Nexstar, Mission Broadcasting Announce Acquisition of 12 TV Stations

IRVING, Texas, July 19, 2012 - Nexstar Broadcasting Group, Inc. (Nasdaq: NXST) ("Nexstar") announced today it and Mission Broadcasting, Inc. ("Mission"), entered into definitive agreements to acquire twelve television stations and associated digital sub-channels in eight markets from entities controlled by privately-held Newport Television, LLC ("Newport") for $285.5 million in a transaction that is expected to be immediately accretive to Nexstar and Mission upon closing. Nexstar will acquire ten stations as well as Newport's Inergize Digital media operations and Mission will acquire two stations in Little Rock, AR (table below). Nexstar also announced that it and Mission have secured commitments for new $645 million Senior Secured Credit Facilities comprised of a $570 million Term Loan B due 2019 and a $75 million Revolving Credit Facility due December 2017. Nexstar management will host a conference call and webcast today at 11:30 a.m. ET (details below) to review details of the transaction and its financing.

The planned acquisition of the Newport stations substantially broadens Nexstar's local television broadcasting platform with stations that are geographically complementary to and diversify Nexstar's operating base while also presenting significant financial and operating synergies with the Company's existing portfolio. Upon closing, the proposed transaction will increase Nexstar's portfolio of stations that it owns, operates, programs or to which it provides sales and other services to 67 stations in 40 markets reaching approximately 11.4% of all U.S. television households.

 

* to be acquired by Mission Broadcasting

Inergize Digital is an industry leader offering fully integrated e-Media management solutions on-air, online and for mobile devices. Inergize has multi-year contracts with approximately 75 stations and other entities outside of the Nexstar platform which Nexstar will assume upon closing. The Inergize operations will be integrated with Nexstar's existing e-Media and GoLocal.biz platforms.

In the first year following the closing of the transaction the twelve Newport stations and Inergize are expected to contribute approximately $110 million in incremental net revenue. In 2014, the anticipated second year of the combined operations, Nexstar believes the combined entity will generate approximately $550 million in net revenue. Giving effect to approximately $19 million in projected synergies, the acquisition is expected to generate approximately $55 million in additional EBITDA (definitions and disclosures regarding non-GAAP financial information are included later in this announcement) and is expected to provide free cash flow accretion in the first year of approximately 45% over the levels expected to be generated by Nexstar's and Mission's existing operations. The purchase price represents a multiple of approximately 5.5 times the average 2011/2012 broadcast cash flow of the acquired stations after giving effect to the anticipated operating improvements and synergies identified by Nexstar.

Perry A. Sook, Chairman, President and Chief Executive Officer of Nexstar Broadcasting Group, Inc., commented, "The Newport transaction is a transformational event for Nexstar from a strategic and operational standpoint and will bring very significant free cash flow accretion to the Company immediately upon closing. The acquisition significantly expands our revenue and operating base with stations where we can quickly apply our operating and management disciplines to meaningfully improve their performance which we believe will drive strong cash flow growth.

"The transaction, combined with the planned new Senior Secured Credit Facilities, concludes and fulfills the goals of the strategic review process announced in July 2011 as it adds substantial new value for our shareholders without materially increasing leverage. Specifically, pro-forma for the completion of the station acquisitions and new credit facilities, Nexstar is projected to generate free cash flow levels approximately 45% higher than we would with our existing operations. Furthermore, total leverage, following the expected record levels of free cash flow in 2012, will rise by only about a half turn due to this acquisition and is expected to be well below 5.0x at the end of 2013. The new credit facilities will also afford Nexstar the flexibility to potentially deploy our free cash flow for other shareholder enhancing actions such as share repurchases and/or the initiation of a dividend.

"The Newport stations represent an ideal complement to our existing station portfolio in terms of geographic fit, market size and duopoly presence. The purchase price for the stations is approximately 5.5 times the acquired stations' average 2011/2012 pro-forma projected cash flow and approximately 5.0 times their 2012 pro-forma projected cash flow. Under Nexstar's ownership, the stations' financial results will benefit from additional retransmission revenues as well as synergistic operating improvements. We intend to implement our proven strategy of focusing on local programming and effective online marketing solutions across the twelve Newport stations being acquired. We will also marry best of breed e-Media practices from our existing operations with those of Inergize Digital to deliver fully-integrated digital management solutions to both our stations and our station clients to generate revenue both on-air, online and on mobile devices."

Mr. Sook concluded, "The transaction announced today again highlights Nexstar's role in the industry as a leading consolidator of stations in mid-sized markets through accretive transactions. In the current environment we see further opportunities to optimize our portfolio through strategic acquisitions and divestitures. In this regard, and reflecting another outcome of the strategic review process, we are in discussions to divest certain stations in smaller, non-core markets to allow us to best maximize the value of our intellectual capital and operating management."

Nexstar board member Jay Grossman, Managing Partner of ABRY Partners, which funded Nexstar's formation in 1996 and remains the Company's largest shareholder with a 52.9% equity interest added, "Over the past year Nexstar conducted an exhaustive review of its assets, operations and the M&A options and strategic alternatives available to maximize shareholder value. ABRY is a strong advocate of the value the transaction announced today creates for all shareholders. While we have an intention over time to monetize the value of our Nexstar holdings for our investors, we will be highly disciplined in this regard and sensitive to the interests of other shareholders by pursuing any such monetization strategies in an orderly manner."

Nexstar and Mission plan to finance the acquisition of the Newport stations with new $645 million Senior Secured Credit Facilities comprised of a $570 million Term Loan B due 2019 and a $75 million Revolving Credit Facility due December 2017. In addition to financing the Newport transaction, Nexstar intends to use the proceeds of the new facilities to refinance its existing Credit Facilities, including amounts outstanding on its First Lien Revolving Credit Facility and its First Lien Term Loans, and to redeem all of its aggregate outstanding principal amount 7% Senior Subordinated Notes due January 15, 2014 and all of its aggregate outstanding principal amount 7% Senior Subordinated PIK Notes due January 15, 2014.

The new credit facilities are being led by Bank of America Merrill Lynch, UBS Investment Bank and RBC Capital Markets as joint lead arrangers and joint bookrunners.

Completion of the Newport transaction, expected to close in the fourth quarter of 2012, is subject to Federal Communications Commission approval, the expiration of the applicable Hart-Scott-Rodino waiting period and other customary closing conditions.