Nexstar Media Group, Inc. (NXST): 5 FORCES Analysis [Nov-2025 Updated]

You're looking for a clear, no-fluff breakdown of Nexstar Media Group, Inc.'s competitive forces, and honestly, the broadcasting world is a defintely complex place right now. As a seasoned analyst, I see a company navigating serious headwinds: suppliers are demanding high fees, and digital substitutes have already shrunk the traditional pay-TV market by roughly 30%. Still, Nexstar Media Group, Inc.'s sheer scale-owning over 200 stations and reaching nearly 70% of U.S. households-provides critical leverage against consolidating customers and rivals like Sinclair Television. The battle for local ad dollars is fierce, but the moat is deep. Here's the quick analysis based on the latest 2025 data we have, mapping out every pressure point you need to know before making your next move.

Nexstar Media Group, Inc. (NXST) - Porter's Five Forces: Bargaining power of suppliers

The bargaining power of suppliers for Nexstar Media Group, Inc. remains a significant force, primarily driven by the essential nature of the content provided by major broadcast networks and licensors. You see this pressure most clearly in the retransmission fee landscape.

Major broadcast networks charge substantial reverse retransmission fees. This practice means that local stations, like those owned by Nexstar Media Group, Inc., must pay a portion of their retransmission revenue back to the national network simply to carry its programming. Some networks have reportedly demanded fees exceeding 100% of the broadcasters' retransmission revenue. To counter this, FCC Commissioner Nathan Simington and his chief of staff proposed a cap on these reverse retransmission fees at 30%. On a net basis, industry-wide station revenue after these payments is projected to decline 1% from $7.35 billion in 2024 to $7.27 billion in 2025.

Content licensors like Disney and Paramount have concentrated market power, which translates directly into leverage during negotiations. Nexstar Media Group, Inc. is in a critical contract cycle, which amplifies this power. Nexstar Media Group, Inc. confirmed that approximately 60% of its retransmission agreements covering its subscribers were up for renewal in 2025, with these renewals directly impacting 2026 results. The remaining 40% of audience coverage is scheduled for renewal between 2026 and 2027.

Here's a look at the upcoming network affiliation renewal schedule for Nexstar Media Group, Inc., which dictates when they face the full negotiating leverage of the major content providers:

The industry's overall distribution revenue is projected to hit $15.4 billion in gross terms for 2025. For the Big Four affiliates specifically, the average monthly retransmission rate per subscriber is projected to reach $4.83 in 2025, marking a 7% increase from $4.52 in 2024. Nexstar Media Group, Inc. itself reported a record first quarter distribution revenue of $762 million in Q1 2025, though Q2 2025 distribution revenue was $733 million. Nexstar Media Group, Inc. reaches approximately 70% of all U.S. television households when including partner stations.

High switching costs exist for specialized broadcasting infrastructure and equipment. This is a structural barrier that keeps Nexstar Media Group, Inc. tied to current technology suppliers for transmission, studio, and master control operations. The capital expenditure required to fully transition core operational technology, such as moving to the ATSC 3.0 standard, represents a significant, sunk-cost barrier that limits immediate supplier flexibility.

• Nexstar Media Group, Inc. stations reach approximately 70% of U.S. households (including partners).
• Projected industry gross retransmission revenue for 2025: $15.4 billion.
• Proposed FCC cap on reverse retransmission fees: 30%.
• Nexstar's Q1 2025 distribution revenue: $762 million.
• Projected average monthly retransmission rate per Big Four sub in 2025: $4.83.

Nexstar Media Group, Inc. (NXST) - Porter's Five Forces: Bargaining power of customers

You're looking at the customer side of the equation for Nexstar Media Group, Inc., and honestly, the power dynamic is split. On one hand, you have the distributors-the cable and satellite companies (MVPDs)-who are consolidating, which naturally increases their leverage when it comes time to talk retransmission fees. On the other, you have advertisers who are increasingly looking at a sea of digital alternatives, which puts pressure on Nexstar's ad sales.

For the MVPDs, the negotiation calendar is key. For 2025, Nexstar Media Group is renewing agreements that cover approximately 60% of their total subscriber base, with the remaining 40% scheduled for renewal between 2026 and 2027. This concentration of renewal timing gives the distributors a temporary upper hand, even though Nexstar is the nation's largest local television and digital media company, operating more than 200 owned or partner stations across 116 U.S. markets. If broadcast programming fees were aligned with ratings, Nexstar estimates there's a +44% upside to distribution revenue industry-wide, which would have meant nearly $7 billion in additional revenue for the industry last year. Still, the reality in Q3 2025 saw distribution revenue dip to $709 million, a 1.4% decrease year-over-year, suggesting some customer pushback or subscriber attrition is taking hold.

Here's a quick look at how the revenue streams fared in the first half of 2025, showing the stability of distribution versus the volatility of advertising:

Advertisers, the other major customer group, are definitely feeling the pull of digital options. This is evident in the non-election year advertising performance. In Q1 2025, Nexstar Media Group's total advertising revenue fell by 10.2%, dropping to $460 million from $512 million in Q1 2024. That $52 million drop was partly due to a $20 million reduction in non-political advertising revenue as the market softened. You see the structural pressure here; digital competition is real.

The cyclical nature of political advertising amplifies this customer power dynamic significantly. Since Q1 2025 was a post-election period, political ad revenue was naturally low. However, the Q3 2025 results really hammer home the volatility. Political ad revenue plummeted to just $10 million in Q3 2025. To put that in perspective, Q3 2024-an election year-saw political advertising hit $155 million. This massive drop of $145 million in that specific segment alone shows how much customer spending in that category is tied to the election calendar, not necessarily Nexstar Media Group's underlying value proposition.

Still, Nexstar Media Group uses its sheer size as a shield against customer demands. You should note the following points regarding their counter-leverage:

• Nexstar Media Group operates more than 200 television stations.
• The company is the largest local TV station owner in the United States.
• The proposed acquisition of TEGNA Inc. for $6.2 billion would increase their station count to 265.
• This potential scale would allow the combined entity to reach 80% of U.S. television households (without the UHF discount).
• As of March 31, 2025, the company's total net leverage ratio was 2.93x, showing a strong balance sheet to weather contract disputes.

This scale is what Chairman and CEO Perry Sook argues puts Nexstar Media Group on a level playing field with Big Tech companies in the evolving marketplace. That size definitely helps when pushing back against MVPDs demanding lower fees.

Nexstar Media Group, Inc. (NXST) - Porter's Five Forces: Competitive rivalry

Direct rivals like Sinclair and Gray Television compete fiercely for local news dominance, but Nexstar Media Group, Inc. currently holds the top spot in terms of U.S. household reach among local station owners. This rivalry is playing out as groups jockey for scale, especially with the U.S. Court of Appeals striking down the FCC's Top 4 duopoly rule in St. Louis, which allows for greater consolidation. You can see the competitive positioning based on 2025 reported reach data:

Competition is high for political ad dollars, a key revenue driver in even-numbered years, though the landscape is shifting toward digital. For the 2024 presidential election cycle, total U.S. political ad spending was projected to hit a record $15.9 billion by one estimate, with linear TV maintaining a stronghold, capturing approximately 70% of that total spend. Looking ahead to the 2026 midterm cycle, projections suggest spending could still be substantial, estimated around $10.1 billion to $10.8 billion. Nexstar Media Group, Inc. reported that for the year ended December 31, 2024, political sources accounted for approximately 9% of its total advertising revenue, which itself was 45% of its $5.4 billion in total revenue for that year. That's a significant chunk of business that every local operator, including Sinclair and Gray Television, is fighting for.

Nexstar Media Group, Inc. is the largest local station owner, reaching approximately 70% of U.S. households with its 201 owned or partner stations across 116 local markets, which creates a clear scale advantage over most rivals. To put that local footprint into perspective, the company employs 6,000 local journalists who generate over 316,000 hours of local programming annually. This scale is what the company argues is necessary to compete against Big Tech platforms that face no similar ownership restrictions. Still, the pending $6.2 billion acquisition of Tegna, which would add 64 stations in 51 markets, is central to this rivalry, as it would push combined reach to 54.5% of U.S. TV homes, contingent on FCC waiver or cap elimination.

The company is investing to grow NewsNation and The CW to compete nationally, directly challenging established national players. The national reach metrics for these properties, as of late 2024/early 2025, stack up like this:

• The CW Network reaches nearly 126 million television households.
• NewsNation reaches approximately 64 million television households.
• NewsNation weekday primetime viewership was up 73% in total viewers year-to-date compared to the prior year.
• The CW's broadcast of a major political debate delivered more than 2.5 million viewers.
• Nexstar holds a 77.1% interest in The CW Network, LLC.

Nexstar Media Group, Inc. (NXST) - Porter's Five Forces: Threat of substitutes

The threat of substitutes for Nexstar Media Group, Inc. remains substantial, driven by the ongoing migration of consumer attention and advertising dollars away from traditional linear television models. You see this erosion clearly in the pay-TV universe, which has been shrinking dramatically.

Cord-cutting has fundamentally reshaped the landscape. The U.S. pay-TV market revenues, which peaked at $105 billion in 2015, are estimated to decline to $56 billion by 2025, representing a 47% drop from that peak. This trend is underscored by household penetration figures: by the third quarter of 2025, pay-TV penetration fell to 50.2%, projected to hit 50% or lower by the end of December 2025. That's a massive shift from just fifteen years prior when nearly nine in ten U.S. households subscribed. For context, by the end of 2024, pay TV penetration had already dropped to 34.4% according to S&P Global Market Intelligence. This means nearly 77.2 million U.S. households are projected to use non-pay-TV services in 2025, compared to only 56.8 million expected to remain subscribed to traditional pay TV.

Digital streaming platforms, both Subscription Video on Demand (SVOD) and Over-The-Top (OTT), are the primary beneficiaries of this shift, capturing audience attention and, critically, advertising spend. As of May 2025, streaming platforms accounted for 44.8% of all time spent with TV in American households, surpassing the combined share of broadcast (20.1%) and cable (24.1%), which totaled 44.2%. This audience migration is mirrored in ad budgets; digital video is projected to capture 58% of all U.S. TV/video ad spend in 2025, totaling $72.4 billion. Within that digital spend, social video alone reached $27.2 billion in 2025, while Connected TV (CTV) spend was $26.6 billion. Streaming TV advertising is expected to surge by 19.3% in 2025, while linear TV faces a projected 3.4% decline.

The threat is not just from paid alternatives; free options are also highly relevant substitutes. Consumers retain easy access to free over-the-air (OTA) broadcast signals. To be fair, even among those cutting the cord, 23% reported switching to antenna TV as their alternative. Nexstar Media Group, Inc. is actively addressing this by launching free streaming apps for its local ABC, CBS, FOX, and NBC news content on platforms like Roku and Fire TV, offering a hybrid substitute that is free with ads, directly competing with both traditional OTA and paid streaming bundles.

Here is a snapshot of the competitive dynamics in audience attention and ad spend:

To mitigate this, Nexstar Media Group, Inc. is pushing its digital footprint. While specific 2025 ranking data for The Hill is not universally available, the company is clearly investing in digital reach, evidenced by its launch of free streaming apps for local news content. This strategy aims to capture the audience segment that prefers free, ad-supported content delivered digitally, which is a direct response to the substitute threat posed by OTT and FAST (Free Ad-Supported Streaming TV) services.

Key substitutes impacting Nexstar Media Group, Inc. include:

• SVOD/OTT platforms capturing audience time.
• Social media platforms diverting digital ad dollars.
• Free over-the-air antenna viewing.
• Nexstar's own free, ad-supported streaming apps.
• Virtual Multichannel Video Programming Distributors (vMVPDs) like YouTube TV.

Nexstar Media Group, Inc. (NXST) - Porter's Five Forces: Threat of new entrants

For you, as someone analyzing the barriers to entry in the local television broadcasting space, the landscape for a new, large-scale player attempting to challenge Nexstar Media Group, Inc. is exceptionally steep. The hurdles are structural, financial, and regulatory, making organic growth or a major startup nearly impossible.

Regulatory barriers, like the Federal Communications Commission (FCC) ownership caps, significantly limit the number of new large-scale players that can emerge. The national ownership rule currently restricts a broadcaster from owning stations that reach more than 39% of U.S. households. While there is ongoing debate and a pending FCC review regarding the authority to modify or eliminate this cap, any new entrant would initially face this ceiling. Furthermore, a recent U.S. Court of Appeals for the Eighth Circuit ruling in July 2025 vacated the Top Four Prohibition in local markets, which could affect existing consolidation, but the national cap remains a primary barrier for new, massive entrants.

The capital required to even approach Nexstar Media Group, Inc.'s scale is immense. High capital investment is required; station acquisition costs for established players range from $10 million to $50 million for individual properties [as per outline]. To put this into perspective for a major market entry, Nexstar Media Group, Inc.'s proposed acquisition of TEGNA Inc. in August 2025 was valued at $6.2 billion, inclusive of net debt and fees. This transaction, which offered TEGNA shareholders $22.00 per share, a 31% premium, demonstrates the multi-billion dollar commitment needed to achieve significant national footprint quickly. Even a smaller, recent acquisition by Nexstar Media Group, Inc. in late 2024 involved a price of $1 million for a single station.

Nexstar Media Group, Inc.'s existing footprint creates a massive distribution moat that new entrants cannot easily cross. Nexstar Media Group, Inc. currently owns or partners with more than 200 stations across 116 U.S. markets, reaching 220 million people. The proposed TEGNA deal would expand this to 265 stations in 44 states. This scale is a significant barrier to entry, as new players would need to replicate this footprint, which took decades and billions in capital to build.

The established network affiliations are another critical wall. New entrants would struggle to secure the primary carriage agreements that Nexstar Media Group, Inc. currently holds with the major broadcast networks. Nexstar Media Group, Inc. stations are affiliated with ABC, CBS, NBC, and FOX, in addition to operating The CW Network. The Dual Network Rule, which prohibits affiliation with two or more of the 'Big Four' networks, further complicates any potential merger or partnership strategy for a new entrant trying to gain immediate, broad market access.

Here's a quick look at the scale Nexstar Media Group, Inc. commands, which new entrants must overcome:

The difficulty in establishing a competitive presence is compounded by the existing relationships and infrastructure:

• Regulatory Cap Limit: 39% national household reach.
• Network Affiliations: Access to ABC, CBS, NBC, FOX, and The CW.
• Operational Scale: Control over 116 DMAs.
• Cost of Scale: Multi-billion dollar acquisition price for major rivals.
• Existing Loopholes: Use of local marketing agreements to satisfy current regulations.

To be fair, the regulatory environment is in flux, which could theoretically open a small window. However, the financial and operational inertia of Nexstar Media Group, Inc. means any new entrant must be prepared to deploy capital on a scale comparable to the $6.2 billion TEGNA deal to achieve parity in market reach.

Finance: draft a sensitivity analysis on the impact of a 39% cap removal on Nexstar Media Group, Inc.'s pro-forma leverage ratio by next Tuesday.