presented for the periods indicated as if Nexstar’s acquisition of Tribune and the related divestitures had occurred on January 1, 2018 (in thousands):

December 31, 2019

Unaudited Pro Forma Financial Information

The following unaudited pro forma financial information has been presented for the periods indicated as if Nexstar’s acquisition of The CW had occurred on January 1, 2021 (in millions):

Years Ended December 31,

Income before income taxes

Net income attributable to Nexstar

The unaudited pro forma financial information combined the historical results of operations, adjusted for business combination accounting effects including transaction costs, the station divestitures, the net gain on disposal of stations previously owned by Nexstar, the depreciation and amortization charges from acquired intangible assets, the interest on new debt and the related tax effects.

The unaudited pro forma financial information is for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition of Tribune had taken place on January 1, 2018 because the pro forma results do not reflect expected synergies.

The unaudited pro forma financial information combines the historical results of operations, adjusted for business combination accounting effects including transaction costs, the gain on bargain purchase, the amortization charges from acquired intangible assets and the related tax effects.

The unaudited pro forma financial information is for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition of The CW had taken place on January 1, 2021, because the pro forma results do not reflect expected synergies.

The acquisitions and dispositions during 2021 and 2020 are not significant for pro forma financial information reporting purposes, both individually and in aggregate.

Therefore, pro forma financial information has not been provided for those transactions.

Property and Equipment

Property and equipment consisted of the following, as of December 31 (dollars in thousands):

Property and equipment consisted of the following, as of December 31 (dollars in millions):

Buildings and improvements

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Property and equipment, net

In the fourth quarter of 2021, certain real estate property (land) was reclassified to assets held for sale (see Note 2 for additional information).

The decrease in land was due to the sale of a real estate property located in Chicago with a carrying amount of $ 236.0 million.

The sale was completed on November 18, 2022 (see Note 2—Assets Held for Sale, Net for additional information on the sale).

For the years ended December 31, 2022, 2021 and 2020, depreciation expense of $ 159.9 million, $ 166.6 million and $ 147.7 million, respectively, were included in Depreciation and amortization expense in the accompanying Consolidated Statements of Operations and Comprehensive Income.

Intangible Assets and Goodwill

Intangible assets subject to amortization consisted of the following, as of December 31 (dollars in thousands):

The Company’s definite-lived intangible assets consisted of the following, as of December 31 (dollars in millions):

and Impairment

Network affiliation agreements

Other definite-lived intangible assets

Other intangible assets

The decrease in other definite-lived intangible assets was primarily due to amortization, partially offset by the current year acquisition of The Hill (see Note 3) and other purchases.

The following table presents the Company’s estimate of amortization expense for each of the five succeeding fiscal years and thereafter for definite-lived intangible assets as of December 31, 2021 (in thousands):

The changes in the carrying amounts of goodwill and FCC licenses for the years ended December 31, 2021 and 2020 are as follows (in thousands):

Definite-lived intangible assets

The decrease in definite-lived intangible assets was primarily due to amortization, partially offset by the current year acquisition of The CW (see Note 3).

For the years ended December 31, 2022, 2021 and 2020, amortization expense of $ 309.3 million, $ 300.9 million and $ 279.7 million, respectively, were included in Depreciation and amortization expense in the accompanying Consolidated Statements of Operations and Comprehensive Income.

The changes in the carrying amounts of goodwill and FCC licenses for the years ended December 31, 2022 and 2021 are as follows (in millions):

Balances as of December 31, 2021

Current year acquisitions (See Note 3)

Current year divestitures

Measurement period adjustments

Impairment loss

Balances as of December 31, 2022

In January 2021, Nexstar sold certain of its digital businesses’

assets for a nominal price.

As such, the gross amount of goodwill of $ 42.5 million and related accumulated impairment for the same amount were written off.

The resulting gain from this disposition was not material.

As discussed in Note 2, the Company has one aggregated television stations reporting unit, one cable network reporting unit, and two digital reporting units for purposes of annual goodwill impairment review as of December 31, 2022.

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Management conducts an impairment test annually in the fourth quarter, or whenever events or changes in circumstances indicate that goodwill or FCC licenses might be impaired.

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

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.

Thus, no impairment was recorded on these reporting units.

For the remaining digital reporting unit 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.

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, 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.

The Company’s quantitative goodwill impairment tests are sensitive to changes in key assumptions used in our analysis, such as expected future cash flows and market trends.

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

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 exceeded the respective carrying amounts.

Thus, no impairment was recorded.

The Company also performed qualitative tests and determined there were no impairment triggering events on its finite-lived intangible assets and other long-lived assets.

Further, based on the estimate of undiscounted future pre-tax cash flows expected to result from the use of such assets, the Company determined that the carrying amounts are recoverable as of December 31, 2021.

The Company also performed qualitative tests on its definite-lived intangible assets and other long-lived assets.

Based on the estimate of undiscounted future pre-tax cash flows expected to result from the use and eventual disposition of such assets, the Company 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.

Investments in the Company’s Consolidated Balance Sheets as of December 31 consisted of the following (in thousands):

Investments in the Company’s Consolidated Balance Sheets as of December 31 consisted of the following (in millions):

Equity method investments

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During the years ended December 31, 2022, 2021 and 2020, the Company received cash distributions from its equity method investments, primarily from its investment in TV Food Network, as discussed below.

Income from equity method investments, net reported in the Company’s Consolidated Statements of Operations and Comprehensive Income for the years ended December 31 consisted of the following (in thousands):

Income on equity investments, net, before amortization of basis difference

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The Company’s share in these basis differences and related amortization is primarily attributable to its investment in TV Food Network (discussed in more detail below).

There were no significant other-than-temporary impairment ("OTTI") during the year ended December 31, 2021.

There were no other-than-temporary impairments (“OTTI”) during the year ended December 31, 2022.

Investment in TV Food Network

Nexstar acquired its 31.3 % equity investment in TV Food Network through its acquisition of Tribune on September 19, 2019 (see Note 3).

Nexstar’s partner in TV Food Network is Discovery, Inc.

(“Discovery”), which owns a 68.7 % interest in TV Food Network and operates the network on behalf of the partnership.

TV Food Network owns and operates “The Food Network,”

a 24-hour lifestyle cable television channel focusing on food and related topics.

TV Food Network also owns and operates “The Cooking Channel,”

a cable television channel primarily devoted to cooking instruction, food information and other related topics.

TV Food Network’s programming is distributed by cable and satellite television systems and via Discovery's streaming platform, Discovery+.

Nexstar acquired its 31.3 % equity investment in TV Food Network through its acquisition of Tribune Media Company on September 19, 2019.

Nexstar’s partner in TV Food Network is Warner Bros.

Discovery, Inc.(“WBD”), which owns a 68.7 % interest in TV Food Network and operates the network on behalf of the partnership.

TV Food Network operates two 24-hour television networks, Food Network and Cooking Channel, offering quality television, video, internet and mobile entertainment and information focusing on food and entertaining.

The partnership agreement governing TV Food Network provides that the partnership shall, unless certain actions are taken by the partners, dissolve and commence winding up and liquidating TV Food Network upon the first to occur of certain enumerated liquidating events, one of which is a specified date of December 31, 2023.

Nexstar intends to renew its partnership agreement with Discovery for TV Food Network before expiration.

Nexstar intends to renew its partnership agreement with WBD for TV Food Network before expiration.

In the event of a liquidation, Nexstar would be entitled to its proportionate share of distributions to partners, which the partnership agreement provides would occur as promptly as is consistent with obtaining fair market value for the assets of TV Food Network.

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As of December 31, 2022, Nexstar’s investment in TV Food Network had a book value of $ 1.099 billion, compared to $ 1.191 billion as of December 31, 2021.

As of December 31, 2021, Nexstar had a remaining share in amortizable basis difference of $ 536.1 million related to its investment in TV Food Network.

This amortizable basis difference had a weighted average useful life of approximately 4 years as of this date.

As of December 31, 2020, Nexstar had a remaining share in amortizable basis difference of $ 661.3 million related to its investment in TV Food Network.

During 2021, there was no change in Nexstar’s share in the basis difference related to the investee’s goodwill.

Nexstar received cash distributions from TV Food Network totaling $ 239.5 million, $ 223.3 million and $ 14.8 million in 2021, 2020 and 2019, respectively.

In 2021, 2020 and 2019, Nexstar recorded its share in TV Food Network’s net income of $ 253.4 million, $ 220.3 million and $ 65.2 million, respectively, less amortization of basis difference (expense) related to this investment of $ 125.2 million, $ 147.2 million and $ 44.7 million, respectively.

Summarized financial information for TV Food Network is as follows (in thousands):

September 19, 2019 to

December 31, 2021

December 31, 2020

December 31, 2019

As of December 31, 2022 and 2021, Nexstar had a remaining share in amortizable basis difference of $ 466.6 million and $ 536.1 million, respectively, related to its investment in TV Food Network.

The remaining amortizable basis difference as of December 31, 2022 had a remaining useful life of approximately 6.7 years.

As of December 31, 2022, Nexstar’s share in the basis difference related to the investee’s goodwill was $ 500.4 million (no change in 2022).

Nexstar had the following transactions related to its investment in TV Food Network during the years ended December 31, 2022, 2021 and 2020, respectively (in millions):

received cash distributions totaling $ 249.4 million, $ 239.5 million and $ 223.3 million,

recognized share in TV Food Network’s net income of $ 226.7 million, $ 253.4 million and $ 220.3 million, and

recorded amortization of basis difference (expense) of $ 69.5 million, $ 125.2 million and $ 147.2 million.

Summarized financial information for TV Food Network is as follows (in millions):

Years Ended December 31,

Costs and expenses

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Accrued Expenses

Accrued expenses consisted of the following, as of December 31 (in thousands):

Accrued expenses consisted of the following, as of December 31 (in millions):

Compensation and related taxes

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Network affiliation fees

Long-term debt consisted of the following, as of December 31 (dollars in thousands):

Long-term debt consisted of the following, as of December 31 (dollars in millions):

Term Loan A, due October 2023

Team Loan A, due September 2024

Term Loan A, due June 2027

Term Loan B, due January 2024

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Term Loan B, due June 2028

Revolving loans, due June 2027

Revolving loans, due October 2023

Total outstanding principal

unamortized financing costs and discount - Nexstar Term Loan A due 2023

unamortized financing costs and discount - Nexstar Term Loan A due 2024

unamortized financing costs and discount - Nexstar Term Loan B due 2024

unamortized financing costs and discount - Nexstar Term Loan B due 2026

unamortized premium, net of financing costs - Nexstar 5.625% Notes due 2027

unamortized financing costs and discount - Nexstar 4.75% Notes due 2028

unamortized financing costs and discount - Mission Term Loan B due 2028

unamortized financing costs and discount - Nexstar Term Loan A, due October 2023

unamortized financing costs and discount - Nexstar Term Loan A, due September 2024

unamortized financing costs and discount - Nexstar Term Loan A, due June 2027

unamortized financing costs and discount - Nexstar Term Loan B, due January 2024

unamortized financing costs and discount - Nexstar Term Loan B, due September 2026

unamortized premium, net of financing costs - Nexstar 5.625% Notes, due July 2027

unamortized financing costs and discount - Nexstar 4.75% Notes, due November 2028

unamortized financing costs and discount - Mission Term Loan B, due June 2028

Total outstanding debt

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Long-term debt, net of current portion

Nexstar Senior Secured Credit Facility

During the year ended December 31, 2021, Nexstar paid the following term loans, funded by cash on hand:

$ 280.0 million in prepayments of Term Loan B due 2024, and

$ 21.4 million scheduled principal maturities of Term Loan A due 2024.

In August 2021, Nexstar borrowed $ 20.0 million under its revolving credit facility.

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

Interest rates are selected at Nexstar’s option and the applicable margin is adjusted quarterly as defined in Nexstar’s amended credit agreement.

Senior Secured Credit Facilities

2022 Transactions

During the year ended December 31, 2022, from cash on hand, Nexstar prepaid a total of $ 333.0 million in principal balance under its Term Loan B and repaid scheduled principal maturities of $ 84.2 million of its term loans.

On June 21, 2022, Nexstar and Mission, an independently owned VIE consolidated by Nexstar, amended their respective credit agreements (also herein referred to as senior secured credit facilities).

The amendments provided for the following:

$ 2,425.0 million in Nexstar Term Loan A, due June 2027

$ 550.0 million in Nexstar revolving credit facility, due June 2027 (no amounts were drawn from this facility as of December 31, 2022)

$ 75.0 million in Mission revolving credit facility, due June 2027 (Mission borrowed $ 61.5 million from this facility on June 21, 2022)

The proceeds from the Nexstar Term Loan A, due June 2027 were used to repay the following on June 21, 2022:

$ 485.4 million of Nexstar Term Loan A, due October 2023

$ 583.9 million of Nexstar Term Loan A, due September 2024

$ 445.0 million of Nexstar Term Loan B, due January 2024

$ 900.0 million of Nexstar Term Loan B, due September 2026

On June 21, 2022, Mission repaid the outstanding principal under its revolving loans, due October 2023 of $ 61.5 million, funded by the amount borrowed from its revolving credit facility, due June 2027 described above.

Each of the above new loan and new revolving credit facilities has a five-year maturity and bears interest at a rate of term Secured Overnight Financing Rate (“SOFR”) for the applicable interest period plus a margin in the range of 1.25 %–

2.00 % determined based on a leverage-based grid.

The term SOFR for any interest period is the sum of the term SOFR screen rate published by the CME Group Benchmark Administration Limited (“CME”) term SOFR administrator plus a spread adjustment of 0.10 %.

The Nexstar Term Loan A, due June 21, 2027, has a 5 % principal amortization each year, to be payable on a quarterly basis, with the remaining amount due at maturity.

In connection with entry into the new loan and new revolving credit facilities, each of Nexstar and Mission also amended its respective credit agreement to, among other things, streamline its notice obligations and update certain covenant terms, in each case, as set forth in such amended credit agreement.

The remaining terms of each new loan and new revolving credit facility are substantially the same as the existing terms in the Nexstar credit agreement in effect prior to the amendment and the Mission credit agreement in effect prior to the amendment, as applicable.

Interest rates are selected at Nexstar’s or Mission’s option, as applicable, and the applicable margin is adjusted quarterly as defined in the applicable amended credit agreement.

Interest is payable periodically based on the type of interest rate selected.

As of December 31, the interest rates were:

1.60 % and 1.89 % in 2021 and 2020, respectively, for Term Loan A due 2023,

1.60 % and 1.89 % in 2021 and 2020, respectively, for Term Loan A due 2024,

2.35 % and 2.39 % in 2021 and 2020, respectively, for Term Loan B due 2024, and

2.60 % and 2.89 % in 2021 and 2020, respectively, for Term Loan B due 2026.

Mission Senior Secured Credit Facility

On June 3, 2021, Mission, a VIE consolidated by Nexstar, 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”), with quarterly principal installment payments of $ 750 thousand beginning on October 1, 2021 through April 1, 2028 , with the remaining principal balance of $ 279.8 million payable on the maturity date.

The Term Loan B, due June 3, 2028 bears interest at the LIBOR rate of 2.50 %, with a 0.00 % LIBOR floor.

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

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

Interest rates are selected at Mission’s option and the applicable margin is adjusted quarterly as defined in Mission’s amended credit agreement.

The interest rate on Mission’s Term Loan B was 2.60 % as of December 31, 2021 .

The interest rates on Mission’s revolving credit facility were 1.60 % and 2.39 % as of December 31, 2021 and 2020, respectively.

5.625% Notes due 2027

On July 3, 2019, Nexstar completed the sale and issuance of $ 1.120 billion 5.625 % senior unsecured notes due 2027 (the “5.625% Notes due 2027”) at par.

The gross proceeds of the 5.625% Notes due 2027 were initially deposited into a segregated escrow account.

The escrow account was subsequently released on September 19, 2019 to Nexstar to partially fund the acquisition of Tribune through a merger (see Note 3).

On November 22, 2019, Nexstar completed the issuance and sale of $ 665.0 million aggregate principal amount of additional 5.625 % Notes due 2027.

These additional notes were issued at a price of 104.875 %, resulting in a debt premium of $ 27.4 million after giving effect to fees and expenses related thereto.

These additional notes are treated as a single series with the 5.625% Notes due 2027 issued on July 3, 2019.

The net proceeds from this issuance were used to redeem the $ 400.0 million 5.875 % senior unsecured notes at 101.469 % and $ 275.0 million 6.125 % senior unsecured notes at 101.531 % plus accrued and unpaid interest.

Interest on the 5.625% Notes due 2027 is payable semiannually in arrears on January 15 and July 15 of each year.

The 5.625% Notes due 2027 were issued pursuant to an indenture dated July 3, 2019 (the “5.625% Indenture due 2027”).

In 2019, Nexstar recorded $ 21.0 million in legal, professional and underwriting fees related to the 5.625% Notes due 2027.

These costs were netted against the debt premium from the issuance of the additional notes.

As of December 31, the interest rates of the outstanding loans under the senior secured credit facilities were:

5.86 % in 2022 for Nexstar’s Term Loan A, due June 2027 (based on an applicable margin of 1.50 %)

6.89 % and 2.60 % in 2022 and 2021, respectively, for Nexstar’s Term Loan B, due September 2026 (based on an applicable margin of 2.50 % in both years)

6.89 % and 2.60 % in 2022 and 2021, respectively, for Mission’s Term Loan B, due June 2028 (based on an applicable margin of 2.50 % in both years)

5.86 % in 2022 for Mission’s outstanding revolving loans, due June 2027 (based on an applicable margin of 1.50 %)

5.625% Notes, due July 2027

On July 3, 2019, Nexstar completed the sale and issuance of $ 1.120 billion 5.625 % senior unsecured notes due 2027 (the “5.625% Notes, due July 2027”) at par.

On November 22, 2019, Nexstar completed the issuance and sale of $ 665.0 million aggregate principal amount of additional 5.625 % Notes, due July 2027.

These additional notes were issued at a price of 104.875 %.

These additional notes are treated as a single series with the 5.625% Notes, due July 2027 issued on July 3, 2019.

During the year ended December 31, 2022, Nexstar repurchased and cancelled $ 71.2 million of its 5.625 % Notes, due July 2027 at a weighted average purchase price of 94.2 %, funded by cash on hand.

Interest on the 5.625% Notes, due July 2027 is payable semiannually in arrears on January 15 and July 15 of each year.

The 5.625% Notes, due July 2027 were issued pursuant to an indenture dated July 3, 2019 (the “5.625% Indenture due 2027”).

In 2019, Nexstar recorded $ 6.4 million in debt premium after netting legal, professional and underwriting fees related to the 5.625% Notes, due July 2027.

The net debt premium is being amortized using the effective interest method over the term of the debt.

Nexstar has the option to redeem all or a portion of the 5.625% Notes due 2027 at any time prior to July 15, 2022 at a price equal to 100 % of the principal amount redeemed plus accrued and unpaid interest to the redemption date plus a make whole premium.

At any time on or after July 15, 2022, Nexstar may redeem the 5.625% Notes due 2027, in whole or in part, at the redemption prices set forth in the 5.625% Indenture due 2027 plus accrued and unpaid interest to the redemption date.

At any time prior to July 15, 2022, Nexstar may also redeem up to 40 % of the aggregate principal amount at a redemption price of 105.625 %, plus accrued and unpaid interest, if any, to the redemption date, with the net cash proceeds from equity offerings.

Upon the occurrence of a change of control (as defined in the 5.625% Indenture due 2027), each holder of the 5.625% Notes due 2027 may require Nexstar to repurchase all or a portion of the notes in cash at a price equal to 101.0 % of the aggregate principal amount to be repurchased, plus accrued and unpaid interest, if any, thereon to the date of repurchase.

The 5.625% Notes due 2027 contain covenants that limit, among other things, Nexstar’s ability to (1) incur additional debt, (2) pay dividends or make other distributions or repurchases or redeem its capital stock, (3) make certain investments, (4) create liens, (5) merge or consolidate with another person or transfer or sell assets, (6) enter into restrictions affecting the ability of Nexstar’s restricted subsidiaries to make distributions, loans or advances to it or other restricted subsidiaries, (7) prepay, redeem or repurchase certain indebtedness and (8) engage in transactions with affiliates.

At any time on or after July 15, 2022, Nexstar may redeem the 5.625% Notes, due July 2027, in whole or in part, at the redemption prices set forth in the 5.625% Indenture due 2027 plus accrued and unpaid interest to the redemption date.

Upon the occurrence of a change of control (as defined in the 5.625% Indenture due 2027), each holder of the 5.625% Notes, due July 2027 may require Nexstar to repurchase all or a portion of the notes in cash at a price equal to 101.0 % of the aggregate principal amount to be repurchased, plus accrued and unpaid interest, if any, thereon to the date of repurchase.

The 5.625% Notes, due July 2027 contain covenants that limit, among other things, Nexstar’s ability to (1) incur additional debt, (2) pay dividends or make other distributions or repurchases or redeem its capital stock, (3) make certain investments, (4) create liens, (5) merge or consolidate with another person or transfer or sell assets, (6) enter into restrictions affecting the ability of Nexstar’s restricted subsidiaries to make distributions, loans or advances to it or other restricted subsidiaries, (7) prepay, redeem or repurchase certain indebtedness and (8) engage in transactions with affiliates.

The 5.625% Indenture due 2027 provides for customary events of default (subject in certain cases to customary grace and cure periods), which include nonpayment, breach of covenants, payment defaults or acceleration of other indebtedness, a failure to pay certain judgments and certain events of bankruptcy and insolvency.

Generally, if an event of default occurs, the trustee or holders of at least 25 % in principal amount of the then outstanding 5.625% Notes due 2027 may declare the principal of and accrued but unpaid interest, including additional interest, on all the 5.625% Notes due 2027 to be due and payable.

4.75% Notes due 2028

On September 25, 2020, Nexstar completed the sale and issuance of $ 1.0 billion 4.75 % senior unsecured notes due 2028 (“4.75% Notes due 2028”) at par.

The 4.75% Notes due 2028 were issued under an indenture dated as of September 25, 2020 (“4.75% Notes due 2028 Indenture”).

The net proceeds from the issuance of the 4.75% Notes due 2028 were used to redeem the $ 900.0 million 5.625 % senior unsecured notes in full and pay related premiums equal to 102.813 % of the principal amount, accrued interest and fees and expenses.

Generally, if an event of default occurs, the trustee or holders of at least 25 % in principal amount of the then outstanding 5.625% Notes, due July 2027 may declare the principal of and accrued but unpaid interest, including additional interest, on all the 5.625% Notes, due July 2027 to be due and payable.

4.75% Notes, due November 2028

On September 25, 2020, Nexstar completed the sale and issuance of $ 1.0 billion 4.75 % senior unsecured notes due 2028 (“4.75% Notes, due November 2028”) at par.

The 4.75% Notes, due November 2028 were issued under an indenture dated as of September 25, 2020 (“4.75% Notes, due November 2028 Indenture”).

The net proceeds from the issuance of the 4.75% Notes, due November 2028 were used to redeem the $ 900.0 million 5.625 % senior unsecured notes in full and pay related premiums equal to 102.813 % of the principal amount, accrued interest and fees and expenses.

The remainder of the proceeds was used for general corporate purposes .

In 2020, Nexstar recorded $ 9.3 million in legal, professional, and underwriting fees related to the issuance of the 4.75% Notes due 2028.

In 2020, Nexstar recorded $ 9.3 million in legal, professional, and underwriting fees related to the issuance of the 4.75% Notes, due November 2028.

These financing costs are being amortized using the effective interest method over the term of the debt.

Interest on the 4.75% Notes due 2028 is payable semiannually in arrears on May 1 and November 1 of each year.

The 4.75% Notes due 2028 are guaranteed by Nexstar, Mission and certain of Nexstar’s and Mission’s existing and future restricted subsidiaries, subject to certain customary release provisions.

The 4.75% Notes due 2028 are senior unsecured obligations of Nexstar and the guarantors, rank equal in right of payment with our and the guarantors’

existing and future senior indebtedness, including Nexstar’s 5.625% Notes due 2027, its term loans and its revolving credit facilities, but effectively junior to our and the guarantors’

Interest on the 4.75% Notes, due November 2028 is payable semiannually in arrears on May 1 and November 1 of each year.

The 4.75% Notes, due November 2028 are guaranteed by Nexstar, Mission and certain of Nexstar’s and Mission’s existing and future restricted subsidiaries, subject to certain customary release provisions.

The 4.75% Notes, due November 2028 are senior unsecured obligations of Nexstar and the guarantors, rank equal in right of payment with our and the guarantors’

existing and future senior indebtedness, including Nexstar’s 5.625% Notes, due July 2027, its term loans and its revolving credit facilities, but effectively junior to our and the guarantors’

secured debt, including the term loans and revolving credit facilities, to the extent of the value of the assets securing such debt.

Nexstar has the option to redeem all or a portion of the 4.75% Notes due 2028 at any time prior to November 1, 2023 at a price equal to 100 % of the principal amount redeemed plus accrued and unpaid interest, if any, to, but excluding, the redemption date plus a make-whole premium as of the date of redemption.

Nexstar has the option to redeem all or a portion of the 4.75% Notes, due November 2028 at any time prior to November 1, 2023 at a price equal to 100 % of the principal amount redeemed plus accrued and unpaid interest, if any, to, but excluding, the redemption date plus a make-whole premium as of the date of redemption.

At any time prior to November 1, 2023, Nexstar may also redeem up to 40 % of the aggregate principal amount at a redemption price of 104.75 %, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption, with the net cash proceeds from certain equity offerings.

At any time on or after November 1, 2023, Nexstar may redeem the 4.75% Notes due 2028, in whole or in part, at the redemption prices set forth in the 4.75% Notes due 2028 Indenture.

Upon the occurrence of a change in control (as defined in the 4.750% Notes due 2028 Indenture), each holder of the 4.75% Notes due 2028 may require Nexstar to repurchase all or a portion of the notes in cash at a price equal to 101.0 % of the aggregate principal amount to be repurchased, plus accrued and unpaid interest, if any, thereon to, but excluding, the date of repurchase.

The 4.75% Notes due 2028 Indenture contains covenants that limit, among other things, Nexstar’s and the guarantors’

At any time on or after November 1, 2023, Nexstar may redeem the 4.75% Notes, due November 2028, in whole or in part, at the redemption prices set forth in the 4.75% Notes, due November 2028 Indenture.

Upon the occurrence of a change in control (as defined in the 4.75% Notes, due November 2028 Indenture), each holder of the 4.75% Notes, due November 2028 may require Nexstar to repurchase all or a portion of the notes in cash at a price equal to 101.0 % of the aggregate principal amount to be repurchased, plus accrued and unpaid interest, if any, thereon to, but excluding, the date of repurchase.

The 4.75% Notes, due November 2028 Indenture contains covenants that limit, among other things, Nexstar’s and the guarantors’

ability to (1) incur additional debt, (2) pay dividends or make other distributions or repurchases or redeem its capital stock, (3) make certain investments, (4) transfer or sell assets, (5) create liens, (6) enter into restrictions affecting the ability of Nexstar’s restricted subsidiaries to make distributions, loans or advances to it or other restricted subsidiaries, (7) guarantee certain indebtedness and (8) engage in transactions with affiliates.

The 4.75% Notes due 2028 Indenture provides for customary events of default (subject in certain cases to customary grace and cure periods), which include nonpayment, breach of covenants, payment defaults or acceleration of other indebtedness, a failure to pay certain judgments and certain events of bankruptcy and insolvency.

Generally, if an event of default occurs and is continuing, the trustee or holders of at least 25 % in principal amount of the then outstanding 4.75% Notes due 2028 may declare the principal of, premium, and accrued but unpaid interest, including additional interest, on all the 4.75% Notes due 2028 to be due and payable.

The 4.75% Notes, due November 2028 Indenture provides for customary events of default (subject in certain cases to customary grace and cure periods), which include nonpayment, breach of covenants, payment defaults or acceleration of other indebtedness, a failure to pay certain judgments and certain events of bankruptcy and insolvency.

Generally, if an event of default occurs and is continuing, the trustee or holders of at least 25 % in principal amount of the then outstanding 4.75% Notes, due November 2028 may declare the principal of, premium, and accrued but unpaid interest, including additional interest, on all the 4.75% Notes, due November 2028 to be due and payable.

Upon such a declaration , such principal, premium and accrued and unpaid interest will be due and payable immediately.

Unused Commitments and Borrowing Availability

The Company had $ 349.7 million and $ 13.5 million of unused revolving loan commitments under the respective Nexstar and Mission senior secured credit facilities, all of which was available for borrowing, based on the covenant calculations as of December 31, 2021.

The Company’s ability to access funds under the senior secured credit facility depends, in part, on its compliance with certain financial covenants.

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

The Company’s ability to access funds under the senior secured credit facilities depends, in part, on its compliance with certain financial covenants.

As of December 31, 2022, the Company was in compliance with its financial covenants.

Collateralization and Guarantees of Debt

The Company’s credit facilities described above are collateralized by a security interest in substantially all the combined assets, excluding FCC licenses and the other assets of consolidated VIEs unavailable to creditors of Nexstar (see Note 2).

Nexstar guarantees full payment of all obligations incurred under the Mission senior secured credit facility in the event of their default.

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

The Company’s credit facilities described above are collateralized by a security interest in substantially all the combined assets, excluding FCC licenses, the other assets of consolidated VIEs unavailable to creditors of Nexstar (see Note 2) and the assets of The CW.

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

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

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

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Debt Maturities

The scheduled principal maturities of the Company’s debt as of December 31, 2021 are summarized as follows (in thousands):

The scheduled principal maturities of the Company’s debt as of December 31, 2022 are summarized as follows (in millions):

The Company as a Lessee

The Company has operating leases for office spaces, tower facilities, antenna sites, studios and other real estate properties and equipment.

The operating leases have remaining lease terms of one month to 93 years, some of which may include options to extend the leases from three months to 99 years , and some of which may include options to terminate the leases within one year .

The depreciable lives of assets and leasehold improvements are limited by the expected lease term unless there is a transfer of title or purchase option reasonably certain of exercise.

The operating leases have remaining lease terms of one to 92 years, some of which may include options to extend the leases from 2 years to 99 years , and some of which may include options to terminate the leases within one year .

Lease contracts that the Company has executed but which have not yet commenced as of December 31, 2022 were not material.

Finance lease contracts as of December 31, 2021 were also not material.

The following table presents lease assets and liabilities and related information as of December 31 (in thousands):

Supplemental balance sheet information related to operating leases as of December 31 was as follows (in millions, except lease term and discount rates):

Balance Sheet Classification

December 31, 2021

December 31, 2020

Operating leases

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Other noncurrent assets, net

Current lease liabilities

Current operating lease liabilities

Operating lease liabilities

Noncurrent lease liabilities

Noncurrent operating lease liabilities

Other noncurrent liabilities

Weighted Average Remaining Lease Term

Operating leases

Weighted Average Discount Rate

Operating leases

In 2021, the increases in operating lease ROU assets and lease liabilities were attributable to the acquisition of The Hill (see Note 3), various extensions of existing leases and new leases.

Weighted Average Remaining Lease Term of Operating leases

Weighted Average Discount Rate of Operating leases

Operating lease expenses for the year ended December 31, 2022 were $ 61.8 million, of which $ 27.7 million and $ 34.1 million were included in Direct operating and Selling, general and administrative expenses, respectively, excluding depreciation and amortization, in the accompanying Consolidated Statements of Operations and Comprehensive Income.

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Operating lease expenses for the year ended December 31, 2020 were $ 47.3 million, of which $ 24.4 million and $ 22.9 million were included in Direct operating and Selling, general and administrative expenses, respectively, excluding depreciation and amortization, in the accompanying Consolidated Statements of Operations and Comprehensive Income.

Cash paid for operating leases included in the operating cash flows were $ 51.6 million, $ 47.0 million and $ 16.8 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Future minimum lease payments under non-cancellable leases as of December 31, 2021 were as follows (in thousands):

Cash paid for operating leases included in the operating cash flows was $ 59.7 million, $ 51.6 million and $ 47.0 million for the years ended December 31, 2022, 2021 and 2020, respectively.

Future minimum lease payments under non-cancellable leases as of December 31, 2022 were as follows (in millions):

Operating Leases

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Nexstar has various funded, qualified non-contributory defined benefit retirement plans which cover certain employees and former employees.

As of December 31, 2021, the combined pension benefit obligations for these qualified retirement plans were $ 2,205 million, which were substantially funded by combined plan assets of $ 2,152 million, or approximately 98 % funded (underfunded by $ 53 million).

All these retirement plans are frozen in terms of pay and service, except for a small plan representing $ 40.5 million of the total pension benefit obligations.

As of December 31, 2022, the combined pension benefit obligations for these qualified retirement plans were $ 1.738 billion, which were substantially funded by combined plan assets of $ 1.562 billion, or approximately 90 % funded (underfunded by $ 175.4 million).

All these retirement plans are frozen in terms of pay and service, except for a plan with immaterial pension benefit obligations.

The remaining pension obligations of $ 41.4 million relate to non-contributory unfunded supplemental executive retirement and ERISA Excess plans for which Nexstar’s policy is to fund the benefits as claims and premiums are paid.

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As of and for the years ended December 31, the following table provides a reconciliation of the plans’

benefit obligations, plan assets and funded status, along with the related amounts that are recognized in the Consolidated Balance Sheets (in thousands):

benefit obligations, plan assets and funded status, along with the related amounts that are recognized in the Consolidated Balance Sheets (in millions):

Pension Benefits

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Plan amendments

Actuarial (gain) loss

Actuarial gain

ESOP transfer

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Funded status

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 October 29, 2021, Nexstar completed the purchase of an annuity contract for certain participants of one of the Tribune defined benefit pension plans.

Pursuant to this agreement, $ 116.9 million of funds from the pension plan assets were transferred to an insurance company (included in change in plan assets table above under benefit payments line).

Concurrently, an irrevocable transfer of pension plan obligations estimated at $ 117.5 million was also assumed by the same insurance company (included in change in benefit obligations table above under benefit payments line).

Nexstar recognized an immediate gain of $ 12.5 million in 2021 related to this settlement, which is included in the pension and other postretirement plans credit, net in the accompanying Consolidated Statements of Operations and Comprehensive Income.

Nexstar’s pension benefit plans were underfunded as of December 31 with accumulated benefit obligations exceeding the fair value of plan assets.

Information for the underfunded pension benefit plans is as follows (in thousands):

Information for the underfunded pension benefit plans is as follows (in millions):

Benefit obligations

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Additionally, the updated mortality projection scale decreased the plans’

projected pension obligation by approximately $ 4.4 million at December 31, 2021.

The decreases were partially offset by an approximately $ 8.7 million increase in pension obligation due to the updated census information and a change to the assumed commencement age and optional form elections for deferred vested participants.

The decrease in the discount rates from December 31, 2019 to December 31, 2020 increased the projected benefit obligations of qualified defined benefit pension plans by approximately $ 211.9 million at December 31, 2020.

Additionally, the updated census information increased the plans’

projected pension obligation by approximately $ 8.7 million at December 31, 2020.

The increases were partially offset by an approximately $ 21.4 million decrease in pension obligation due to the updated mortality projection scale, cash balance interest crediting assumption and optional form conversion basis in 2020.

projected pension obligations by approximately $ 2.4 million at December 31, 2022.

The decreases were partially offset by an approximately $ 26.1 million increase in pension obligations due to the updated census information and cash balance crediting rate assumption.

The increase in the discount rates from December 31, 2020 to December 31, 2021 decreased the projected benefit obligations of qualified defined benefit pension plans by approximately $ 84.9 million at December 31, 2021.

Additionally, the updated mortality projection scale decreased the plans’

projected pension obligations by approximately $ 4.4 million at December 31, 2021.

The decreases were partially offset by an approximately $ 8.7 million increase in pension obligations due to the updated census information and a change to the assumed commencement age and optional form elections for deferred vested participants.

Net Periodic Benefit Cost (Credit)

The following tables provide the components of net periodic benefit cost (credit) for the plans for the years ended December 31, (in thousands):

The following tables provide the components of net periodic benefit cost (credit) for the plans for the years ended December 31 (in millions):

Pension Benefits

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Amortization of prior service costs

Amortization of net (gain) loss

Amortization of net loss

Settlement gain recognized

Net periodic benefit cost (credit)

The Company anticipates recording an aggregate net periodic benefit credit of $ 42.3 million for its pension and other benefits in 2022, as the expected return on plan assets exceeds estimated interest cost.

The Company anticipates recording an aggregate net periodic benefit credit of $ 35.4 million for its pension and other postretirement benefits in 2023, as the expected return on plan assets exceeds estimated interest cost.

The net periodic costs for the Company’s pension and other benefit plans were determined using the following assumptions:

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The rate was assumed to decrease gradually to 4.50 % for 2030 and remain at that level thereafter.

The following table provides a summary of the Company’s accumulated other comprehensive income (loss) related to pension and other postretirement benefit plans prior to any deferred tax effects (in thousands):

Pension Benefits

December 31, 2019

Actuarial (loss) gain

December 31, 2019

Prior service cost

Past service cost

Actuarial gain (loss)

December 31, 2020

Prior service (cost) credit

Prior service credit

Actuarial gain

December 31, 2021

Prior service cost

Actuarial gain (loss)

December 31, 2022

The asset allocation for Nexstar’s funded retirement plans at the end of 2022, and the asset allocation range for 2023, by asset category, are as follows:

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Fixed income securities

Opportunistic

As the plan sponsor of the funded retirement plans, Nexstar’s investment strategy is to achieve a rate of return on the plans’

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returns is the asset allocation policy.

The investment policies for plan assets provides ranges for the plans’

The investment policies for plan assets provide ranges for the plans’

long-term asset mix, as follows:

For plan assets with a total fair value of $ 1,751 million as of December 31, 2021, the investment policy ranges are 12 - 32 % U.S.

For plan assets with a total fair value of $ 1.274 billion as of December 31, 2022, the investment policy ranges are 8 - 28 % U.S.

equity, 0 - 16 % non-U.S.

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Real Estate and Real Asset Common Collective Trusts seek to achieve high current return and long-term capital growth by investing in equity securities of real estate investment trusts that seek to outperform their respective benchmarks.

Other investments include investments in real estate funds, emerging market debt and high yield bonds.

These investments use the National Council of Real Estate Investment Fiduciaries Property Index or the FTSE NAREIT All Equity REIT Index (real estate), JPM EMBI Global Core Index (emerging market debt) and Barclays U.S.

High Yield Ba/B 1% Issuer Capped Bond Index (high yield bonds) as their benchmarks.

Other investments include investments in real estate funds, emerging market debt, high yield bonds, commodity index fund, floating rate debt, and inflation-protected bond.

High Yield Ba/B 1% Issuer Capped Bond Index (high yield bonds), BBG Commodity Index (commodity index fund), Morningstar LSTA US Loan (floating rate debt) and BBG 1-10 TIPS (inflation-protected bond) as their benchmarks.

The following table sets forth, by asset category, Nexstar’s pension plan assets as of December 31, 2022 and 2021, using the fair value hierarchy established under ASC Topic 820 as described in Note 11.

The fair value hierarchy in the tables excludes certain investments which are valued using net asset value (“NAV”) as a practical expedient (in thousands):

The fair value hierarchy in the tables excludes certain investments which are valued using net asset value (“NAV”) as a practical expedient (in millions):

Pension Plan Assets as of December 31, 2022

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Expected Cash Flows

The following table includes amounts that are expected to be contributed to the plans by Nexstar, in thousands.

The following table includes amounts that are expected to be contributed to the plans by Nexstar (in millions).

It additionally reflects benefit payments that are made from the plans’

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The Company has a Supplemental Income Deferral Plan for which certain employees, including executive officers, are eligible.

The plan provides benefits to highly compensated employees in circumstances in which the maximum limits established under the ERISA and the Internal Revenue Code prevent them from receiving Company contributions.

The plan provides benefits to highly compensated employees in circumstances in which the maximum limits established under ERISA and the Internal Revenue Code prevent them from receiving Company contributions.

The amounts recorded by the Company for these plans for 2022 are immaterial.

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Assets and liabilities whose values are based on valuation models or pricing techniques that utilize unobservable inputs that are significant to the overall fair value measurement.

The carrying values of cash and cash equivalents, restricted cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value due to their short term nature.

As of December 31, the estimated fair values and carrying amounts of the Company’s long-term debt which are not measured at fair value on a recurring basis were as follows (dollars in thousands):

Term Loan A due 2023 (1)

Team Loan A due 2024 (1)

Term Loan B due 2024 (1)

Term Loan B due 2026 (1)

5.625 % Notes due 2027 (2)

4.75 % Notes due 2028 (2)

Term Loan B due 2028 (1)

Revolving loans due 2023 (1)

The carrying values of cash and cash equivalents, restricted cash and cash equivalents, accounts receivable, accounts payable, broadcast rights payable, and accrued expenses approximate fair value due to their short term nature.

As of December 31, the estimated fair values and carrying amounts of the Company’s long-term debt which are not measured at fair value on a recurring basis were as follows (dollars in millions):

Term Loan A, due October 2023 (1)

Team Loan A, due September 2024 (1)

Term Loan A, due June 2027 (1)

Term Loan B, due January 2024 (1)

Term Loan B, due September 2026 (1)

5.625 % Notes, due July 2027 (2)

4.75 % Notes, due November 2028 (2)

Term Loan B, due June 2028 (1)

Revolving loans due June 2027 (1)

Revolving loans due October 2023 (1)

(1) The fair values of senior secured and revolving credit facilities are computed based on borrowing rates currently available to the Company for bank loans with similar terms and average maturities.

These fair value measurements are considered Level 3, as significant inputs to the fair value calculation are unobservable in the market.

See Note 8 for information on changes in the carrying amounts of debt during 2022.

(2) The fair value of the Company’s fixed rate debt is estimated based on bid prices obtained from an investment banking firm that regularly makes a market for these financial instruments.

These fair value measurements are considered Level 2, as quoted market prices are available for low volume trading of these securities.

During the year ended December 31, 2021, there were no events or changes in circumstance that triggered an impairment to the Company’s significant assets, including equity method investments, indefinite-lived intangible assets, long-lived assets and goodwill.

See Note 8 for information on changes in the carrying amounts of debt during 2022.

During the year ended December 31, 2022, there were no events or changes in circumstance that triggered an impairment to the Company’s significant assets, including equity method investments, indefinite-lived intangible assets, long-lived assets and goodwill, other than those disclosed.

See Notes 5 and 6 for additional information.

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See Note 10 for fair value disclosures related to retirement and postretirement plans.

The holders of Class A common stock are entitled to one vote per share and the holders of Class B common stock are entitled to 10 votes per share.

Holders of Class A common stock and Class B common stock generally vote together as a single class on all matters submitted to a vote of the stockholders.

Holders of Class C common stock have no voting rights.

The holders of common stock are entitled to one vote per share.

The common stockholders are entitled to receive cash dividends, subject to the rights of holders of any series of preferred stock, on an equal per share basis.

Nexstar’s senior secured credit facility provides limits on the amount of dividends the Company may pay to stockholders during the term of Nexstar’s credit agreement.

On January 27, 2021, Nexstar’s 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 2021, Nexstar repurchased a total of 3,575,568 shares of Class A common stock for $ 536.7 million, funded by cash on hand.

In 2020, Nexstar repurchased a total of 3,085,745 shares of Class A common stock for $ 281.8 million, funded by cash on hand.

In 2019, Nexstar repurchased a total of 439,743 shares of Class A common stock for $ 45.1 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 January 27, 2021, Nexstar’s board of directors approved a share repurchase program authorizing the Company to repurchase up to an additional $ 1.0 billion of its common stock, of which $ 638.2 million remained available as of December 31, 2021.

On July 27, 2022, Nexstar’s 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 2022, Nexstar repurchased a total of 5.1 million shares of common stock for $ 880.7 million, funded by cash on hand.

In 2021, Nexstar repurchased a total of 3.6 million shares of common stock for $ 536.8 million, funded by cash on hand.

In 2020, Nexstar repurchased a total of 3.1 million shares of common stock for $ 281.9 million, funded by cash on hand.

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

Share repurchases may be made from time to time in open market transactions, block trades or in private transactions.

There is no minimum number of shares that Nexstar is required to repurchase and the repurchase program may be suspended or discontinued at any time without prior notice.

During the years ended December 31, 2021, 2020 and 2019 , 1,076,169 shares, 592,785 shares and 563,285 shares, respectively, of Class A common stock were reissued from treasury, net of any shares withheld to cover participant taxes and to fulfill stock option exercises and vesting of restricted stock units.

During the years ended December 31, 2022, 2021 and 2020 , 1,116,701 shares, 1,076,169 shares and 592,785 shares, respectively, of common stock were reissued from treasury, net of any shares withheld to cover participant taxes and to fulfill stock option exercises and vesting of restricted stock units.

During the years ended December 31, 2022, 2021 and 2020, total dividend payments were $ 142.2 million, $ 118.2 million, and $ 101.0 million, respectively.

On June 13, 2022, Nexstar’s shareholders approved certain amendments to Nexstar’s Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) to eliminate Nexstar’s Class B common stock, par value $ 0.01 per share (the “Class B Common Stock”), and Class C common stock, par value $ 0.01 per share (the “Class C Common Stock”), which classes of common stock had no shares issued and outstanding prior to the date of shareholder approval of their elimination.

The common stock (f/k/a Class A common stock) has been the only class of shares outstanding since 2013.

On June 27, 2022, Nexstar filed a Certificate of Amendment No.

2 (the “Amendment”) to the Certificate of Incorporation with the Secretary of State of the State of Delaware to reflect the elimination of Nexstar’s Class B Common Stock and Class C Common Stock and make related changes.

The Amendment became effective upon its filing with the Secretary of State of the State of Delaware on June 27, 2022.

For transactions and events involving the Company’s common stock after December 31, 2022, refer to Note 19.

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Stock-Based Compensation Expense

The Company measures compensation cost related to stock options based on the grant-date fair value of the awards, calculated using the Black-Scholes option-pricing model.

The compensation cost related to time-based restricted stock units (“RSUs”) and performance-based restricted stock units (“PSUs”) is based on the market price of the stock on the date of the award.

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The fair values of PSUs are recognized when it is probable that the performance conditions will be achieved.

The Company measures compensation cost related to stock options based on the grant-date fair value of the awards, calculated using the Black-Scholes option-pricing model.

The Company recognized stock-based compensation expense of $ 61.6 million, $ 46.7 million and $ 48.3 million for the years ended December 31, 2022, 2021 and 2020, respectively , all attributable to RSUs and PSUs.

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Stock-Based Compensation Plans

As of December 31, 2021, Nexstar has three stock-based compensation plans that provide for the granting of stock options, stock appreciation rights, RSUs and PSUs to directors, employees or consultants of Nexstar:

the 2019 Long-Term Equity Incentive Plan, approved by Nexstar’s majority stockholders on June 5, 2019 (the “2019 Plan”), the 2015 Long-Term Equity Incentive Plan, approved by Nexstar’s majority stockholders on June 11, 2015 (the “2015 Plan”) and the 2012 Long-Term Equity Incentive Plan, approved by Nexstar’s majority stockholders on September 26, 2012 (the “2012 Plan”).

A maximum of 3,100,000 shares, 2,500,000 shares and 1,500,000 shares of Nexstar’s Class A common stock can be issued under the 2019 Plan, 2015 Plan and 2012 Plan, respectively.

No new awards are granted under equity incentive plans prior to these plans but any unissued available shares can be issued under the 2012 Plan.

As of December 31, 2022, Nexstar has two stock-based compensation plans that provide for the granting of stock options, stock appreciation rights, RSUs and PSUs to directors, employees or consultants of Nexstar:

the 2019 Long-Term Equity Incentive Plan, approved by Nexstar’s majority stockholders on June 5, 2019 (the “2019 Plan”) and the 2015 Long-Term Equity Incentive Plan, approved by Nexstar’s majority stockholders on June 11, 2015 (the “2015 Plan”).

A maximum of 3,100,000 shares and 2,500,000 shares of Nexstar’s common stock can be issued under the 2019 Plan and 2015 Plan, respectively.

At December 31, 2022, 2,051,861 shares remained available for future grants, of which 2,029,195 shares and 22,666 shares were available under the 2019 Plan and the 2015 Plan, respectively.

No remaining shares were available under the 2012 Plan.

Nexstar utilizes any available treasury stock or issues new shares of its Class A common stock when options are exercised or restricted stock units vest.

Nexstar utilizes any available treasury stock or issues new shares of its common stock when options are exercised or restricted stock units vest.

Stock Options

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As of December 31, 2022, all outstanding options are fully vested and expire ten years from the date of grant.

Except as otherwise determined by the compensation committee or with respect to the termination of a participant’s services in certain circumstances, including a change of control, no option may be exercised within six months of the date of the grant.

Upon the employee’s termination, all nonvested options are forfeited immediately and any unexercised vested options are cancelled from 30 to 180 days following the termination date.

Upon the employee’s termination, any unexercised vested options are cancelled from 90 days to one year following the termination date.

The following table summarizes activity and information related to stock options for the year ended December 31, 2022:

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Fully vested and expected to vest as of December 31, 2022

Aggregate intrinsic value represents the difference between the closing market price of Nexstar’s common stock on the last day of the fiscal period, which was $ 130.8 million on December 31, 2021, and the stock option exercise prices multiplied by the number of options outstanding.

The $ 43.2 million aggregate intrinsic value represents the difference between the closing market price of Nexstar’s common stock on the last day of the fiscal period and the stock option exercise prices multiplied by the number of options outstanding.

For the years ended December 31, 2022, 2021 and 2020 , the aggregate intrinsic value of options exercised, on their respective exercise dates, was $ 109.8 million, $ 71.1 million and $ 11.9 million, respectively.

Time-Based Restricted Stock Units

The RSUs vest over a range of two to five years from the date of the award.

All unvested RSUs are forfeited immediately upon the employee’s termination for any reason other than change of control.

The RSUs vest over a range of two to four years from the date of the award.

Unvested RSUs are generally forfeited immediately upon the employee’s termination for any reason other than change of control.

The following table summarizes activity and information related to RSUs for the year ended December 31, 2022:

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Performance-Based Restricted Stock Units

The vesting of the PSUs is contingent on the continued service of the grantee and the achievement of specific performance metrics (generally over a range of two to four years ) designated by the Board of Directors of the Company.

All unvested PSUs are forfeited immediately upon the employee’s termination for any reason other than change of control.

Unvested PSUs are generally forfeited immediately upon the employee’s termination for any reason other than change of control.

The following table summarizes activity and information related to PSUs for the year ended December 31, 2022:

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Unvested as of December 31, 2022

The income tax expense (benefit) consisted of the following components for the years ended December 31 (in thousands):

The income tax expense (benefit) consisted of the following components for the years ended December 31 (in millions):

Current tax expense:

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Income tax expense

The following is a reconciliation of the federal statutory income tax rate to income tax expense for the years ended December 31 (in thousands):

The following is a reconciliation of the federal statutory income tax rate to income tax expense for the years ended December 31 (in millions):

Federal income tax at the statutory rate

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Nondeductible compensation

Nondeductible acquisition costs

Nondeductible meals and entertainment

Nondeductible goodwill impairment

Excess tax benefit on stock-based compensation

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Uncertain tax positions

Bargain purchase gain

Minority interest

Income tax expense

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As a result of these provisions of the Act, the Company’s deduction related to executive compensation and interest expense could be limited in future years.

The components of the net deferred tax asset (liability) were as follows, as of December 31 (in thousands):

The components of the net deferred tax asset (liability) were as follows, as of December 31 (in millions):

Deferred tax assets:

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Net deferred tax liabilities

As of December 31, 2021 , the Company had a valuation allowance related to deferred tax assets of $ 42.3 million which was not likely to be realized, an increase of $ 18.9 million from the December 31, 2020 balance.

The valuation allowance increased in 2021 primarily due to Mission’s limitation on the deduction for business interest expense, continued losses, and the increase in deferred tax liabilities for indefinite-lived intangible assets.

As of December 31, 2022 , the Company’s reserve for uncertain tax positions totaled approximately $ 28.0 million.

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The Company has not recorded any tax reserves related to the Chicago Cubs Transactions as further described in Note 16.

A reconciliation of the beginning and ending balances of the gross liability for uncertain tax positions is as follows (in thousands):

A reconciliation of the beginning and ending balances of the gross liability for uncertain tax positions is as follows (in millions):

Uncertain tax position liability at the beginning of the year

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Increases related to tax positions taken during prior periods

Decreases related to tax positions taken during prior periods

Decreases related to settlements with taxing authorities

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federal jurisdiction and various state jurisdictions.

The Tribune acquired entities are currently undergoing a 2014–2015 federal audit and continue to be subject to audit for years after 2017.

The Tribune acquired entities are currently undergoing federal audits for tax periods including 2014–2015 and 2018–2019.

Protective claims for refund have been filed for 2013, 2016 and 2017 to keep the periods open for specific issues relating to the potential Cubs resolution.

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The FCC’s two most recent quadrennial reviews—those for 2010 and 2014—were eventually consolidated into a single proceeding that involved extensive litigation, an agency reconsideration and multiple court appeals, culminating in an April 1, 2021 decision by the U.S.

Supreme Court.

The 2018 quadrennial review, which the FCC commenced in December 2018, remains pending, and the FCC has recently solicited and received comments to update the record of that proceeding in the wake of the Supreme Court’s decision.

Additionally, the FCC has opened a proceeding to review the national television station ownership limit.

The FCC also has not yet opened its 2022 quadrennial review proceeding.

Thus, the media ownership rules are subject to change, both as a result of current and future quadrennial reviews and in other proceedings.

Supreme Court which upheld the FCC’s elimination or relaxation of several rules.

The 2018 quadrennial review, which the FCC commenced in December 2018, remains pending, and the FCC has solicited and received comments to update the record of that proceeding in the wake of the Supreme Court’s decision.

Notwithstanding the pendency of the 2018 review, in December 2022 the FCC commenced its 2022 quadrennial review proceeding.

Additionally, the FCC has an open proceeding to review the national television station ownership limit.

Thus, the media ownership rules are subject to change as a result of current and future quadrennial reviews and in other proceedings.

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.

In 2017, the Company 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.

Retransmission Consent

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Broadcast rights acquired for cash under license agreements are recorded as an asset and a corresponding liability at the inception of the license period.

Future minimum payments for license agreements for which the license period has not commenced and no asset or liability has been recorded are as follows as of December 31, 2021 (in thousands):

Future minimum payments for license agreements for which the license period has not commenced and no asset or liability has been recorded are as follows as of December 31, 2022 (in millions):

Guarantee of Mission Debt

Nexstar and its subsidiaries guarantee full payment of all obligations incurred under the Mission senior secured credit facility.

Nexstar (excluding The CW) guarantees full payment of all obligations incurred under the Mission senior secured credit facility.

In the event that Mission is unable to repay amounts due, Nexstar will be obligated to repay such amounts.

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In the event of an adverse outcome of these proceedings, the Company believes the resulting liabilities would not have a material adverse effect on its financial condition or results of operations.

Local TV Advertising Antitrust Litigation —On March 16, 2018, a group of companies including Nexstar and Tribune (the “Defendants”) received a Civil Investigative Demand from the Antitrust Division of the DOJ regarding an investigation into the exchange of certain information related to the pacing of sales related to the same period in the prior year among broadcast stations in some DMAs in alleged violation of federal antitrust law.

Local TV Advertising Antitrust Litigation —On March 16, 2018, a group of companies including Nexstar and Tribune (the “Defendants”) received a Civil Investigative Demand from the Antitrust Division of the Department of Justice (“DOJ”) regarding an investigation into the exchange of certain information related to the pacing of sales related to the same period in the prior year among broadcast stations in some DMAs in alleged violation of federal antitrust law.

Without admitting any wrongdoing, some Defendants, including Tribune, entered into a proposed consent decree (referred to herein as the “consent decree”) with the DOJ on November 6, 2018.

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The Court denied that motion on November 6, 2020.

On March 16, 2022, the Plaintiffs filed their Third Amended Complaint.

The Third Amended Complaint adds two additional plaintiffs and an additional defendant, but does not make material changes to the allegations.

The parties are in the discovery phase of litigation.

The Court has not yet set a trial date.

Nexstar and Tribune deny the allegations against them and will defend their advertising practices.

Nexstar and Tribune deny all allegations against them and will defend their advertising practices.

In connection with Nexstar’s acquisition of Tribune on September 19, 2019, Nexstar assumed contingencies from certain legal proceedings, as follows:

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As of December 31, 2022, restricted cash and cash equivalents held by Tribune to satisfy the remaining claim obligations were $ 15.6 million and are estimated to be sufficient to satisfy such obligations.

In 2021, the Debtors settled and resolved a disputed unsecured claim asserted by Wilmington Trust Company (WTC), in its capacity as indenture trustee for the “PHONES Notes,”

in an amount in excess of $ 30.0 million.

Pursuant to that settlement, the Debtors withdrew $ 1.0 million from the reserve to pay WTC’s resolved claim.

As of December 31, 2021, all but 30 proofs of claim against the Debtors had been withdrawn, expunged, settled or otherwise satisfied.

All of the remaining proofs of claim were filed by certain of Tribune’s former directors and officers and certain professionals formerly retained by Tribune, asserting indemnity and other related claims against Tribune for claims brought against them in lawsuits arising from the cancellation of all issued and outstanding shares of Tribune common stock as of December 20, 2007 and Tribune thereafter becoming wholly-owned by the Tribune Company employee stock ownership plan.

Those lawsuits were consolidated in multidistrict litigation (“MDL”) before the U.S.

District Court for the Southern District of New York in proceedings captioned In re Tribune Co.

Fraudulent Conveyance Litigation .

On August 20, 2021, the United States Court of Appeals for the Second Circuit issued an opinion affirming the New York District Court’s dismissal of certain of the claims alleged in those lawsuits and reversing the New York District Court’s dismissal of others of those claims.

The claims that were not dismissed are now once again pending before the New York District Court.

The Debtors are continuing to evaluate the remaining proofs of claim.

The ultimate amounts to be paid in resolutions of the remaining proofs of claim, including indemnity claims, continue to be subject to uncertainty.

If the aggregate allowed amount of the remaining claims exceeds the restricted cash and cash equivalents held for satisfying such claims, Tribune would be required to satisfy the allowed claims from its cash on hand from operations.

As of December 31, 2022, all but three proofs of claim against the Debtors had been withdrawn, expunged, settled or otherwise satisfied.

Those claims were resolved with Bankruptcy Court approval in January 2023.

The amount of such resolution did not exceed the restricted cash and cash equivalents held by Tribune to satisfy remaining claim obligations described above.

In the event any additional claims were to be allowed that exceeded the amount of restricted cash and cash equivalents held by Tribune, Tribune would be required to satisfy the allowed claims from its cash on hand from operations.

Chicago Cubs Transactions —

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The fair market value of the contributed assets exceeded the tax basis and did not result in an immediate taxable gain as the transaction was structured to comply with the partnership provisions of the Internal Revenue Code (“IRC”) and related regulations.

On June 28, 2016, the IRS issued Tribune a Notice of Deficiency which presented the IRS’s position that the gain with respect to the Chicago Cubs Transactions should have been included in Tribune’s 2009 taxable income.

On June 28, 2016, the Internal Revenue Service (“IRS”) issued Tribune a Notice of Deficiency which presented the IRS’s position that the gain with respect to the Chicago Cubs Transactions should have been included in Tribune’s 2009 taxable income.

Accordingly, the IRS proposed a $ 182.0 million tax and a $ 73.0 million gross valuation misstatement penalty.

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After-tax interest on the aforementioned proposed tax and penalty through December 31, 2022 would be approximately $ 158.0 million.

In addition, if the IRS prevails with its position, under the tax rules for determining tax basis upon emergence from bankruptcy, the Company would be required to reduce its tax basis in certain assets.

In addition, if the IRS prevails in its position, under the tax rules for determining tax basis upon emergence from bankruptcy, the Company would be required to reduce its tax basis in certain assets.

The reduction in tax basis would be required to reflect the reduction in the amount of the Company’s guarantee of the New Cubs partnership debt which was included in the reported tax basis previously determined upon emergence from bankruptcy and subject to Tribune’s 2014 and 2015 Federal Income Tax Audits (described below).

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The Tax Court issued a separate opinion on January 6, 2020 holding that the IRS satisfied the procedural requirements for the imposition of the gross valuation misstatement penalty.

The judge deferred any litigation of the penalty until the tax issue has been resolved by the Tax Court.

The judge deferred any litigation of the penalty until a final determination was reached by the Tax Court or Court of Appeals.

On October 26, 2021, the Tax Court issued an opinion related to the Chicago Cubs Transactions, which held that Tribune’s structure was, in substantial part, in compliance with partnership provisions of the Code and, as a result, did not trigger the entire 2009 taxable gain proposed by the IRS.

The Company is currently evaluating the potential for appeal to the Court of Appeals for the holdings within the opinion which are unfavorable to the Company.

While the Tax Court has issued its opinion, it has not held further proceedings on the penalty issue and has not entered a final decision that starts the time in which either party may appeal the ruling to the Court of Appeals.

As of December 31, 2021, Nexstar believes the tax impact of applying the Tax Court opinion is not material to the Company’s accounting for uncertain tax positions or to its Consolidated Financial Statements.

Although management believes its estimates and judgments are reasonable, the timing and ultimate resolution is unpredictable and could materially change.

On October 19, 2022, the Tax Court entered the decision that there is no tax deficiency or penalty due in the 2009 tax year.

On January 13, 2023, the IRS filed a notice of appeal to the U.S.

Court of Appeals for the Seventh Circuit.

On February 3, 2023, the Company filed a notice of cross-appeal.

As of December 31, 2022, Nexstar believes the tax impact of applying the Tax Court opinion to 2009 and its impact on subsequent tax years is not material to the Company’s accounting for uncertain tax positions or to its Consolidated Financial Statements.

Although management believes its estimates and judgments are reasonable, the timing and ultimate resolution are unpredictable and could materially change.

Revenue Agent’s Report on Tribune’s 2014 to 2015 Federal Income Tax Audits —

Prior to Nexstar’s merger with Tribune in September 2019, Tribune and a few of its subsidiaries were undergoing separate federal income tax audits for taxable years 2014 and 2015.

In the third quarter of 2020, the IRS completed its audits of the acquired Tribune entities, and with the exception of Tribune, all other entity audits have been resolved and closed.

For Tribune, the IRS issued a Revenue Agent’s Report which disallows the reporting of certain assets and liabilities related to Tribune’s emergence from Chapter 11 bankruptcy on December 31, 2012.

Prior to Nexstar’s merger with Tribune in September 2019, Tribune was undergoing federal income tax audits for taxable years 2014 and 2015.

In the third quarter of 2020, the IRS completed its audits of Tribune and issued a Revenue Agent’s Report which disallows the reporting of certain assets and liabilities related to Tribune’s emergence from Chapter 11 bankruptcy on December 31, 2012.

Nexstar disagrees with the IRS’s proposed adjustments to the tax basis of certain assets and the related taxable income impact, and Nexstar is contesting the adjustments through the IRS administrative appeal procedures.

If the IRS prevails with its position and after taking into account the impact of the Tax Court opinion, Nexstar would be required to reduce its tax basis in certain assets resulting in a $ 15.0 million increase in its federal and state taxes payable and a $ 71.0 million increase in deferred income tax liability as of December 31, 2021.

If the IRS prevails in its position and after taking into account the impact of the Tax Court opinion, Nexstar would be required to reduce its tax basis in certain assets resulting in a $ 16.0 million increase in its federal and state taxes payable and a $ 70.0 million increase in deferred income tax liability as of December 31, 2022.

In accordance with ASC Topic 740, the Company has reflected $ 11.0 million for certain contested issues in its liability for uncertain tax positions at December 31, 2022 and December 31, 2021.

The Company’s reportable broadcast segment includes (i) television stations and related community focused websites that Nexstar owns, operates, programs or provides sales and other services to in various markets across the United States, (ii) NewsNation, a live daily national news and general entertainment cable network, (iii) two owned and operated digital multicast networks and other multicast network services, and (iv) WGN-AM, a Chicago radio station.

The other activities of the Company include (i) corporate functions, (ii) the management of certain real estate assets, including revenues from leasing certain owned office and production facilities, (iii) digital businesses and (iv) eliminations.

The Company’s reportable broadcast segment includes (i) television stations and related community focused websites that Nexstar owns, operates, programs or provides sales and other services to in various markets across the United States, (ii) NewsNation, a national cable news network, (iii) two owned and operated digital multicast networks and other multicast network services, and (iv) WGN-AM, a Chicago radio station.

The other activities of the Company include (i) operating Nexstar’s recently acquired The CW (see Note 3), (ii) digital businesses, (iii) corporate functions, (iv) the management of certain real estate assets, including revenues from leasing certain owned office and production facilities, and (v) eliminations.

The Company evaluates the performance of its operating segments based on net revenue and segment profit.

Segment profit excludes depreciation and amortization, amortization of broadcast rights (but includes payments for broadcast rights), reimbursement from the FCC related to station repack, impairment charges, gain on disposal of assets and business divestitures and certain other items that are included in income from continuing operations determined in accordance with U.S.

Segment financial information is included in the following tables for the periods presented (in thousands):

Segment financial information is included in the following tables for the periods presented (in millions):

Years Ended December 31,

Corporate (unallocated)

Total net revenue

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Broadcast segment profit

Corporate (unallocated) and other

Depreciation and amortization

Other segments (loss) profit

Corporate (unallocated)

Depreciation and amortization expense

Goodwill and other long-lived asset impairments

Payments for broadcast rights, net of amortization

Reimbursement from the FCC related to station repack

Assets held for sale impairment

Goodwill and intangible assets impairment

Gain on disposal of stations and business units, net

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Broadcast (1)

Corporate (unallocated) and other

Corporate (unallocated)

(1) While the Company’s investment in TV Food Network ($ 1.099 billion at December 31, 2022 and $ 1.191 billion at December 31, 2021) has not been allocated to a Company reporting unit or operating segment, such asset has been included in the Company’s disclosure of Broadcast segment assets given the similar nature of the investment to that segment.

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As of December 31,

The following table presents the disaggregation of the Company’s revenue under ASC 606 for the periods presented (in thousands).

The following table presents the disaggregation of the Company’s revenue under ASC 606 for the periods presented (in millions).

Year Ended December 31, 2022

Core advertising (local and national)

Corporate (unallocated)

Core advertising

Political advertising

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Year Ended December 31, 2021

Core advertising (local and national)

Corporate (unallocated)

Core advertising

Political advertising

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Year Ended December 31, 2020

Core advertising (local and national)

Corporate (unallocated)

Core advertising

Political advertising

Total revenue

Total net revenue

The Company primarily derives its revenues from television and digital advertising and from distribution of its stations’

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In 2022, each of these customers represented approximately 10 %, and 11 %, respectively, of the Company’s consolidated net revenues.

In 2021, each of these customers represented approximately 12 %, and 13 %, respectively, of the Company’s consolidated net revenues.

In 2020, each of these customers represented approximately 11 % of the Company’s consolidated net revenues.

No single customer provided more than 10 % of the Company’s consolidated net revenues during the year ended December 31, 2019.

Advertising revenue (core, political and digital) is positively affected by national and regional political campaigns and certain events such as the Olympic Games or the Super Bowl.

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Valuation and Qualifying Accounts

Allowance for Doubtful Accounts Rollforward (in thousands):

Allowance for Credit Losses Rollforward (in millions):

Deductions (1)

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Subsequent Events

On January 27, 2022 , Nexstar’s Board of Directors declared a quarterly cash dividend of $ 0.90 per share on its outstanding Class A common stock.

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

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.

From January 1 to February 25, 2022, in connection with stock option exercises and vesting of restricted stock units, we issued 712,535 shares of our Class A common stock, net of any shares withheld for taxes.

On January 31, 2022, the Company announced that its Board of Directors voted to recommend that shareholders approve an amendment to its corporate charter to eliminate the Company’s Class B common stock and Class C common stock classes.

As of December 31, 2021, and as of the date of filing this Annual Report on Form 10-K, no shares of Class B common stock or Class C common stock were outstanding.

The proposed charter amendment is subject to shareholder approval at the Company’s 2022 annual meeting of stockholders, which will be held in June 2022.

The Company expects to file a preliminary proxy statement for the 2022 stockholder meeting in April 2022.

On January 26, 2023 , Nexstar’s board of directors declared a quarterly cash dividend of $ 1.35 per share on its outstanding common stock.

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

From January 1 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 remaining available amount under the share repurchase authorization was $ 1.225 billion.

From January 1 to February 27, 2023, in connection with the vesting of restricted stock units, we issued 130,808 shares of our common stock, net of any shares withheld for taxes.

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 9A. Controls and Procedures