Nexstar Media, Inc., a unit of television broadcasting and digital media company Nexstar Media Group, Inc. (NXST), acquired independent political digital media platform, The Hill, for $130 million. Shares rose 1.7% on the news, closing at $142.79 on August 20.
The Hill acquisition puts Nexstar on track with its content-first strategy, which focuses primarily on news, enabling the company to further leverage and monetize its expansive digital reach. The acquisition is said to be immediately accretive to Nexstar’s operating results.
According to Comscore, in 2020, Nexstar had a record 91 million average monthly users and 7.8 billion pageviews, while The Hill had 48 million average monthly users and 2.2 billion total pageviews. (See Nexstar Media Group stock charts on TipRanks)
What’s more, Nexstar is said to have ranked #1 in local news every month throughout 2020, while The Hill’s popularity is evident with its more than 4 million followers and 914 million video views on Twitter. Additionally, it has received five times more Facebook interactions than other political news websites.
The Hills’ business model is based on advertising, supported by direct, programmatic, and licensing revenue, with over 100 journalists covering political news and events. Nexstar’s omnichannel content distribution model will enable it to expand The Hill’s reach and revenue channels with NewsNation, its national cable news network, and its content generated by over 5,500 journalists producing over 275,000 hours of local and national news annually.
Commenting on the deal, Karen Brophy, Nexstar Media Inc. President, Digital said, “Together with Nexstar, the combined digital network offers an extremely valuable, brand-safe environment for issue and other advertisers to reach a growing digital audience of informed, intent-oriented consumers. As the nation’s largest local broadcast and media company, Nexstar is ideally positioned to accelerate The Hill’s growth and further penetrate the massive political news market to grow audience share and drive increased content monetization.”
In response to Nexstar’s solid beat and raise second-quarter performance, on August 5, Benchmark Co. analyst Daniel Kurnos reiterated a Buy rating on the stock and lifted the price target to $190 (33.1% upside potential) from $185.
Kurnos noted that the most encouraging point about the results was management’s comments on Q3 core meeting or exceeding its 2019 levels.
The analyst said, “Catalysts may be in short supply outside of a smart digital deal here and there but we expect shares will resume their grind higher when the dust settles, supported by a robust share buyback program and increasing overall return of capital.”
With 4 unanimous Buys, the stock has a Strong Buy consensus rating. The average Nexstar Media Group price target of $184.25 implies 29% upside potential to current levels. Shares have gained 50.7% over the past year.
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