Nexstar Earnings: Distribution and Political Ad Revenue Mask Core Advertising Challenges

No-moat Nexstar concluded the year meeting our expectations as recent trends have largely persisted on both the positive and negative sides. Nexstar benefited from $254 million in political advertising sales during the presidential election cycle, but core advertising remains a sore spot with declines accelerating in the fourth quarter. The pay-TV industry continues to lose viewership, though the rate of subscriber decline has slowed at distributors. We believe revenue growth will remain constrained, but potential regulatory change could provide a boost. We are maintaining our $175 fair value estimate.