For those that don't know, I had surgery about three weeks ago, so Robert's going to be my voice for many of the next two days. So we'll go back and forth with Lee Ann and Perry. So thanks for being here.
Thanks for having us.
Hey, Benny. Good to see you.
That's right, we keep time.
Right. I like that thing. Good to know. Oh, cool.
Cool. There we are. OK, we'll get started. Hey, good morning, everyone. Michael Nathanson. I'm joined by Robert Fishman. And we are really excited today to have, maybe for the 11th year in a row, Perry Sook from Nexstar, joined by Lee Ann Gliha. And thank you guys for both being here.
Thank you.
Thanks for having us.
Oh, my God, it's a pleasure. You guys are always so supportive of our firm. Thank you. We really appreciate it. It would be a tag team, as I mentioned, because of my voice. So in October, you guys published an awesome slide presentation, something that we should probably steal and put our name on it. It was your perspective about how the broadcast station market was on the cusp of benefiting from a number of key changes in the landscape, like the Charter Disney deal from last fall. We're even caught up in a while, but I wonder, has anything changed your optimistic view since that point?
Well, I think I'll let the author of that report speak for herself. Lee Ann was the one who put that together, and we've got a lot of positive feedback on it. I'll let her express our point of view.
OK. I mean, just to kind of recap what we said in that deck, it was a few things. I think, first of all, we just reiterated the power of our content and our reach as the broadcast medium. The broadcast networks are by far the most-watched networks that are out there on television, and that's supplemented by our local content, which generates almost 50% of our total impressions that we have. So that was point number one. Point number two that we made was that there is some underutilized dollars that are being spent in the overall content universe. So there is about $5 billion that the distributors pay for content that is for channels that are rated 101 and below or not rated. And there's about $16 billion when you include channels that are rated 51 and below or not rated. And that's not even including the RSN.
So there's plenty of money in the system that can really be reallocated at some point to the more important or more popular content, which is the broadcast content. And then the third thing we said was that we said that the DTC business models seem to be unsustainable. They generate a lot of losses, and those companies are going to start to look to kind of rein in those losses. And so what have we seen since then? I mean, it's not been very long, but we've seen things that have been positive in terms of supporting our vision. We've seen companies like us and some of our other peers get their retrans deals done on terms that have been favorable to those companies. We've seen the basically continued power of the broadcast model. I mean, for example, you can just look out there.
We've cited this stat before about how in the local markets where Amazon has Thursday Night Football, it's over 60% of the people are watching those games on broadcast television. Similarly, ABC put their content of Monday Night Football on ABC this year, as well as ESPN. It was over 50% of the people watched it on ABC. You saw the Sports JV get announced, and that's going to be anchored by broadcast stations. We're going to have an ability to kind of participate in that. And you can see with the NBA negotiations that are ongoing, there's an increased interest in making sure that there's a broadcast element to that. So we feel like a lot of things have happened. On the DTC side, you've seen these companies continue to increase prices. You've seen price increase after price increase.
You've seen reduction in content spend, where they're trying to rationalize the content spend kind of across more of their portfolio. You've seen rebundling. That kind of all points to, I think, a validation of our thesis, which is the bundle anchored by broadcast is really kind of the most valuable to the consumer and to the distributor and really should hopefully, over time, as these trends continue to take hold, create a reduction in the rate of attrition that you're seeing from these distributors.
It's also your view that the bundle has to change its shape. Your point about channels 50 and above, those become useless as more and more people go to streaming for entertainment.
Right. Absolutely. Yeah, no, absolutely. I think, you know, and when you kind of go back and you just look at what rates, it's our content. And so we think we'll always be part of whatever the smallest bundle is. And that will help folks, help distributors improve their profit margin, but also help us improve our close that gap. We're still very under-monetized relative to the viewership that we contribute relative to the spend that the.
We should just say, like Charter's in the midst of a Paramount negotiation, and we're waiting to see how that plays out because they have even more surplus channels than what Disney has.
Right. Absolutely. It'll be interesting to see the outcome there.
It was interesting in your answer where we wanted to go with this. Clearly, sports is a big part of all of this. So just given the importance of live sports to the overall ecosystem, we are seeing mixed messages that you didn't hit on yet in terms of NBC's continued investment in putting more sports on Peacock. And then the future of Paramount remains a little bit uncertain. But whatever path that they end up, they've been using sports to their advantage for Paramount+. So how do you think this strategy develops from here about how some of the other partners that you have use sports and how that impacts you?
I think I'd probably turn the question a little bit on its side and talk about how important broadcast television has become to all of the leagues and the rights holders. We've had conversations with NASCAR, IndyCar, every college league out there, as well as the NBA and the NHL and MLB. They all realize that if their games are only on cable channels, that they're leaving a lot of audience reach on the table. That even translates at the local level. When we did our deal in Los Angeles with Steve Ballmer for the Clippers, he realized how much of that Los Angeles audience was missing an opportunity to see his games, buy his merchandise, get interested in the team, buy a ticket.
And so I think that there is an increasing appreciation for what broadcast reach can bring to the equation, and even to the extent that the leagues may be willing to accept less money in exchange for the reach that we can deliver. Because we can't deliver the economics of an RSN or some of these cable models because, last I checked, they went to bankruptcy. So that's not a business we want to be in. And so any sports deal that we would do and have done, our deals that we've penciled out to break even to make money. So we think that you'll continue to see more migration of parts of packages to the broadcast ecosystem because of the value that it brings, the over-the-air ecosystem.
Do you think the leagues or the affiliates can put pressure on these other media companies to reverse some of their strategies of throwing it all over the top for a significant discount that they offer?
Well, God knows we're trying. OK? We agree with your thesis that cheaters never win. I think if you listen to our earnings call, we said this is a lose-lose proposition. Usually, creative destruction, somebody wins. But at this point, no one has won. So we're not in streaming A, we don't need to be because our stations are available over the top, if you will. They were the original FAST channels. But we just also don't think it's fundamentally a good business.
Yeah, no, we agree with that vision. So you touched on it before, Lee Ann. One of the biggest highlights this year is that proposed Sports JV between Turner, Fox, and Disney. How will that impact the local station industry? We think it's a good first step. So what's your take on it?
Well, I think that from our perspective, the fact that we're included in the bundle, that particular bundle with both Fox and with ABC, if we decide to opt in, our stations are carried as part of it. We're paid to be carried as part of it. So it's really no different than any other pay TV provider, if you will. And so it'll be interesting to see if it comes together and if it happens and how the regulators feel about it and how the lawsuits go. But if it happens and we're a part of it, it's just one more distribution channel for us.
Well, we're waiting to see also if the NBA rights stay with Turner. And if they don't, will Turner be part of the JV, given that you've lost probably the most important set of rights they have? And then what happens to the Paramount in that mix? It could be very fluid based on the NBA rights the next couple of weeks, what happens there.
So maybe just sticking with sports, you just hit on it. The programming strategy overall, both for CW, you mentioned some of the signed deals that you have: NASCAR, WWE also, LIV Golf, and even a Barstool College Bowl, I believe. But then on the local side, too, right? So some of the local partnerships that you have and the opportunities available, given the RSN comment that you made. So can you just maybe help us think about what is the overall programming strategy as it relates to sports across Nexstar?
For the company?
Yeah.
Well, you know, in The CW, and Lee Ann was integral with me in negotiating these deals. I mean, we, in the space of about nine months, spent in the neighborhood of $1 billion to line up sports for The CW on multi-year agreements. We went from no sports on The CW to now, this upcoming season, we'll have 500 hours of local sports. We will make an announcement later today that another sports rights addition to The CW that will bring additional content that I think folks will be interested in. We didn't anticipate to go that far that fast, but took advantage of the opportunities and the increasing sentiment that we need broadcast.
A broadcast network with broadcast affiliates is a viable alternative to negotiations that I might currently be having either with streamers or with when you look at NASCAR, they have a streaming package. They have an NBC package and a Fox package. But the Xfinity Series, the Saturday races, are exclusive for the entire season on the CW. And we think there's value in that, plus the local activation that we can do in local stations when the race is in Dallas or Kansas City or Long Beach or wherever NASCAR races. We're proximate to their tracks, and that can benefit our stations locally. As to individual sports rights, we've talked to 24 teams: MLB, NHL, and NBA. And what we have learned through all of that, which we already knew, is that these are all family-owned businesses. They're multi-billion-dollar corporations, but they're all family-owned.
Each family has its own unique set of circumstances as to what they're interested in, what they're looking for. We've made some deals. We've made the deal with the Clippers. We're in conversations with others. We've done some small packages. That will be interesting. We make money with our Clippers package in Los Angeles. It's added to the reach of the station and brought them additional viewers that might not tune historically to KTLA for sports or certainly in the most recent past. But it's not really a scalable business because you've got to do it market by market and team by team. So when I moved to Dallas in 1985, I worked for an independent station that had the Texas Rangers, the Dallas Mavericks, Southwest Conference Football and Basketball, literally 220 live sporting events a year. That's not easy.
I mean, you've got to obtain the rights. You've got to sell the advertising. You've got to produce the games. You've got to line up affiliates outside of your home market. And then that's before you even discuss distribution and your ability to get paid without a network affiliation of some sort. So it's not an easy road. And it's certainly, I don't think, a scalable business that you can do at the local station level.
Following that follow-up, you mentioned $1 billion of investments. How do you balance that investment level with the returns and the margin discipline you guys have, right? Robert and I always ask the networks, when they pick on sports rights, what are you measuring the value against, right? Can you drive retrans? Can you drive advertising dollars? How do you balance the interest and enthusiasm and investment in sports rights versus the returns on those investments?
Well, we think it increases value to us as the media home, both in advertising and in distribution. Now, there's not a sports property out there that's on the air that can make money through advertising alone. And I don't care if that's ESPN or the CW. But you look at what the uplift should be for distribution, either from MVPDs, virtual MVPDs, but also from your affiliate base. If you're creating value, what do you think is a reasonable expectation of sharing that value back with us? And I can tell you, and Lee Ann can sign the certification that we have not signed up, pardon me, for any sports deal to lose money. I mean, every rights deal we've done so far, we penciled out to make money over the term of the agreement. And we believe that we're playing Moneyball.
So, NASCAR, we were able to win the Saturday series. We bid on the Cup races. But we're substantially below the market at what it would take to work for us. And so just like acquisitions, just like everything else, if there's not an opportunity to see a return on investment, it's like, why do it? And I would say see streaming for.
You also do WWE, which is a big deal.
So maybe just on the return on investment comment, if we zoom out a little bit, just talk about CW overall and how that overall transaction has gone. What would have been the positives or negative surprises? And where is that tracking compared to your expectations when you first acquired it?
Well, I think that, again, the sports opportunity came faster than we had originally envisioned. But we were able to move nimbly and quickly to take advantage of it. I think the appetite for differentiated programming, certainly from the affiliates, was a pleasant surprise. And we're the largest affiliate group. But when we offered out the Republican debate that was produced by NewsNation, we cleared it in 100% of the country. I would have lost that bet. I would not have thought that CW entertainment stations would have had a unanimous interest in that kind of content. But they have. We produce a show on Sunday on NewsNation called The Hill. And it's your typical Sunday morning talk and opinion D.C. show. We offered that out to the affiliate body and cleared it in 82% of the country.
On Sunday morning, you're fighting against paid religion and maybe some of these local news. But 82% of the country for just an opportunistic clearance we thought was pretty good. The affiliates have embraced sports and have embraced a differentiated program schedule, I think. The CW was very good at producing highly stylized, scripted entertainment based on comic books and superheroes. We said, OK, I want to go from being a shoe store to being a department store, if you will. I want to appeal to more than folks that are just looking to buy shoes, more than folks that are just fans of these shows. They're also very expensive. But our thesis was that live news, live sports are what are really going to drive distribution, drive advertising, drive affiliate fees.
Scripted entertainment and unscripted shows are interesting but not meaningful in moving the needle. And boy, were we right on that. I mean, I think you read every day about where advertising dollars are going. And obviously, being in sports is a sweet spot right now.
Well, I said this to you last year. We always say this to the people at CW. CW made no sense as a business. The previous CW made no sense as a programming strategy. They were programming for young people in the streaming world. And they're putting on broadcast TV. It was like a crazy idea.
I think it made perfect sense for the studio owners and the way they constructed the economics. This was a silo for distribution. It made no sense as a network, I think, is your point.
So on that point, when you look at when you sit down, you guys are very thorough about planning. Talk to us about the financial opportunity here. When you look at what you bought versus where you're going, talk a bit about the financial dynamics at play here.
Yeah, I mean, look, I would just, just for one second, tack on one other thing to Perry's comment in terms of the positive surprises coming out of CW. I think the reason that we, one of the main reasons we bought the network was to really solidify our affiliate base, like our owned affiliate base. And since we bought the network, we've been able to add 12 affiliates to our own stations, which has been very positive to the cash flow of the company on that side of the ledger. So look, I think that over time, we look at growing the profitability of the network to get to, like we've said, over the next couple of years, to get to a break-even place on the network side.
And then, as I mentioned, we've had tremendous success on the station side of the business in terms of incremental retrans dollars and being able to bring some new affiliations over that have generated significant profitability on the station side of the ledger. And so we like to look at things kind of holistically. And that's one of the things that Nexstar does, I think, fabulously, is to make sure that we're utilizing all of our assets to benefit each other's assets. And so not only looking for the profit of just the network, but the profit on the station side of things. Over time, if you look at—I was telling Perry yesterday—I pulled down from Kagan all of the broadcast networks and what the profitability is. And we're the only one that's down there still in the negative territory.
And so I think there's opportunity to kind of grow this as we move forward, as Perry said, both on the advertising side and the distribution revenue side of things.
Perry mentioned NewsNation. We can clearly see that it's starting to hit its stride. You mentioned the debate also. Maybe just update us how overall the network is performing compared to your expectations? What is next on the development slate there in any way to frame that longer-term opportunity there as well?
Sure. Well, I think, as we said in our conference call, we entered the zeitgeist. Any time you get spoofed on Saturday Night Live, you've arrived at somewhere in some way, shape, or form. But I think from our perspective, on June 1, we will complete the build-out to 24/7. The last piece is Saturday, Sunday, 4:00 P.M. to 7:00 P.M., which will be live news anchored out of our headquarters in Chicago. So we'll be in less than four years a 24/7 cable network. The latest Nielsen numbers show that we now are distributed in more pay TV homes, MVPDs, virtual MVPDs, than CNN or MSNBC. So distribution and reception is not the problem. Raising awareness is our challenge and our opportunity. Our awareness scores, which we track monthly, 35% of the country in a telephone awareness panel study, 35% of the country knows what NewsNation is.
But that means 65% of the country we've got to introduce ourselves. So our focus is on building awareness, continuing to grow our presence in the distribution community. There are still a few opportunities we have to up-tier ourselves to expose to more homes. And so from our perspective, again, success looks like the profitability of CNN or Fox News, which we're into the hundreds of millions of dollars. And for us, we're sub-$100 million in terms of profitability as a standalone. But again, we have been able to build the network just reinvesting the syndicated programming dollars into journalism and have been able to build a 24/7 cable network without going into our own pocket except to fund the CapEx necessary. So it was a real opportunity for us. And I'm very proud of the work that we do. I'm very pleased at the progress we've made.
But I'm never satisfied in terms of things we do, things we can do better. And our focus is what we believe to be the, and it may not resonate in this room, but the moderate majority of America, which is those that are not consumed by the extreme left, the extreme right. I think people that can have a civil conversation about things are the ones we're trying to reach. We're not trying to get people on the air to shout at each other. We're getting very positive feedback and that response, not only from Washington, but around the country. And so we want to build on that, make sure that the programming we do is on brand. We're producing a show for the CW called Crime Nation.
It's basically taking a lot of the true crime stories that Ashleigh Banfield does every night at 10:00 P.M. and synthesizing those down into an hour-long show on the CW. We think there's opportunity to do more of that. Dan Abrams did a show that was literally an hour live from the southern border, which, again, we've been covering as a news organization daily from the beginning when everyone else left town. I would argue we have, in some small part, influenced the discussion around this election and how important securing the border is to our country's national interest. In any event, during that hour-long live broadcast last week, there were literally four interdictions and a number of gotaways that people crossing the border while we're on the air.
Sean Compton, who oversees the networks division of the company, but also is our chief programmer, says, you know that could be a television show. There's nothing like that on the air. Now, I'm not sure it's on brand for NewsNation. But maybe it's on brand for the CW and part of the Crime Nation franchise that we're trying to develop. So again, as Lee Ann said, trying to take the best of what we do and share it across as many platforms as possible.
You don't think our audience would want moderate news?
Well, I would hope that they do. But we're not trying to reach the coastal elites, if you will. This is more for the middle of America, the center of opinion, and not beholden to one side or the other. If you watch Chris Cuomo on our air every weeknight, it's, "I'm going to expose the game and why people, the dog whistles that go back and forth." And we're going to have people on from both sides. And Dan Abrams says, "listen, here's my opinion. You may disagree with me." Well, where else can you see that or hear that? And he'll have people on his show to debate him on his opinion. And it's respectful. And so it started as a counter-programming strategy to preserve distribution revenue.
It's now turned into a passion project of the company to try and get this right and to build it and sustain it. I think we're beyond the point of, can we do it? Now it's just how well can we do it?
Yeah, it's healthy for democracy.
We hope so.
OK, so last year, you renewed your agreements to covering over 40% of your subscriber base. In 2024, this year, you've given guidance for low teen net distribution fee growth. So can you help unpack we're sitting here as analysts trying to unpack the drivers. So get under the hood of low teen affiliate fee growth. What's going on and the sustainability of what we're worrying about, which is the scope of cost cutting?
Yeah, let me just, I guess, just clarify one thing. So we did say low teens net. So not revenue or affiliate fee growth. It's just our net, our retrans minus our reverse comp. And that number is a little inflated just because last year, if you remember, we had a dispute with one of our MVPDs. So we were dark for a period of time. So excluding that, we did say we were going to be up mid-single digits on a net basis. And so we feel like that's really the effect of the distribution agreements that we renegotiated during the course of 2023, which was about 40% of our subscriber base, and then our affiliation agreements with the networks. And so we feel like going forward, we should still be able to improve our top line retransmission revenue growth as those affiliation agreements come up.
Going forward, our next big set of renewals will be in next year. That's really just due to the fact that we're still under-monetized. That's why I was talking about at the top of this conversation, where the broadcasters provide 26% of the viewership. I'm sorry, they're getting 26% of the content fees, but providing 36% of the viewership, the Big Four networks, and 46% if you take all broadcasters together. There's still room to close that gap. There's money in the system to have it come to us. We expect that we'll still be able to kind of grow those revenue streams as we go forward.
Then on the reverse side, I think it just as the content is becoming less exclusive to us, as the networks themselves are doing different things with their content, we are being successful at being able to kind of moderate that level of growth in the reverse comp side of things. So that has resulted in an expanding margin and a growing business. Now, over time, does that continue forever? Probably not. But at some point, if our thesis is correct and we see some reduction in the rate of attrition, we should be in a good spot.
Do you think that the partners who've agreed to maybe less net retrans or, I guess, reverse retrans are now rethinking the strategy of leaking their best content? Is this just a point in time where, basically, maybe the content becomes more exclusive again? So are you getting any early signs from two of the four partners who may have maybe rethinking strategies at all?
Well, we're in discussions with them all the time. And I think there's obviously the company line. And then there may be what people would admit to you privately. But by the same token, that's fundamental to us. And again, it's a symbiotic relationship. They don't have distribution without an affiliate base. And that could be called basic cable. And there's a rate for that. But it's not going to be what they get in today's Upfront. So I think you can only push so far before there is substantial pushback. And I think we're at the substantial pushback phase, not only from our company, but from others saying, we pay for exclusivity. We pay for programming and in-market exclusivity. To the extent that the programming is less and less exclusive, it's worth less and less to us. But I know that ours is not the only company saying that.
And so I think that there's an acknowledgment of that, certainly, in the discussions we've had. Has there been meaningful activity? I would say not just yet.
OK, just maybe one quick follow-up. Can you talk about where you are in terms of variable rate versus fixed rate on the reverse compensation front? I think the way we understood it historically, most of the companies tried to move to a fixed rate. But I'm wondering if there's any flexibility for them or for you to move back to a per-sub basis.
I would say, look, I think the conversations around this point are trying to simplify something that's not a simple relationship at all. And so I think what we've said is, we do the best deal that we can do. And maybe a fixed deal looks more like variable. And a variable deal looks more like fixed. But it all comes out into a lower rate of growth that we're seeing on that reverse side that's helping our bottom line.
Got it. So let's maybe shift to advertising. So we've been getting some mixed messages about the health of the local TV and the U.S. economy overall here. So just maybe update us. What do you think is happening on the local economy level and how that's translating to your ad dollars?
Yeah, I mean, look, our local revenue, from an advertising perspective, is just under 70% of our total composition of our revenue. It's been much more stable than the national side of the business. Or the national side has been negative for a period of time, although we're starting to see that get a little bit better. I would say the local side has been down on a percentage basis. But it's not been anything that's been sort of reaching the levels of the national side. And so it's been much more resilient. I mean, it goes back to what do local advertisers use television for? And it really is a call to action.
It's if you're a local attorney and you want somebody who got caught for a speeding ticket to call you, you want to make sure that that number is out there and available for you to know and to call. And so you can see the sort of reaction in your own business as a local advertiser from providing that advertising or not. Whereas on the national side, it is much more brand-focused. And so it's a little bit one more step removed.
On the national side, you guys complete the transition of all your markets to your own national sales force. Talk about what's the benefits from doing that? And then basically, more broadly, has owning national networks like CW, NewsNation impacted your ability to go into the national market and sell inventory at the local level?
I think that with the major holding companies, we have a higher profile now. No one really knew Nexstar as any kind of a brand. And now we can go in and have gone in, whether it's a group dinner, which we had a couple of weeks ago, or the individual presentations. And you can start at the top of the pyramid with our network brands and what we can offer, whether it's our national diginets. It's our broadcast network. It's our cable network. And then complement that with, if you like the college sports on the CW and you do business in 30% of the country, we can amplify that with other networks, college sports, with local spots in those markets where you do your business.
So local activation at scale, I think, is one of the secret sauces, uniquely of our company, because we have a larger local footprint than any other media company out there in terms of television, certainly in video. I think that local activation at scale, if we can marry that with national brand identity and then take it all the way through to the local cash register, there's been a lot of interest expressed in that. Now we just have to put it all together at a value prop that makes sense for both parties. Then we have to execute. That's what we're exploring in this Upfront. We brought a number of new advertisers to NewsNation and The CW in last year's Upfront.
We were literally just bolting the rivets on the airplane as it was going down the runway because we had just taken over the CW not long before. So I think now we've got a more cogent strategy. We're into the marketplace with discussions, like I said, marrying our local assets, our national assets, our digital assets. What works best for the client, obviously, is what we have to put first. So it gives us more ammo. Can we quantify that yet? I think let's get through the Upfront, through the political season. We might have some data points on that. From our perspective, it allows us to go into the holding companies with a Nexstar brand and begin to talk about what we could do with their brands as opposed to just competing in a spot television or a small network silo.
So maybe let's just hit on political advertising. Given the ear to the ground that you guys have in all the different markets, clearly, we've heard the primaries are probably going slower than historical trends. But wondering, when you look at the overall year and what you're expecting for coming up, including NewsNation and including The Hill, what's your point of view on where political advertising is going?
Yeah, I mean, look, I think on the political side of things, we feel very good about where the year is looking like it's going to come together. I think if you look historically, we generally generate something like 80% plus of our political revenue in the back half of the year. This year, from a presidential perspective, it's been less powerful. I mean, if you look back at 2020, we had Spire and Bloomberg that spent a bunch of money. We didn't have that this year. But at the end of the day, politics is local. And that is absolutely true. We are in really more than 90% of the contested election markets, I think, for gubernatorial and Senate and more than 80% for House. We've gotten benefits from the initiatives and some of the ballot propositions around reproductive rights. Those things have been all positive.
I think the benefit of our portfolio, if you just kind of look, we have a very consistent track record. We actually look over the last 4 election cycles. What was the share that we generated from our stations in terms of political revenue that was or political advertising spending on television broadcasting? It's been in the low- to mid-teens for the last 4 cycles. So we feel pretty confident that that'll be the outcome again this year. If you just look at the fundraising, I have my team go to the FEC website every quarter just to sort of check on that number. You can see that through March 31, the fundraising is up something in the teens versus the 2022 election cycle. All signs are pointing to the money is being raised.
We know that television is the best place for those candidates and the PACs and the initiatives to put their money to work because that's where the electorate is. Pew Research did this study that said, if you look in the last election, 60% of the people that actually voted were age 50 and plus, which is exactly our demographic. It's going to be a great place for people that are looking to win their elections and their ballot props to put their dollars to work at a Nexstar station.
Cool. Can you talk about we're seeing, obviously, growing consumer engagement and ad spending in the CTV space. What are you doing here to leverage interest in that market and the assets that you guys own for CTV?
I mean, I would say on that side, if you just kind of I'll flip it for just half a second. What we're hearing from advertisers is they do like a concentrated viewership where you can get your message across to people that are actually watching television at one point in time. When you go and try to buy CTV, you're getting a few people here, a few people here. And you have to aggregate it all to sort of get to the right demographic. And maybe that dilutes the message a little bit. But having said that, we do have our own set of video assets that we're selling. We've got The Hill. We've got clips from NewsNation. We've got our local stations that have all video inventory that our sales force sells together. We've got a product where our local stations will engage with the local advertiser.
And then also, who's buying linear? And then just look to sort of expand their audience around the CTV product in the market. So we've got lots of different ways that we're addressing it.
So Perry, every year that we've done this, we ask you a similar question on ATSC 3.0 or NextGen TV. So maybe just share with us the latest over the past year, where we are in this development. And then can you maybe start to think about when this benefit is going to be impactful to the financials?
Sure. I mean, we've gone from the conceptual stage to actually the testing stage now. We just did a test with a vehicle manufacturer that you all would know well in one of our markets. It was a good old-fashioned drive test like we used to do back in the cellular. Can you hear me now? But basically, can we deliver an ATSC 3.0, which is a 4K signal, to the connected car, not only for navigation but for entertainment and the TV and the headrest that's facing the back seat and any number of things that we can do there? And the initial response was very positive in terms of not only signal strength but clarity and continuity. And so that's just one test that's going on. We met with a group of folks regarding this backup GPS system called BPS.
Our country is the only industrialized country on the face of the planet that doesn't have a backup GPS system. And if GPS and the timing goes out, ATMs don't work, planes don't fly, gas pumps don't work, is the timestamp on your receipt. You need that universal timing. And so we have the ability, with our spectrum and a nationwide spectrum footprint, to develop, which both the DOT and the DOD have said is in the national interest, a backup GPS system for the country. And ours would be terrestrial-based, unlike China or other companies where it's one satellite system versus another. If you want to know how to wage war, you probably would not roll tanks down 5th Avenue. But you would probably try and take out satellites in the sky.
And so we think that there is a lot of interest around what our spectrum could offer in terms of providing that service, which I think then would allow us to move quicker through the transition period through the experimental license to an actual license. If we can get rid of the simulcast mandate, get a sunset date for ATSC 1.0, then I think we would be I think you would see things move further faster. I think you'll see us sign commercial clients this year. And I think you'll see some money flow from those clients as early as next year. It won't be significant dollars until there's an absolute proof of concept. But it's like other things that I've seen. You've written, how do things happen? They happen slowly and then very quickly. And I think that could be the same in terms of adoption here.
There are a number of factors, I guess, at stake, is what I wanted to say.
Let's end on a question I usually start with, which is, it doesn't take a math wizard to look at your stock price and the cash flow you generate and say the stock's trading yet again an incredibly cheap free cash flow yield. But what gives you that confidence, both you, that the market is wrong about the future of Nexstar and your business?
Lee Ann gave a very impassioned speech on this during our last earnings call. I'll let her give you the CliffsN otes version of that right now because she says it better than anyone.
Yeah, I mean, look, I think the bottom line is, if you just look at the free cash flow yield that we trade at, which is usually a high teens, a low 20s rate of return, that would imply that we would just have 4 or 5 years of our cash flow. And then that would be it. And we know that that's not the case. We anticipate that we'll be able to continue to generate a similar level of free cash flow for the foreseeable future. And so when you look at it from that perspective, it's just we've been very aggressive about buying back our stock because we see the undervalued nature of that business.
OK, cool. Well, we hit our warning. Perry, Lee Ann, thank you guys so much for being here. We appreciate it.
Thanks for having me.
Robert, thanks for helping. Thank you.
Well, good to see you.