Feb 26, 2014
Executives
Perry A. Sook - Founder, Executive Chairman, Chief Executive Officer, President, Chief Executive Officer of Nexstar Broadcasting Inc, President of Nexstar Broadcasting Inc and Director of Nexstar Broadcasting Inc Thomas E.
Carter - Chief Financial Officer, Principal Accounting Officer and Executive Vice President
Analysts
John Janedis - UBS Investment Bank, Research Division Aaron Watts - Deutsche Bank AG, Research Division Marci Ryvicker - Wells Fargo Securities, LLC, Research Division Tracy B. Young - Evercore Partners Inc., Research Division Davis Hebert - Wells Fargo Securities, LLC, Research Division James G.
Dix - Wedbush Securities Inc., Research Division Lance W. Vitanza - CRT Capital Group LLC, Research Division Edward J.
Atorino - The Benchmark Company, LLC, Research Division Barry L. Lucas - G.
Research, Inc. David Farber Ari Friedman Michael A.
Kupinski - Noble Financial Group, Inc., Research Division Brian Marc Warner - Performance Capital Corporation
Operator
Good day, and welcome to the Nexstar Broadcasting Group's 2013 Fourth Quarter Conference Call. Today's call is being recorded.
All statements and comments made by management during this conference, other than statements of historical fact, may be deemed forward-looking statements within the meaning of Section 21 of the Securities Act of 1933 and Section 21A of the Securities and Exchange Act of 1934. The company's future financial conditions and results of operations, as well as forward-looking statements, are subject to change.
The forward-looking statements and comments made during the conference call are made only as of the date of today's conference call. Management will also be discussing non-GAAP information during this call in compliance with Regulation G.
Reconciliations of this non-GAAP information to GAAP measurements are included in today's news announcement. The company does not undertake any obligation to update forward-looking statements reflective of changes in circumstances.
At this time I would like to turn the call over to your host, Nexstar President and CEO, Perry Sook. Please go ahead.
Perry A. Sook
Thank you, operator, and good morning, everyone. Thank you, all, for joining us to review Nexstar's fourth quarter and record full year 2013 operating results, our recent M&A activity and other initiatives that will drive continued free cash flow growth this year and beyond.
Our Chief Financial Officer, Tom Carter, is also here with me this morning. During 2013, Nexstar generated record financial results by every metric.
We successfully integrated 18 station acquisitions announced in 2012 and early 2013 into our operations. We entered into agreements to strategically expand our operating base by an additional 37 stations through accretive transactions.
We lowered our weighted average cost of capital and strengthened our balance sheet, and we initiated, in 2013, the payment of a quarterly cash dividend. In late 2013, Nexstar celebrated its 10th year as a public company, and 2013 also marked the 17th year anniversary of the company's founding.
Over this time and over my 34-year career in the industry, one thing has been certain, and that has been change. Today is no different, except that our ability to adapt to that change and our visibility for growth and future opportunities to build our platform and shareholder value has never been clearer to us.
The consumer appeal of our local news and local content franchises, as well as the influence of our medium with advertisers, are the envy of the media world. We've observed time and again over history that potential disruptors and regulatory change are part and parcel of our operating landscape.
So let me reiterate that we are confident that in 2014, we will see another period of record financial results for Nexstar as we benefit from our expanded scale, our new operating efficiencies and synergies related to recent and soon-to-be-completed acquisitions, the renewal of a significant number of retransmission consent agreements in Q4 '13 and the first half of '14, and the expansion of our digital media initiatives, along with the return of the political cycle and highly rated programming, such as the Winter Olympics just completed. In addition, Nexstar continues to actively and opportunistically identify acquisition targets that adhere to our criteria for accretion and the development of new, strong local platforms.
And we will continue to cover these items in more detail later on this call as well as in your Q&A. Quickly recapping our Q4 acquisition activity.
In November, we entered into definitive agreements to acquire the stock of Grant Company, the owner of 7 television stations in 4 markets, for $87.5 million in a transaction that is expected to be immediately accretive to Nexstar's free cash flow upon closing. We followed this in December with an agreement to acquire 6 television stations in 2 markets for $37.5 million from Hoak Media, also in a transaction that is expected to be immediately accretive upon closing.
Since July 2012, Nexstar has doubled the number of television stations that we own or to which we provide services, as we and Mission have acquired, or agreed to acquire, a total of 53 television stations for a total value of approximately $863 million. Of that amount, $498 million are in pending transactions, which are before the FCC and are expected to close in the first or second quarter of this year.
Upon completing all announced transactions, our platform will expand to 108 stations and yet, we will reach just 16% of all U.S. television households.
So our runway for additional growth through M&A remains [ph] substantial. Consistent with our M&A criteria that emphasizes the development of duopolies, upon completing all pending transactions, we will own or provide services to multiple stations in 37 of the 56 markets in which we operate.
There has recently been a focus by the capital markets on a possible FCC item for the March agenda dealing with television station JSAs. As you may know, as of last night, that item has been postponed.
We will have limited comment on these matters this morning, other than to say that we would amend our agreements with Mission to conform and comply with the new regulations, while minimizing the financial impact to the overall entity. However, given the limited specifics at this time, it would be speculative to discuss our reaction and approach were there a change on this front, and as I noted a moment ago, we continue to pursue acquisition targets that adhere to our criteria for the development of new, strong local platforms and financial accretion.
And we do not believe a change in regulation will materially affect our approach to M&A. With our M&A activity to date, as we complete our transactions announced in 2013, Nexstar will generate meaningfully higher free cash flow.
We will quickly delever over the first year of operating our new stations and our leverage will be at an attractive mid-3x level by the end of 2014. Pro forma for the completion of all announced transactions, we believe that Nexstar will generate free cash flow in excess of $350 million over the 2014-2015 2-year cycle.
That translates to an average annual pro forma cash flow of approximately $5.85 a share for each year in the 2014 and 2015 period. Looking back at fourth quarter, all of our nonpolitical revenue sources posted significant year-over-year increases, leading to record fourth quarter net revenue, adjusted EBITDA and free cash flow that exceeded our 2012 levels, which benefited in 2012 with political advertising.
Operationally, Nexstar had an outstanding fourth quarter, with our results highlighting the ongoing focus on building new local direct advertising channels, as well as our growth in distribution and digital media revenue, and the successful integration of the accretive acquisitions completed in 2012 and early 2013. Reflecting organic- and acquisition-related growth, fourth quarter core ad revenue rose 47.4%, marking the company's highest growth rate in this metric in 2013.
Nexstar's strong core television advertising growth was complemented by a 67% increase in retransmission fee revenue and a 24.4% increase in digital media revenue, which collectively more than offset the impact of $25.8 million of political revenue reduction year-over-year. Overall, core revenue growth highlighted solid spending in 7 of our top 10 categories, an increase in 4 of our top 5 categories on a same-station basis.
In addition to the 4% year-over-year growth in auto, we also saw strength in cable, retail, insurance and legal categories. Overall top 10 category revenue on a same-station basis was up 7% versus 4Q of '12, and our core revenue growth continues to reflect healthy levels of new business, with new-to-television ad revenue for Q4 of $7.7 million, marking a 24% increase over the prior year.
In addition to the strong core ad revenue growth, Nexstar's approach to M&A integration continues to drive substantial increases in our noncore revenue streams, as total fourth quarter retransmission fee and digital media revenue, taken together, rose 56.4% to $33.4 million, representing 24.2% of our 2013 fourth quarter net revenue. By comparison, total fourth quarter retransmission fee and digital medial revenue comprised 18.4% of net revenue in the year-ago period and 16.9% of net revenue in the 2011 fourth quarter.
Reflecting the approximate $26 million delta in fourth quarter political revenue relative to 2012, 4Q of '13 BCF of $55.3 million was off the record levels by less than $1 million or 1.7%, while our adjusted EBITDA grew 2.5% to $49.3 million, inclusive of onetime expenses of approximately $1.1 million related to strategic initiatives. Fourth quarter 2013 free cash flow was up 113.7% from the fourth quarter of 2011, the previous nonpolitical period, and was up $4 million or 14% over last year, despite the benefit in Q4 of '12 of significant political revenue.
The operating efficiencies we are deriving from our expanded scale, the integration of our recently completed acquisitions and our focus on duopolies is highlighted in our fourth quarter BCF and our adjusted EBITDA margins, which were solid in a nonpolitical year at 40% and 35.7%, respectively. Tom will review the financials and our strength in capital structure shortly, but our balance sheet provides us with additional flexibility, allowing us to continue to acquire other stations in accretive transactions, also to continue to delever and for the increased return of capital to shareholders.
Last month, as you may know, the Board of Directors approved a 25% increase in our quarterly cash dividend to $0.15 per share per quarter in 2013, and we returned approximately -- a total of approximately $23 million of capital to shareholders in the form of dividend and the repurchase of 365,384 shares of our common stock in 2013. For Nexstar, free cash flow is our primary performance metric and as we move toward completing the pending transactions and in the 2014 political spending cycle, our prospects for generating very significant free cash flow per share over the current and next 2-year cycle is highly visible.
Tom will now give you further detail on our financials and review the expected financing of our recently announced transactions, and also update you on our capital structure. Tom?
Thomas E. Carter
Thanks, Perry, and good morning, everybody. I'll start with a review of Nexstar's Q4 income statement and balance sheet data, after which, I'll provide an update on our capital structure and the recently announced transactions.
For Q4 2013, net revenue was $138.1 million, which was up 18.9% over the same period in 2012. Core revenue was $107.9 million, up 47.4%, as Perry mentioned before.
Local revenue was up 42.7% to $75.1 million and national revenue was $32.8 million, up 59.5%. On a same-station basis, core revenue was up 6.3%, local revenue was up 4.4% and national revenue was up 11.4%.
Political revenue was down from $27.3 million to $1.5 million as, obviously, we benefited in 2012 from the strong political cycle. Retransmission fees were up 67% to $26.8 million.
This amount was up 14% on a same-station basis. Digital media revenues were $6.6 million compared to $5.3 million the year before and profitability, as Perry mentioned, was up as adjusted EBITDA was $49.3 million and free cash flow was $32.7 million, up 14% over the same period in 2012.
Nexstar's fourth quarter corporate expenses were $6 million compared with $8.2 million a year ago. Corporate expense declined, as the year-ago period included $2.6 million in nonrecurring expenses associated with personnel costs, the recently announced strategic and closed acquisitions and expenses related to capital markets activities compared to approximately $700,000 in such expenses in Q4 of 2013.
Also as noted previously, in anticipation of the station acquisition integrations in Q4, corporate expenses increased to reflect additional staffing, infrastructure and to manage the operation of these additional stations. As detailed in this morning's press release, Nexstar issued options to purchase approximately 745,000 shares to 53 executives, directors and managers on January 15, in the first broadly distributed incentive option grant since 2009.
The size of the grant and the value of the options will cause an increase in the noncash stock compensation expense of approximately $1.1 million in Q1 of '14 and $1.5 million each quarter thereafter. This amount is on top of the current run rate of approximately $500,000 a quarter.
Accordingly, we expect total corporate overhead to increase to approximately $8 million to $8.5 million per quarter beginning in Q1, but cash corporate overhead will remain consistent with previous expectations of approximately $6 million per quarter. Both amounts do not assume additional meaningful transaction expense.
Also importantly during the quarter, total station expenses on a same-station basis were down 1%, and on a same-station basis fixed cost which, in our definition, exclude affiliation expenses and sales expenses, were down 3.1% in Q4 of 2013 compared to the same quarter the previous year, as we continue to aggressively manage our business and drive expenses from the system. Turning to the balance sheet.
I will review some key items at 12/31/13. Total net leverage was 5.84x versus the total permitted leverage covenant of 7.25x.
And first lien leverage was 2.86x versus a new covenant of 4x. The only changes to the capital structure during the fourth quarter were those outlined in our Q3 call on November 5.
In connection with the refinancing of the 8.875% notes, we recognized an extraordinary charge of approximately $33.7 million during the quarter, and in December of 2012, we repriced the other $350 million of our Term Loan B to the same price of the Term Loan B, which was done in November, of approximately 3.75%. The blended rate on the refinancing of the 8.875% notes is approximately 5.75%, comprised of $275 million of the 6.875% senior notes and $150 million of borrowings under the credit facility at 3.75%.
This financing is expected to be approximately $10 million to $15 million accretive to free cash flow in the next several years, which is included in our current estimate of over $350 million in pro forma free cash flow over the next 2 years. The committed cost of financing for the CCA transaction is below 4%, which will further reduce Nexstar's weighted average cost of borrowings to approximately 5% from the current levels of approximately 5.75%.
Nexstar's outstanding debt as of 12/31/13 consisted of $545.4 million of outstanding term loan debt, though we have no borrowings under the revolver currently. Additionally, under the now expanded 6.875% senior sub debt, there's approximately $525 million of debt outstanding.
Total debt at the quarter was $1,071,000,000 and we had approximately $40 million of cash at 12/31/13. Total interest expense for the fourth quarter was $15.9 million compared to $13.6 million for the same period in 2012.
Cash interest expense was $15.1 million compared to $13.0 million for the same periods, as average debt levels throughout the quarter increased to reflect the borrowings on the credit facility and the addition -- and the issuance of the additional 6.875% notes, partially offset by the aforementioned lower weighted average cost of debt. During the quarter, we announced accretive transactions for 13 stations for a total purchase price of approximately $125 million.
These transactions will be funded with existing cash, existing financing commitments and additional capital markets activities. Nexstar's Q4 CapEx of $1.8 million compared with Q4 '12 CapEx of approximately $6 million.
The CapEx occurred -- incurred during 2013 in the fourth quarter was for upgrades to the newly acquired stations and the relocation of our corporate offices. The year-over-year CapEx reduction reflects the fact that much of the 2000 -- CapEx was front-end loaded in 2013, reflecting the station additions and the construction and equipment cost associated with those new broadcasting properties, including our Memphis station facility and Fresno hub, and the acceleration of local HD originations in a large number of our markets.
Our full 2013 CapEx came in at $18.7 million, more or less in line with -- or slightly below our $20 million expectation and, considering the 2013 announcements and the planned addition of 37 stations, we are budgeting CapEx in 2014 of approximately $22 million, which like 2013, will largely be front-end loaded as we bring these stations in, in the first half of the year. We believe that our results again demonstrated we are successfully managing our M&A initiatives and disciplined acquisition criteria, our top line fixed and variable costs and the balance sheet for cash, and remain focused on further actions that can enhance value.
Also as Perry noted, the first increased dividend and our fifth dividend overall will be paid this Friday. Looking forward, the successful integration and realization of synergies from the stations acquired in late 2012 and early 2013, reinforce our view on the synergies and cash flows to be garnered from station transactions announced later in 2013.
That concludes the financial review for the call. I'll now turn it back over to Perry for some closing remarks before Q&A.
Perry A. Sook
Thanks very much, Tom. I want to remind everyone that, first and foremost, our goal is to deliver growing levels of free cash flow for our shareholders.
We've built a long-term track record of success on this front and we remain committed to identifying and acting on new opportunities to create additional further value for our shareholders. In this regard, we believe we have the debt capacity combined with a target debt capacity to complete approximately $250 million to $300 million of additional acquisitions, should those opportunities meet our acquisition criteria.
This would be without the issuance of additional equity and while maintaining prudent leverage levels. There's a fair amount of this activity in our pipeline and we will harvest any and all of it, provided we see a path to free cash flow accretion upon closing the acquisition.
Looking forward, we have every reason to be very confident in our expected free cash flow growth as we look out through 2014 and beyond. First, core television ad sales remain healthy with the medium continuing to assert its dominance, with huge ratings for the Super Bowl, which aired on our 13 FOX affiliates.
With our 19 NBC-affiliated stations, the last 2 weeks have been phenomenal as the Olympic programming has been masterfully produced, and Nexstar took the advantage and initiative to send 2 crews to Sochi to successfully leverage the national popularity of the games with specially locally-produced Olympic content. In terms of political, this category has been a revenue source that's grown at a double-digit clip even -- in the even years, which we see continuing again in 2014.
This year is expected to be robust for Nexstar, based on the geographic composition of our platform and the statewide races. Specifically, there are a record number of statewide senate and gubernatorial election races in the Nexstar markets this year, with 19 senate seats up for contestants, 5 of those are open; and 24 -- I'm sorry, 22 governor seats, with 4 of those being open seats.
Issue advertising has become almost a year-round revenue item, and we'll see the official kickoff to our 2014 campaign political cycle with the congressional primaries in Texas and Illinois coming up in March. As I noted earlier, during Q4 we successfully renewed a significant number of retransmission consent agreements and continued to close the value gap between audience viewership and distribution revenue.
In total, an additional 40% of Nexstar's MVPD subs are up for renewal during calendar year 2014, and we remain confident that the high value and ratings of our programming and our local content will continue to be more appropriately valued by our distribution partners. With respect to digital media, our long-term double-digit organic growth, combined with the energized platform that we acquired in the first Newport transaction, has elevated our scale and prospects for digital media.
Total digital media revenue amounted to approximately $31 million in 2013, up 68% over 2012 levels, and we believe we can grow this high-margin revenue stream to over $100 million over the next 5 years, both through organic growth and M&A that adheres to our accretion and acquisition criteria. To support this goal, in Q4, we named former NBCUniversal broadcasting and cable veteran Tom O'Brien to the newly created position of Executive Vice President, Digital Media.
Tom's extensive digital media and marketing experience and successes at NBC in developing and implementing multiplatform growth strategies will help to expand our offerings and enhance our user platforms and multiplatform integration, while allowing us to take a more holistic approach across our entire platform to business and revenue development. In closing, we are laser-focused on closing and effectively integrating and extracting synergies from the planned acquisition and addition of the 37 stations that are currently before the FCC, and we will close on those in the coming months.
We believe that our acquisition and operating plan, combined with our prudent management of our capital structure, is a proven formula for sustained long-term growth and shareholder value appreciation. I'd like to again thank you for joining us this morning.
So now let's open the call to Q&A for your specific areas of interest. Operator?
Operator
[Operator Instructions] And we'll take our first question from John Janedis with UBS.
John Janedis - UBS Investment Bank, Research Division
Perry, just wanted to start. Thanks for the comments on the JSAs, and look, I get it that you don't want to speak too much to it, but can you give us an update on the -- maybe the percentage of your revenue that comes from JSA or maybe similar types of arrangements?
Perry A. Sook
John, I think that we've said that from our JSA markets currently in the platform, before all of the acquisitions are folded in, approximately 70% of our revenue comes from markets where we derive an economic benefit from more than 1 station.
John Janedis - UBS Investment Bank, Research Division
And then just moving to advertising. When we think back to last year, I think the overall view maybe was that the health of the core ad market was okay but not great.
And so as you start '14, x political, how do you feel about the economic backdrop in the markets you operate in? Does it feel better than last year to start?
And is there any kind of impact from weather, so far, for the first quarter?
Perry A. Sook
The first quarter is -- well, I think first of all, we reported fourth quarter core ad revenue growth on a same-station basis of approximately 6%, and I think you will see a similar mid single-digit rise in core ad revenue on a same-station basis in the first quarter of 2014. So weather has not affected our operating and our ability to generate revenue.
In fact, that is not permitted as an excuse for not making your revenue budget in our company. If you're not selling far enough out to take advantage of opportunities, then you are probably not managing your business correctly.
But we believe that you'll see a mid-single-digit growth in core revenue on a same-station basis in the first quarter of 2014 and, yes, obviously, that's much better than the way 2013 started off from a core revenue basis.
John Janedis - UBS Investment Bank, Research Division
And so the macro feels better, generally speaking, across your assets?
Perry A. Sook
I think that's fair to say, yes.
Operator
We'll take our next question from Aaron Watts with Deutsche Bank.
Aaron Watts - Deutsche Bank AG, Research Division
As you guys think about your costs in 2014, as you kind of break that down to the core level, how should we kind of consider that? And then also maybe an extension there of, as you think about investment in more kind of proprietary local programming in your markets, how are you kind of thinking about that type of investment going forward?
Thomas E. Carter
Let me take the cost question and then, I'll turn it over to Perry for local programming there. Our cost, we kind of break it down, obviously, into a couple of buckets.
The variable cost associated with sales will be up this year as we see a return in political advertising, but that's a good thing because those are, clearly, directly attributable to revenue. Our costs associated with network affiliation fees will continue to increase at a double-digit rate clip over 2013, but again those, on a total basis, represent less than 10% of our total expenses currently and then the fixed costs -- it's basically everything else which, in my way of thinking, probably represents between 60% and 65% of our total cost will increase at a low-single-digit rate of increase over previous quarters -- on previous years, I should say.
And you can see that clearly, in Q4, we substantially beat that, as our absolute level of expenses on a same-station basis was down, and it was down approximately 3% if you x out those affiliation expenses and the sales expense which is, the way we think about it, our controllable expenses if you want to think about it that way. So it's clearly a focus.
It's job 1 for me on the expense side and we take it seriously and have a passion for it. So with that, I'll turn it back over to Perry for the local programming.
Perry A. Sook
Sure. Obviously, we've expanded the amount of local programming we do fairly dramatically, in addition to the hours of news that we produce.
For example, I was in our Salt Lake City ABC affiliate on Friday, and we have launched in the last year a 3:00 show that is -- it's a local show in the afternoon that complements our morning shows, which we do 2 hours of local programming in the morning following Good Morning America. And those have all been funded.
And our Green Bay station has done the same thing, has launched a 9:00 show and has a 4:00 show, in addition to our local news broadcast at regularly scheduled times throughout the day. And those have all been funded through savings of license fees for nonrenewal of syndicated programming.
So we will continue to look at that as the model, of taking some of the savings of our license fees to the bottom line and investing the remainder in additional personnel at the local level that can help to produce this additional local programming which, by the way, has broad appeal with advertisers. We are able to bring advertisers onto the set to talk about their businesses, they can have billboard opportunities, we can do programs on-location.
And all of this has tremendous appeal, beyond just selling 30-second commercials inside of TV programming. So it's a core tenet of our business that we will expand locally wherever we have the opportunity to do so, because it's good business to do that.
Aaron Watts - Deutsche Bank AG, Research Division
That's really helpful. And one other one for me.
What's your latest thoughts on when you are going to close these most recent acquisitions?
Thomas E. Carter
Obviously, it's dependent on FCC approval, which has kind of stalled, and I think now we know why some of the approvals have not been forthcoming. It's obviously dependent on that, but we would expect the logjam to break sometime in the second quarter.
Perry A. Sook
Aaron, let me just add that I was in Washington, D.C. in the last 2 days and I met with -- I was in every one of the FCC Commissioner's offices, as well as I met with the Media Bureau and also met with the DOJ.
And I would characterize all of those discussions as constructive. There was a good exchange of information.
I will also point out, I read this article I think last week, that in the first 4 months of the government's new fiscal year, there have been 105 days -- working days and the government's been closed for 27 of those due to either holidays or weather delays. So literally, the federal government was closed for about 25% of the time since the beginning of its fiscal year.
None of that has helped move along the processing, but the Media Bureau is processing our applications and obviously, we are hopeful that we will see, perhaps, a grant here in the first quarter and then the other grants, depending on the timing that the transactions were initiated, would come in the second quarter.
Aaron Watts - Deutsche Bank AG, Research Division
And what did you say was postponed in your opening remarks? I missed that.
Perry A. Sook
There was a rumor of the Chairman's white paper on JSAs, as well as his agenda for his March 19 meeting, has to be posted, under the FCC rules, 21 days prior to the meeting. My understanding is that white paper and the agenda have been postponed until March 31.
I am not an expert on the inner workings of the FCC, but whatever agenda items related to JSAs will not be on the March 19 agenda, and have been postponed until later in the month and may be postponed again for all we know.
Operator
We'll take our next question from Marci Ryvicker with Wells Fargo.
Marci Ryvicker - Wells Fargo Securities, LLC, Research Division
Perry, you mentioned you're going to continue to pursue M&A despite all this uncertainty over the JSAs. So are M&A discussions, just in the industry broadly, currently happening or have they slowed or are they on hold because of what's going on in D.C.?
Perry A. Sook
Well, I mean, there were M&A transactions announced in the last 2 weeks involving the Granite stations, and a number of those involved existing JSAs or other sharing arrangements. I -- we're involved in M&A discussions.
I can't speak for the industry, but I know that we have M&A in our pipeline and we're involved in those discussions. I think most folks feel that, obviously, we're conforming to the government regulations that are in place today, and if the regulations change at some point in the future, and all of that is uncertain, but if they do, then we will work hard to find ways to conform with those regulations and minimize the financial impact, if any, to the organization.
So I think that I've been in the business long enough, and you've been around, too, that we have had regulatory uncertainty during certain administrations, going back to Reed Hundt and the Clinton administration in the '90s, and business continues to move on. We can't wait for something to happen when we don't know what will happen.
I think if you -- so we continue to press with our agenda, and I believe that others in the industry feel the same. I did run into some other broadcasters on the eighth floor of the FCC, and I think people are feeling that we will press our case and make our case for our side of the argument in front of the regulators, and others will do the same.
But at the same time, business goes on and so I don't think that -- I will not characterize anything as being on hold at this point in time.
Marci Ryvicker - Wells Fargo Securities, LLC, Research Division
Okay. And turning to the financials, I think you had some pretty big retransmission consent contracts coming in at the end of the year, so I don't know what color you can give us in terms of rate.
Can you at least talk about whether you got over $1 per sub or any sort of color would be really helpful?
Perry A. Sook
All I can tell you is that we repriced approximately 22% of our subscribers in December of 2013, and they are, in our mind, at or above current market economics. But beyond that, I really can't comment.
We're subject to confidentiality provisions in every one of those agreements and wouldn't want to betray any of those with our partners.
Marci Ryvicker - Wells Fargo Securities, LLC, Research Division
And then my last question. Do you have a sense for any impact that a Comcast-Time Warner Cable merger could have on retransmission consent growth going forward?
Perry A. Sook
Well, I think it remains to be seen. I think, obviously, if the FCC has got Comcast-Time Warner on their plate and they have to deal with that, to me, it would make logical sense that there would be no additional regulatory burden placed on those that sit across the table from Comcast and Time Warner, in either retransmission negotiations or competition for ad revenues.
But that's one man's opinion. So obviously, as the industry continues to consolidate in all sectors, I think that you will see continued consolidation in the broadcast sector because I think it's just the natural evolution and reaction to everything else going on around us.
Operator
We'll take our next question from Tracy Young with Evercore.
Tracy B. Young - Evercore Partners Inc., Research Division
I'm just going to first start with 2 financial questions. Can you give us guidance for CapEx for 2014 and also, how much you have in NOLs?
Thomas E. Carter
Sure. The CapEx, as we mentioned before, for 2014 will be approximately $22 million.
And it will be front-end loaded, as we have projects on the drawing board right now that will happen in the first half of the year. NOLs have not changed appreciably.
We haven't really had much in the way of an update, other than the fact that they do approximate something in the high-$300 million range for Nexstar and Mission. And obviously, I think the good news about the refinancing of 2013 in Q4, and you can see from our financial statements is, we were basically at a GAAP net income breakeven, so we didn't use any of the NOLs in 2013.
And that $54 million limitation will roll over into 2014 and be added to the $91 million limitation there. So we don't think that cash taxes will be meaningful in 2014 or, quite honestly, 2015.
So no big change there from our perspective over some of the comments we've made historically.
Tracy B. Young - Evercore Partners Inc., Research Division
Great. And then 2 questions if I could.
The first relates to the JSAs. Is there any way you can give us some color as to what percentage they represent or how they contribute to revenues?
And then the second question, CBS recently raised its retrans estimates through 2020. Perry, how do you think longer term about retrans versus [ph] retrans?
Perry A. Sook
Sure. As I think we said earlier, approximately 70% of our revenue comes from markets where we derive an economic benefit from more than 1 station.
Our JSA agreements, and these are public, we basically sell the ad time for Mission and take a 30% commission and they keep 70% of the revenue. That's the sum and substance of our TV station JSAs.
So we look at that in the context of, in some of our markets, Comcast Spotlight selling ad inventory insertions on 23 to 29 channels, and so our selling ad insertions on 2 of those channels we don't think should be a cause for concern or -- with anyone. And we'll continue to press that case.
As it relates to CBS increasing their expectations for retrans revenues by 2020 or 2018, I think we continue to increase our expectations for retrans going forward. And I believe most of the networks now are looking at fixed fee arrangements that, regardless of your revenue, this is what the expense will be.
And of all of the proposals and all the business we've done, we feel very comfortable that we can continue to grow our retrans revenue and maintain a certain margin on that business. Will the expense go up?
Yes. Will the revenue go up?
I'm confident we can continue to keep pace and continue to grow our top line revenue. Because if CBS is getting more for their O&Os, that makes it necessarily easier for us to get more and more for our O&Os.
And so I think they can rise in concert and we feel very comfortable with maintaining that ecosystem as far as out as I can see.
Operator
We'll take our next question from Davis Hebert with Wells Fargo Securities.
Davis Hebert - Wells Fargo Securities, LLC, Research Division
I believe you guys have talked about political being a positive for you in 2014, meaning you didn't have as much presidential-related revenue in 2012. Tom, I wonder if you could provide any additional information on pro forma political versus 2012.
Thomas E. Carter
Sure. I think what we've said -- and you're exactly right, Davis, we didn't have much in the way of large presidential states other than Iowa, where we now operate with the Citadel acquisition.
I think what we have told people is we see a double-digit growth over the reported number from 2012 for a proxy for 2014, and that could be high teens to a 20% kind of growth in the reported number for '14 over the reported number for '12, even though that's not exactly same station.
Davis Hebert - Wells Fargo Securities, LLC, Research Division
Okay. So the high -- double-digit, high-teens over reported 2012, not necessarily inclusive of the acquisitions, then?
Thomas E. Carter
Correct.
Davis Hebert - Wells Fargo Securities, LLC, Research Division
Okay. And then in terms of the NBC agreement, I believe that's up for renewal this year.
Are you guys in negotiations or is it a little too early at this point?
Perry A. Sook
It's a little too early. Both parties acknowledge that we have a discussion to be had.
And we had a brief discussion down at NAPY [ph] in Miami that we may want to get started sooner as opposed to later, but it's early to have those discussions at this point in time.
Davis Hebert - Wells Fargo Securities, LLC, Research Division
Okay. Can you remind us, I mean, are you paying NBC currently or would this be part of that double-digit growth in affiliation fees?
Perry A. Sook
No, no, we're paying NBC currently in agreements that were struck in 2011, so it -- and just generally, we're paying on 95% of our Big 4 affiliates currently, and so there were only less than a handful of Big 4 affiliates that are under legacy agreements that currently don't have a material affiliation fee payment in them. So you won't see any extraneous shocks to the system here because we're paying.
We anticipate we'll pay more, but we also anticipate we'll continue to grow the revenue side of the equation. But we're not going to go from 0 to a number.
We're going from a number to a larger number, the byproduct of the negotiation.
Thomas E. Carter
And just given the timing and the math, our contribution will actually go up and if you want to think about retrans on a net basis, retrans revenue net of affiliate expense will actually go up in '14, because 22% of our subscribers repriced in '14. And that growth, combined with the general growth of our escalators and our other agreements, you will actually see the percentage contribution go up.
Davis Hebert - Wells Fargo Securities, LLC, Research Division
Okay. Got it.
And then, Tom, you gave some good details on the acquisitions, but I wonder if you could just kind of bullet point it for us in terms of what are the sources and uses that you might still need to address over the next few months.
Thomas E. Carter
Well, as Perry mentioned, we've got about $500 million of acquisitions pending. Various deposits and TBA payments on those reduced the actual cash needed to close to approximately $400 million.
And of that $400 million, we have $184 million unfunded Term Loan A commitment. We have $105 million unfunded revolver.
And as we mentioned on the call, we have approximately $40 million of cash, which we think of as kind of being $30 million of available cash above the $10 million which is kind of trapped in the system at any given time. So if you do that quick math, there's about an $80 million funding requirement, which we can address once we know the timing of these acquisitions.
And quite honestly, the Grant and the Hoak acquisitions are likely to close later in the second quarter, just given their processes and when they were announced in December or late in Q4. Plus the Grant acquisition is from an estate and there's more to it just from their side in terms of wanting to close there.
So we anticipate a need for an additional, call it, $100 million to $150 million of potential issuances here sometime in the next 120 to 180 days.
Davis Hebert - Wells Fargo Securities, LLC, Research Division
Okay. That's really helpful.
And then on the -- last one for me, on the pacing number, does that include or exclude any sort of incremental Olympic-related revenue?
Perry A. Sook
The core revenue of mid-single digit would include the contribution from Olympics, because as that's special event revenue it also takes away regular programming and it's hard to calculate an incremental margin on that because you don't have your regular primetime or your news programming, but you do have special event programming. It does help us gain share in the quarter and our stations did a terrific job with the Olympics, not only selling the ad time from NBC, but selling it digitally on our websites and mobile devices.
And then as I mentioned, we sent 2 reporters -- 2 crews to Sochi to do localized reports on athletes from various regions, and we generated another $300,000 from those special reports. And that was, on an all-in basis, highly incremental margin business to us.
So all-in, again, I think you'll see, as I mentioned, a mid-single-digit growth in core revenue on a same-station basis. Obviously, reported revenue numbers will be much higher than that.
Operator
We'll take our next question from James Dix with Wedbush.
James G. Dix - Wedbush Securities Inc., Research Division
Couple of questions. I guess just first, Perry, you talked about reverse compensation or retrans rates kind of in the market moving to a structure of a fixed fee, fixed rate.
By that, do you mean a fixed rate, which is set independent of what retrans the affiliate partner might be getting, or do you mean a fixed rate, really, across all affiliate groups, large and small, so that a particular network would not have a different fee that they would charge a larger group versus a smaller group? And then I had one follow-up.
Perry A. Sook
Yes, I really -- I was speaking more to just a fixed rate extends [ph] per sub per month kind of -- that's what it would cost to secure the affiliation. And I really can't speak as to whether that would be universal and blanket or whether you will get what you negotiate and your mileage may vary.
I can't really speak to what other groups are doing, I just know our experience.
James G. Dix - Wedbush Securities Inc., Research Division
Okay. And then in terms of your TV time sales, do you have a rough estimate as to how much of your TV time sales comes from news dayparts, and do you see that trending in a particular direction for any particular reason?
Perry A. Sook
Sure. Local news is approximately 35% of our television stations' total ad sales, and that's for the entire company, and that includes 4 markets that don't have any local news product on.
So -- but I can tell you that it averages 40% to 50% in traditional affiliates with strong local news operations. And so that has been increasing as we increase the amount of local news we do and displace syndicated programming or daytime programming.
So on an all-in basis, that has been increasing as we have added additional inventory.
James G. Dix - Wedbush Securities Inc., Research Division
Okay. And then just one follow-up on this question of the revenue that comes from JSA markets.
So the way you described the Mission arrangement, would it be fair to say that if, for some reason, you had to unwind the JSAs, the impact on your cash flow would be, at most, really that commission rate times the revenue, so really no more than 30% of that revenue and probably less, given other things you could do to adjust for that? But is that kind of the right way to think about it or is there additional color you could provide on that?
Thomas E. Carter
James, it's Tom. Just to be clear, we have expenses associated with that 30% of the revenue that we retain.
We pay all of the commissions, we pay the agency commissions, we pay the sales commissions, staff, sales management, et cetera. So there are hard dollar charges against that 30% that we retain.
So -- and all of that information that we've seen I think have focused on this 15% -- being able to sell 15% of the available advertising space. So the JSAs would not go away, they would be limited.
And if they're limited, we can still obviously believe we'd work with that. But even under your scenario, there are expenses that would move off of the Nexstar income statement onto the Mission income statement associated with doing away with that JSA as currently constructed.
Is that responsive?
James G. Dix - Wedbush Securities Inc., Research Division
Yes. So it sounds like the cash flow impact, even under this more extreme scenario that I laid out, would be really substantially -- I mean, quite a bit lower than even the 30% of the revenue in terms of [indiscernible].
Thomas E. Carter
We believe that it's not financially significant.
Operator
We'll take our next question from Lance Vitanza with CRT Capital Group.
Lance W. Vitanza - CRT Capital Group LLC, Research Division
Perry, I'm sorry if I'm making you go through this again, but could you talk about what a pro-Aereo ruling might mean for Nexstar, and what your response to that might be?
Perry A. Sook
I'm sorry, would you repeat that again, I...
Lance W. Vitanza - CRT Capital Group LLC, Research Division
Aereo, obviously, before the Supreme Court, I'm wondering if you could talk a little bit about what a pro-Aereo ruling might mean for Nexstar, and what your response to such a ruling might be?
Perry A. Sook
A pro-Aereo ruling, meaning the Supreme Court would not enforce the preliminary injunction or would not grant the stay of the preliminary injunction, I guess, is what you are asking. I think at that point, it defaults back to litigation and things go on and on and on.
So again, I can't comment too much on Aereo because we were involved in the Salt Lake City case, where the Tenth Circuit judge did affirm the preliminary injunction, did believe that broadcasters would prevail on the merits of the case and we were party to that. That happened last week and so I can't comment too much on it.
But we spent a lot of time talking about Aereo. I think the impact on our business is much less than the time we spend talking about it.
Operator
We'll take our next question from Edward Atorino with Benchmark.
Edward J. Atorino - The Benchmark Company, LLC, Research Division
Most have been asked, but this gentleman just brought up -- I'm not a lawyer, since you have this court ruling, that's a pretty strong language. Would it be most likely that the Supreme Court would not overturn a ruling like that?
Perry A. Sook
I'm not a lawyer either, Ed, so I can't speak to what the Justices of the Supreme Court will ultimately do, but we feel that the record -- we feel that if you get into the actual technology, that Aereo is an illegal service, and more people have agreed with that position than have not. But I would not feel comfortable predicting what justices or individuals would do, individually or collectively, in the ruling.
But we feel that the facts are definitely on the side of broadcasters that, in its current form, it's an illegal service.
Edward J. Atorino - The Benchmark Company, LLC, Research Division
And not to belabor the point, but if you read the ruling, it wasn't a wishy-washy, let's-take-a-look ruling, it was a pretty strong support of the copyright situation.
Perry A. Sook
I couldn't agree more. The attorney in the [indiscernible] argument and they very much felt that the judge saw exactly the facts, and ruled accordingly.
Edward J. Atorino - The Benchmark Company, LLC, Research Division
Did you give an Olympic number, by the way? The revenues from the Olympics, did I miss that?
Perry A. Sook
I didn't, but on an all-in basis, it's approximately $8 million, Ed.
Edward J. Atorino - The Benchmark Company, LLC, Research Division
And there was one other event, you didn't have the Super Bowl -- you did the Super Bowl, you got it somewhere?
Perry A. Sook
Yes, we had it on our 15 FOX stations and that was about $1.5 million Sunday for us.
Operator
We'll take our next question from Barry Lucas with Gabelli & Company.
Barry L. Lucas - G. Research, Inc.
I have a couple of quickies, if we can squeeze them in, Perry. First, any sense either fourth quarter auto pacings on a comp basis, same station and what that's looking like in the first quarter?
Perry A. Sook
It was up in the fourth quarter. I think we said approximately 4% on a same-station basis, and we're seeing a slight acceleration to that number in the first quarter, so mid-single-digit growth.
Barry L. Lucas - G. Research, Inc.
Okay. And I want to make sure that I got the right numbers, at least on paper here, from Tom.
I thought you said you repriced 20% of the sub base in December and another 40% come up during the first half of '14. So close to 2/3 of the overall household base could come up within 6 months or so?
Perry A. Sook
Yes, it's -- it was 22% of our subscribers were repriced at the end of 2013, and it's about 42% are -- will be repriced during 2014, not just in the first half but for the full year.
Barry L. Lucas - G. Research, Inc.
Okay. So within a 12-month period, 2/3 of the sub base is going to be repriced?
Perry A. Sook
That is correct, Barry.
Barry L. Lucas - G. Research, Inc.
I can do that kind of math, actually, Perry. Last item for me.
I want to go back, since we're beating dead horses here. But you mentioned comments about Time Warner Cable and Comcast getting together.
And just wondering if you, as I'm sure you do, raised the point in either with the Commission or elsewhere when you look not just across cable households, and you mentioned the ability -- Comcast's ability to sell ad insertions across multiple channels, but looking at the multiple exposure of the network, the NBC network, the cable networks, the owned and operated stations, along with the cable households, what kind of response, if any, do you get from the people and the powers that be when you are talking about having 2 outlets in the market when they've got many, many more in certain markets?
Perry A. Sook
The response we got from, kind of depending on party affiliation, was either we get it or we haven't made up our mind on Time Warner and Comcast as to how we're going to deal with that. But I think you make the perfect point that -- and we certainly don't have anything against consolidation.
We have been preaching and extolling the benefits of consolidation in our space, the mid-market space, for as long as we've been having these phone calls. But I think logic dictates, as you said, that the #1 and #2 cable entities can merge and Comcast has multimedia interests.
We don't begrudge anyone anything but, by the same token, then why can't we own or at least sell the inventory of 2 UHF TV stations in Abilene, Texas. I don't think that, that is in any way, shape or form anticompetitive and in fact, I think it's a reaction to the current competitive environment and landscape in which we operate.
And I think that most people acknowledge that. As I said, with all of the Commissioner's office in the Media Bureau and the DOJ, I thought our conversations were constructive.
And so whether that influences anything, politically or otherwise, it remains to be seen. There are a lot of fingers in the pie, but I think we've attempted to make the same logical argument that you have, Barry, and so we'll see where the chips fall and how they fall.
Operator
We'll take our next question from David Farber with Credit Suisse.
David Farber
I just wanted to get a better understanding of the appropriate pro formas, given timings and closings. And Tom, you helped before in sort of discussing, I think, the funding requirements a little bit.
So I guess my first question is, in the fourth quarter you talked about compliance leverage of, like, 5.8x versus 4.9x last quarter. And I'm just curious -- and the debt level is roughly the same, so I'm just curious what's driving that?
Maybe there's some timing, but if you could help us with that. And then I just have a follow-up question as well.
Thomas E. Carter
Sure. Well, we have 2 things.
One is, the biggest driver is the fact that we lost -- on a trailing 12 basis at September 30, we had a substantial amount of political revenue from the fourth quarter of 2012. By 12/31/13, all of that went away and was replaced.
If you look at the financial statements, obviously, we had approximately $26 million or $25 million less political revenue in Q4 '13 versus Q4 '12, that's the biggest driver. The other driver is the fact that we have approximately $40 million of deposits on deposit for pending acquisitions, which is funded debt to us but, obviously, we're not receiving any cash flow for that.
So those are the 2 drivers that increased leverage in Q4 '13 over previously announced levels, if that's responsive to your question.
David Farber
Yes, so that is the timing that I was speaking to. So it's the political and then it's obviously funding without being able to close it and, therefore, get the attributable EBITDA?
Thomas E. Carter
Correct.
David Farber
Okay, that's helpful. And then the second piece is in a similar vein.
You obviously ended the quarter with roughly $1.1 billion of net debt. It sounded like, if we heard you correctly, that might grow, call it, $300 million or $400 million, given the pending acquisitions, correct us if we're wrong there.
And then what would the pro forma EBITDA look like alongside of the funding? If you guys have broken that down at all, that would be helpful.
Thomas E. Carter
Well, on the pro forma debt, our net debt right now is $1,030,000,000. If you added $400 million to it, obviously, you get about $1,425,000,000 or thereabouts.
And we have not given a pro form EBITDA number off of that, other than to say if you go back and look at each one of the announcements of the acquisitions, we give a first year expected BCF, and you can try and total all those up. But again, it's a little bit different -- it's a little bit difficult for us because of the seasonality of the business, we don't know exactly when these things are going to close.
I mean, I have a whole model built on various closing dates for this, but the EBITDA moves around a little bit, given the seasonality in the business.
Perry A. Sook
Maybe the best way to think about it is Tom's guidance that we'll be in a -- pro forma for closing all of the acquisitions in '14, and assuming they close in first and second quarter, we'll be at a mid-3 net debt level -- leverage at the end 2014.
David Farber
I see that. And that, Tom or Perry, that includes cash flow generated alongside of it?
Just to be clear, or does that exclude the cash component?
Thomas E. Carter
No, that is a total leverage, including free cash flow either used to pay down debt or reallocated to other purposes.
Operator
We'll take our next question from Ari Friedman with Cobalt Capital.
Ari Friedman
So just given the significant free cash flow growth that you have in front of you and the attractive price of the stock right now on these regulatory concerns, which you guys seem to think are not significant, why not use some of the cash for stock buyback?
Thomas E. Carter
Well, I think from our perspective, we still see there being opportunities for accretive M&A, and accretive M&A at levels that are consistent with what we have seen in the past, which is a buyer's multiple of something that starts with a 5 for us. And so we're more interested in putting that money to work for the most accretive acquisitions we can and the most accretive purposes we can.
And if we still believe that, that is in fact the case, which we do, in acquisitions, that is more accretive and substantially more accretive than buying back our stock.
Operator
We'll take our next question from Michael Kupinski from Noble Financial.
Michael A. Kupinski - Noble Financial Group, Inc., Research Division
I just have a clarification. Regarding the Time Warner Cable and Comcast merger, you indicated that you're not really affected by the retransmission revenues or you don't think that it's going to have much of an impact.
I'm more curious from the standpoint on getting a little bit more granular on the retransmission revenues because of the acquired clauses that Comcast may have. And I know that Time Warner, in the past, has been a little more lenient on retransmission revenues than Comcast has.
Is there any variance between the prospect of Comcast buying Time Warner that you might be affected by the acquired clauses, which may ultimately lower your retransmission revenues for systems that are covered by Time Warner?
Thomas E. Carter
Sure. I'll take a stab at that.
Quite honestly, Time Warner is a -- well, let me make this a positive statement. Comcast has been more commercially reasonable from a retransmission fee negotiation perspective.
At least, that's been our experience and I think the experience of the sector as a whole, has been -- Time Warner has been more difficult to deal with. So I wouldn't say that there is a material economic difference to us from their contracts.
The only thing that would change that equation is the contracts obviously do not perfectly align themselves from an expiration date. So you may see one that is slightly better than another but that's only a timing factor that can be made up over a period of time.
But in terms of the absolute economic impact of that, they're not materially different and we haven't seen it be materially different in our experience.
Perry A. Sook
If the transaction closed today, it would be a net positive to us due to the timing of those 2 agreements.
Operator
We'll take our next question from Brian Warner with Performance Capital.
Brian Marc Warner - Performance Capital Corporation
I apologize if this has sort of been covered. But I'm really curious as to the acquisition market and sort of what -- sort of the size and the breadth of it, and are there any sort of asset deals left in your mind or are we at a point -- and I know you commented that nothing's really on hold as a result of some of the regulatory things that have gone on.
But do you think we'll see some of the combinations among sort of the midsized public groups this year? I mean, is that sort of a logical thought?
Thomas E. Carter
Well, sure. I'll take a stab at that.
As we've said historically, we thought that there was roughly $1.5 billion or so of available cash M&A, as we call it, continue to be out there. That number has been reduced by the amount of transactions that have been announced in the last several weeks, specifically granite, to something just north of $1 billion of probably potential cash M&A over the next, call it, 12 months, plus or minus.
So we think that there still remains meaningful cash M&A and that's all against the backdrop of -- keep in mind that approximately half of the cash M&A done in 2013 came from 3 rather large transactions. We don't see any of those billion-dollar transactions materializing in 2014.
So the market is not significantly different than it was in 2013 for these medium-sized deals, which is, quite honestly, where we find ourselves more successful. Having said that, we think that there continues to be opportunities and larger transactions of nonprivate companies, public companies that could potentially transpire and could potentially require the use of equity, still makes sense.
We think that those transactions would be accretive, but none of those have happened heretofore.
Brian Marc Warner - Performance Capital Corporation
Fair enough. And just one last question.
Just sort of your best guess on everything you're sort of seeing and hearing about how this political cycle will compare with 2010?
Perry A. Sook
Sure. I think from our perspective, we're confident in the ability to sustain that 20-plus percent compound annual growth rate in political revenue even-year over even-year.
We don't have huge exposure in Virginia, Florida and no exposure in Ohio. So those were the 3 big battleground states in the presidential election.
I don't think you'll see those states replicate the political spending they had 2 years ago. But again, all politics are local.
We have 22 governors races and 19 senate races in our geography. We touch approximately 165 of the House of Representative districts that turn over every 2 years.
And then you get down to the statewide races. We've got a heated primary for lieutenant governor in the State of Texas right now, and we're benefiting from some of that revenue.
And so you go down-ballot and you'll see more and more of that. But all of which is to say that we have a high degree of confidence that, that 20% neighborhood CAGR will be sustained for Nexstar 2014 over reported 2012.
Brian Marc Warner - Performance Capital Corporation
Over 2012 or over 2010?
Perry A. Sook
Over 2012.
Operator
There are no further questions at this time. I'd like to turn it back to our speakers for any additional or closing remarks.
Perry A. Sook
Thank you, everyone, for joining us. We look forward to joining you in the early part of May to discuss our first quarter results.
Have a nice afternoon.
Operator
And this concludes today's conference. Thank you for your participation.