NEXSTAR MEDIA GROUP, INC. (NXST) stock intrinsic value fair value estimate & owner earnings analysis

Nexstar Media Group is the largest owner of local television stations in the United States. Before March 2026 it ran about 200 full-power stations in 116 markets plus the NewsNation cable network and a controlling stake in The CW network; on March 19, 2026 it closed its $22-per-share cash purchase of TEGNA, adding TEGNA's roughly 64 stations (big-market NBC, CBS and ABC affiliates such as those in Dallas, Houston, Atlanta and Washington, D.C.). The combined group reaches roughly 80% of U.S. TV households. It earns money in three ways: fees that cable, satellite and streaming-TV bundles pay to carry its stations (about half of revenue), local and national advertising, and political advertising that surges in every even-numbered election year. It also owns 31% of the TV Food Network, which pays it cash distributions. What changed since our previous estimate ($323 bear / $559 base / $739 bull). Three things, and together they cut the value sharply. First, debt. Previously we valued the cash left for shareholders after interest and did not separately subtract the borrowings, which quietly assumed Nexstar could roll over its debt forever on today's terms. We now value the business before its lenders are paid and then subtract everything it owes. Second, the TEGNA deal closed. It brought TEGNA's cash earnings, but also about $5.5 billion of new borrowing: debt rose from $6.36 billion at the end of 2025 to $11.88 billion at June 30, 2026. Third, we previously credited about 3% a year of per-share growth that came mostly from share buybacks. Buybacks are a use of cash, not growth in the business, and none were made in the first half of 2026 as the company took on the deal debt. The underlying dollars have been shrinking, not growing, and the estimate now reflects that. How we measured earning power. We start from cash from operations, strip out working-capital timing swings, subtract stock compensation as a real cost, and subtract the capital spending needed to maintain the stations. Non-cash amortization of acquired intangibles and the 2025 write-down of the Food Network stake are added back, because they are accounting charges for past purchases; the economic erosion they reflect is carried instead in the declining growth paths below. We then add back cash interest to see what the business produces before its lenders. Because political advertising makes odd and even years very different, we use full two-year election cycles. For Nexstar's own stations we use 2022 through 2025, the two cycles since The CW was acquired in late 2022. Over that span the stations and networks, excluding Food Network, produced a median of about $1.18 billion a year before interest, and were essentially flat from the 2022-23 cycle ($1.17 billion a year) to the 2024-25 cycle ($1.18 billion). The Food Network distributions are measured separately because they are falling fast: $270 million in 2023, $154 million in 2024, $137 million in 2025 and $96 million in the first half of 2026. We carry them at today's $137 million, not the higher earlier level. For TEGNA we use its own 2023-2025 filings: a median of about $572 million a year before interest (2023 $572 million, 2024 $683 million, 2025 $456 million). The combined starting level is about $1.89 billion a year before interest. Recent trend versus our first-year assumption. Owner earnings fell 30% in 2025 (from $33.04 to $24.68 per share), but 2025 was an off-year with no elections, so that single-year drop mostly reflects the missing political advertising. Comparing like-for-like election cycles, Nexstar's pre-interest cash flow fell about 3.7% a year, nearly all of it from the Food Network decline. The base case assumes the combined business shrinks about 3% in year one. That is better than the 2025 print because November 3, 2026 midterm elections return political advertising to the stations, as they have every even year, and first-half 2026 revenue of $3.39 billion is consistent with that. What each case assumes. No growth is credited in any case except in the bull, because none is contracted or proven: subscriber losses in the cable-TV bundle are offsetting rate increases (Nexstar's distribution revenue was flat in 2025; TEGNA's fell from $1.54 billion in 2023 to $1.47 billion in 2025), and TEGNA's non-political advertising fell from $1.28 billion to $1.17 billion over the same two years. What keeps earning power going after year ten is structural: FCC licenses, network affiliations, local news franchises and the every-other-year political cycle, which has recurred for decades. So each case fades at its own rate rather than ending. Base case: Nexstar's stations and networks decline 2% a year (a little worse than the flat recent cycle, since part of that stability came from cutting The CW's losses, which cannot repeat), Food Network distributions decline 8% a year, and TEGNA declines 4% a year (its non-political revenue fell about 3.4% a year from 2023 to 2025). No merger savings are credited because a federal court has barred combining the two companies (see below). The business is worth about $20.8 billion. It owes about $12.04 billion: $11.88 billion of borrowings, less about $118 million of cash beyond operating needs, plus about $285 million for the fact that its debt costs somewhat more than 6% (the new 6.50% secured notes due 2033 and 7.25% notes due 2034, and floating-rate term loans near 6.5%, outweigh the cheap 4.75% notes due 2028). That leaves about $8.76 billion for shareholders, or about $282 per share. Bear case: cord-cutting outruns fee increases and advertising keeps eroding, so Nexstar's stations decline 5% a year, TEGNA 7% a year (roughly its 2023-2025 pace in off-election years), and Food Network distributions 15% a year (their pace since 2023). Refinancing the floating-rate loans and the 2028 notes costs more, adding about $700 million to the debt burden. The business is worth about $14.8 billion against about $12.46 billion owed, leaving about $2.35 billion, or about $76 per share. Even here the business covers its interest bill (about $1.77 billion of pre-interest cash in year one against roughly $0.8-0.9 billion of interest) and can pay the debt down over time, but shareholders keep only a thin slice because the debt is about six times annual pre-interest cash flow. A forced unwinding of TEGNA would not change this much: at the prices this case implies, a sale would roughly repay the debt raised to buy it. Bull case: the distribution agreements Nexstar renewed in late 2025, covering more than 60% of its subscribers, keep its own stations flat for ten years before a 1% annual fade; Food Network declines only 4% a year; TEGNA declines 2% a year; and if the court restrictions are lifted, Nexstar realizes about $100 million a year of combination savings from 2028, a modest figure for a company that has twice before combined large station groups (Media General in 2017, Tribune in 2019). Interest costs settle near 6% (about $60 million adjustment). The business is worth about $27.4 billion against about $11.82 billion owed, leaving about $15.57 billion, or about $502 per share. The TEGNA litigation. Thirteen states and DirecTV have sued to block the combination. A federal judge issued a preliminary injunction on April 17, 2026 barring Nexstar from integrating TEGNA's operations, and in August 2026 ruled that Nexstar officers cannot sit on TEGNA's board; TEGNA is being run separately while the ruling is appealed. The FCC also required six overlapping stations (including WTHR Indianapolis and KTVD Denver) to be sold within two years. This is why no merger savings appear outside the bull case. What the shares appear to be worth. About $282 per share in the base case, within a wide range of $76 to $502. The range is wide because the debt magnifies every change in the business: each 1% a year difference in the rate of decline moves the share value by roughly $75 to $100. With a shrinking industry, heavy debt and unresolved litigation, the estimate calls for a large margin of safety, and the margin-of-safety price is around $125 per share. At that price the cash left after interest (about $34 per share in the first year of the base case) would let the company pay down debt quickly, which moves value from lenders to shareholders. What would make this wrong. Faster cord-cutting or a lost carriage dispute would push toward the bear case; a court win that lets Nexstar combine the two companies, or retransmission renewals at higher rates, would push toward the bull. Two items could not be fully reconciled: TEGNA's 2025 cash flow was depressed partly by merger costs that its filing does not total, and first-half 2026 results include only about three months of TEGNA, so the combined run rate will be clearer after the full 2026 year is reported.