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Executives

Perry 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 Carter - Chief Financial Officer, Principal Accounting Officer and Executive Vice President

Analysts

Aaron Watts - Deutsche Bank AG

Tracy Young - Evercore Partners Inc.

Dennis Leibowitz - Palisades Ventures Management

Barry Lucas - Gabelli & Company, Inc.

Edward Atorino - The Benchmark Company, LLC

Bishop Cheen - Wells Fargo Securities, LLC

Nexstar Broadcasting Group (NXST) Q2 2011 Earnings Call August 9, 2011 11:00 AM ET

Operator

Good day, and welcome to Nexstar Broadcasting Group's 2011 Second Quarter Conference Call. Today's conference 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 21-A 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 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'd like to turn the conference over to your host, Nexstar President and CFO, Perry Sook. Please go ahead.

Perry Sook

Thank you, Latif, and good morning, everyone. Thank you very much for joining us to review Nexstar's second quarter 2011 operating results. Tom Carter, our Chief Financial Officer, is also here with me this morning. Nexstar's strong operating and financial momentum continues in 2011 as reflected by our record second quarter revenue and EBITDA and our strong free cash flow. These are all-time second quarter records over our 15-year history, and they reflect our success in overcoming a negative $4.8 million year-over-year delta on political revenue as well as the auto industry disruptions caused by the earthquake in Japan.

The ongoing advertising rebound in our markets and Nexstar's effectiveness in driving new-to-television local direct billings drove our seventh consecutive quarter of core television advertising revenue growth. Core being defined as local and national advertising. The 4.3% rise in core ad revenue growth and another period of double-digit increases in e-MEDIA and retransmission fee revenue more than replaced the record levels of political revenue we recorded in last year's Q2. At the same time, we continue to make tangible progress in streamlining our capital structure, reducing leverage, lowering our weighted average cost of debt and expanding our station base. Also, vertically integrating aspects of our e-MEDIA operations through the accretive acquisition of .Biz.

We are excited about our 2 new CBS affiliates, which we recently added, as well as our acquisition, as I mentioned of Internet technology provider, GoLocal.Biz, both of these deals bringing Nexstar financial and strategic benefits which I will review in more detail in just a few minutes.

Before we get deeper into our discussion this morning, I want to quickly address a piece of housekeeping with respect to the announcement on July 21, that our company's board of directors decided to explore and evaluate strategic alternatives intended to maximize shareholder value including a possible sale of the company. As we indicated on July 21, Nexstar does not intend to disclose developments with respect to the strategic review progress until such time as the Board has approved the transaction or otherwise, deems disclosure-appropriate. As such, we will not be making comments on this topic on the call today.

Moving back to our results, our revenue growth reflects the strength of our core local content and continued success in driving new local revenue, while developing distribution and digital extensions for our core content including new, online, text, mobile, and content, and applications. These factors position Nexstar to offset the cyclical impact of political advertising in the second quarter and political and Olympic revenue for the first half of 2011. Excluding political revenue from both periods, Nexstar's 2011 second quarter gross revenue rose 6.9% year-over-year, and rose 6.1% in the first half of 2011 versus the first half of 2010.

Despite the recent macro uncertainty, positive core television advertising trends are continuing for Nexstar in the third quarter and we remain on track to continue growing all of our non-political revenue sources in the second half of 2011. Nexstar's 2011 second quarter net revenue increase of 1.3% was driven by the increase in core revenue, including our sixth consecutive quarter of auto advertising increases despite the impact of Japan's earthquake, as well as significant e-MEDIA and retransmission fee revenue growth. Total second quarter retransmission fee, mobile, and e-MEDIA and management fee revenue collectively rose 18.8% to $13.2 million. These higher margin revenue streams accounted for over 17.5% of 2011 second quarter net revenue, up from 14.9% a year ago.

Looking deeper at the second quarter, gross local and national television ad growth of 4.3% to $62 million marks a quarterly sequential improvement over the 3.3% rise posted in Q1 of '11, and is also on top of the 13.6% growth recorded in last year's second quarter. Second quarter 2011 local revenue rose by 5.4%. National revenue was up 1.3%.

Nexstar's television ad revenue strength, combined with double-digit growth in retransmission fee, mobile and e-MEDIA elements of our revenue quadruple play and our quarterly management fee revenue resulted in the 1.3% increase in total second quarter net revenue to $75.5 million. We generated second quarter broadcast cash flow of $30 million, about in line with last year. Our adjusted EBITDA was $25.5 million, that's a second quarter all-time record and our free cash flow was $10 million.

Let me quickly review our quarterly financial highlights then Tom will take you through additional financial detail. Second quarter retransmission consent fee revenue, $8.6 million, that represented an increase year-over-year of 18.4%, and we're starting to see the benefits of our newest contracts rolling into the mix. With respect to our Round 3 deals, on July 3, we completed a new multi-year agreement with DIRECTV, the nation's largest satellite television service provider. As a result of this agreement, we expect the meaningful acceleration in our quarterly retrans revenue growth trajectory well above the 18% growth recorded in Q2 and we will see this growth beginning in the current quarter. We believe this trend will continue for the balance of 2011 and 2012 as additional contract renewals will be negotiated over the next several months.

Our Q2 e-MEDIA revenue growth also continues to accelerate as we successfully expand our base of revenue applications to achieve further penetration and modernization of our mobile marketing and our video initiatives. Q2 e-MEDIA revenue came in at $4.1 million, passing last year's second quarter by 22.5% and marking the 19th consecutive quarter of growth. Also it was Nexstar's highest ever level of quarterly e-MEDIA revenue. A moment ago, I mentioned our accretive acquisition of GoLocal.Biz. This transaction is a terrific compliment to our existing platform as it vertically integrates a critical function of our e-MEDIA offerings while creating new revenue opportunities for Nexstar.

In the second quarter, we've recorded $500,000 of management fee revenue from our management services agreement with 4 points. We're entitled to performance compensation as we generate broadcast cash flow for the station group above specified threshold. We receive meaningful upside on this front in the third and fourth quarters of 2010, and based on current pacing in operating performance, we fully expect to achieve similar or greater results beginning in the current quarter, third quarter of 2011.

Nexstar generated $4.7 million in new local direct advertising in Q2 '11. That represented 10.2% of our total local billing. We improved this metric by 19% relative to what we did in Q2 of 10. Of note, we have shown success of year-over-year growth in generating new local direct billings on a quarterly basis for the last 2 years. Political revenue of $2 million in Q2 of '11 marks an odd-year record and a 154% rise of -- from 2009 levels as during the quarter we took advantage of state-wide issue and municipal-race spending across virtually all of markets including a congressional special election in Rochester, New York. Based on what occurred in Washington last week, it goes without saying that we see the political season heating up. And we're also expecting the issues spending to continue to increase.

Now to look at other category data, Nexstar was up in 7 of our top 10 advertising categories in Q2 with our top 10 categories collectively up 4% year-over-year, led by increases in auto, our top category, up 2%; fast foods and restaurants, #2, up 7%; and we also saw a significant rise in department and retail stores spending, up 33%. By the way, our auto gains were driven by a 30% increase in spending from our local dealers. Tom will now provide further detail on our financials, on our debt reduction initiatives, after which I'll come back and talk a bit about our outlook. Tom?

Thomas Carter

Great. Thanks, Perry, and good morning, everybody. I'll start with a review of Nexstar's Q2 income statement and balance sheet data and then spend a minute updating you on our debt reduction progress and simplification of our capital structure. Total revenues, as Perry mentioned, were up 1.3% to $75.5 million. Core revenue, which is a combination of our local and national business, was up 4.3%. The components of that were local, up 5.4% to $45.7 million, and national, up 1.3% to $16.4 million. Political revenue was down $4.8 million from Q2 of '10, to $2 million. But as Perry mentioned, it was up 154% over Q2 of '09.

Our retransmission revenue, fee revenue was up 18.4% to $8.6 million, e-MEDIA revenues continued their growth trajectory, up 22.5% to $4.1 million. Broadcast cash flow, was relatively flat at $30 million for the quarter for Q2 of '11. Adjusted EBITDA was up slightly 1.3% to $25.5 million and our free cash flow was $10 million for the second quarter.

Nexstar's second quarter corporate expenses were $4.5 million, down from $5.6 million a year ago, which included a $1.6 million one-time, non-cash stock-based compensation expense from the stock option re-pricing which was executed in May of 2010. In Q2 '11, we incurred $288,000 of ongoing non-cash option expense compared to $297,000 in the year-ago quarter. Of the additional $50,000, I'm sorry, $500,000 of cash corporate expenses, a large percentage was associated with the professional costs of the Green Bay acquisition, as well as the GoLocal acquisition.

Station direct operating expenses, consisting primarily of news, engineering and programming, as well as SG&A expenses, net of trade expense, were $37.9 million for the 3 months ending, June 30, 2011, compared to $36.7 million for the same period in 2010, an increase of $1.2 million or 3.2%, with all of the increase coming from SG&A at the station level. The additional SG&A largely reflects increased variable expenses associated with our JOA payments to Sinclair and Peoria in Rochester, local broadcasting commission, sales commissions, as well e-MEDIA sales expenses, also additional utility cost and property tax expenses. Excluding the variable expenses, which were the JOA payments, the local broadcast and e-MEDIA sales commissions, our fixed G&A expenses were up a modest 1.5%.

In addition to our expense diligence -- vigilance, we continue to actively de-leverage the balance sheet and has successfully eliminated all of the most expensive pieces of our capital structure, which has significantly reduced our weighted average cost of borrowing. During the second quarter, we expanded our Term Loan B credit facility by $50 million to $149.5 million and used the proceeds to redeem the remaining $33.2 million of the 11 3/8% senior-discount notes. During the second quarter, we also repurchased approximately $20.5 million of the outstanding 7% subordinated payment in kind notes, and $7.4 million of the 7% senior-subordinated notes.

Following a significant reduction in debt in 2010, Nexstar lowered total debt by $27 million in the first half of 2011. The net effect of our debt reduction program has been to reduce our weighted average cost of borrowings to approximately 7.5% at June 30, from 7.94% at June 30, 2010. Reflecting the completion of our accretive acquisitions for the 2 CBS affiliates in Michigan and Wisconsin, and the GoLocal.Biz acquisition subsequent to Q2's quarter end, we borrowed an additional $19 million under the credit facility to facilitate those acquisitions.

Reflecting the improvements in our capital structure over the past 2 years, I'll review key balance sheet items as of June 30, 2011. Total leverage at quarter end was 5.53x, down from 5.65x at 12-31-10, and versus a total permitted leverage covenant of 8.5x. First lien leverage at 6-30, 2011 was 1.34x, compared with 0.9x at 12-31-10, and versus a 2.5x covenant. Reflecting the repurchases and redemptions and our significantly simplified capital structure, Nexstar's outstanding debt at June 30, 2011, consisted of $148.9 million of outstanding term loans, which are first lien debt, the second lien bonds at $317.9 million, and the other debt which comprises of 2 tranches of the 7% senior sub-debt, $111.9 million of the pick security and $37.4 million of the cash-pay security. Both of those actually are now cash pay. We just differentiate the 2Q subs.

Total debt at quarter end was $116.1 million. And we had cash on hand of $12.5 million. Total interest expense in the second quarter of 2011 was $13.3 million compared to $13.9 million for the same period in 2010. Cash interest expense for the quarter was $12.5 million compared to $10.7 million for the same period of 2010. This increase primarily related to the $325 million senior secured second lien note offering which was completed in the month of April, 2010. With our debt reduction initiatives in 2011, to date our cash interest expense run rate will be approximately $12 million per quarter.

Nexstar's Q2 CapEx at $2.8 million compares with $4.6 million in the second quarter last year, and we project total CapEx for 2011 to come in, in the $13 million to $14 million range with $6.9 million of that expended in the first half of the year. Overall, we successfully managed the top line, our fixed-in variable costs and the balance sheet for cash, and remained focused on further actions to enhance value. And we plan to deploy what will be another year's of solid free cash flow in 2011 for debt-reduction initiatives. That concludes the financial review for the call, and I'll turn it back over for some closing remarks to Perry before Q&A.

Perry Sook

Thanks, Tom. Just to clarify, our total debt number was $616.1 million at the end of Q2. The economy remains challenged. Nexstar continues to demonstrate that we can successfully grow and diversify our business by delivering great local programming and content to our viewers, both mobile and online, and on-air, while offering a unique set of traditional new media marketing solutions to advertisers, as well. Q2 of 2011 marks Nexstar's 15th anniversary, and our success over this period reflects our deep industry experience, as well as our confidence in the future of television as the foundation of a broad-reaching multimedia platform.

Last month, we announced our acquisition of GoLocal.Biz, an Internet technology provider and marketing services company, offering targeted online local business listings. The acquisitions created another new revenue stream for Nexstar, as we are prepared to expand the distribution and syndication of the GoLocal.Biz platform to other online publishers in television and radio markets not currently served by Nexstar. We also further expanded our station base through the July 1 closing of our accretive acquisition of WFRV-TV and WJMN-TV, the CBS affiliates serving Green Bay, Wisconsin and market [ph] Michigan markets. We followed this up with yesterday's announcement that Nexstar had reached the infinitive agreement to acquire WEHT-TV, the ABC affiliate serving the Evansville, Indiana market. This acquisition is expected to close at the end of the year.

All told, our acquisitions and our new agreement with DIRECTV, are expected to contribute an incremental $10 million in net revenue and $5 million of EBITDA to our second half 2011 results, and for the full year of 2012, an incremental $30 million in net revenue and approximately $17 million in EBITDA for the full year of 2012. We do not believe that any of this incremental revenue and EBITDA has yet been recognized in analyst projections and models currently out on the street.

To date, 2011 is on plan and we continue to experience core ad revenue growth in the mid-single-digit rates. Nexstar is planning to achieve and pacing to achieve, odd-year record financial results in 2011, and we're on track to replace a significant portion of the $6.7 million in political revenue from Q3 of 2010.

Core revenue growth, mid-single digits, high retrans revenue, and our latest agreement with DIRECTV which will push our growth rate of this revenue stream ahead of the 18% growth recorded in Q2. We'll also see ongoing double-digit growth of our e-MEDIA offerings and contributions from our new CBS stations and a near full-quarter contribution in Q3 from the GoLocal.Biz acquisition.

Looking forward, reflecting on what occurred in Washington last week, it goes without saying that we see the political landscape heating up and political season heating up with a range of Republicans vying for the presidential candidacy that we expect will lead to robust political spending during the primaries. We also expect to see issue spending to continue to increase as a result of the many heated topics facing the country, including the debt crisis, increased government spending and continued high unemployment. We believe the political spending at the state and local levels will continue to increase and will increase in 2012 during the upcoming political season, due to the highly charged issues such as the state and municipal employee-collective bargaining, immigration issues, as well as state government budgets.

Looking at this current 2-year cycle, 2011, 2012, we believe that from now, through the end of next year, we have the potential to generate an excess of a 9-figure amount of free cash flow. Our combined 2009, 2010, free cash flow grew to $79.6 million so when we referenced below [ph] 9 figures, we're expecting a continuation of this free cash flow trend in the upcoming period that will end with the next year's presidential election. With that, I would like to thank you again for joining us this morning, and now let's open the phone lines for your Q&A to address your specific areas of interest. Latif?

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from Bishop Cheen of Wells Fargo.

Bishop Cheen - Wells Fargo Securities, LLC

Okay, so a lot of stuff, a lot of great detail. How about Q3? Can you give us some color on what you're seeing, what you're feeling, where auto is, if in whatever you're seeing, if that's kind of -- if there's guidance in there, if it's only based on pacing or expectation and any color you can add about cancellations from nervous folks out there?

Perry Sook

We'd had no cancellations that I'm aware of, Bishop. I can tell you that July is in the books and it's continuation of a trend, single-digit growth in core revenue, double-digit growth in e-MEDIA, double-digit growth in retrans, as well as better-than-expected political advertising. We now are proud owners of a television station in Green Bay, Wisconsin. You probably saw the piece on Bloomberg this morning, talking about Wisconsin recall elections getting record-spending in the first battle of 2012, and that certainly has positively affected the revenue at our Green Bay station with over $1 million of political revenue in the third quarter alone. So I would say continuation of a trend and business as usual. And with July in the books, that's the validation that we have. We did have a slow start on selling NFL and preseason, but that has now dramatically accelerated with the end of the labor disagreements, and we're actually -- we actually see better pace in August and September than we -- what we saw in July.

Bishop Cheen - Wells Fargo Securities, LLC

Okay, and how about auto? What is auto feel like to you?

Perry Sook

Well, it feels about like second quarter. It was up 1% driven by 30% increase in local dealer ad spend, and we see no discernible difference here in the third quarter in terms of what we have on the books to date and what we -- what our visibility would tell us, is where we'll end up the quarter.

Bishop Cheen - Wells Fargo Securities, LLC

Okay, and then Q4, just way too early to say anything meaningful about visibility or expectations into Q4?

Perry Sook

I think that's fair. I'm not even looking at the Q4 pace in any meaningful way, yet it's just too early. It's a small sample size, it's not. I'm not sure you could discern anything from the results in any event.

Bishop Cheen - Wells Fargo Securities, LLC

All right, no argument from me. And Evansville, close by year end, $18.5 million. I think I understand the 2 parts of the transaction per the press release. But basically, that means that your revolving credit facility will have between Mission and Nexstar like $18.5 million more on them at year end when it closes?

Thomas Carter

That's correct. And obviously that's in addition to the $19 million that we borrowed early in July to complete the Green Bay-Marquette acquisition.

Bishop Cheen - Wells Fargo Securities, LLC

Right, and then so great color on what the acquisitions in DTV do. So let me just see if I have this right. The Evansville is not going to close until year end. So in the second half, the $10 million revenue, $5 million EBITDA contribution, that really is not including Evansville? Or is that pro forma as if Evansville were in there.

Perry Sook

No, that's not including Evansville. That the 2 elements there would be our new agreement with DIRECTV, which will influence the back half of this year, as well as the 2 CBS affiliates we acquired from liberty.

Operator

Our next question comes from Aaron Watts of Deutsche Bank.

Aaron Watts - Deutsche Bank AG

Maybe kind of a follow-on to the situation of what played out in Evansville. Perry, I'm just curious how you're thinking about retrans of assets of a couple of your peers, too. And with what the different networks are asking for from you. Do you view retrans as being a profitable proposition for you in the years ahead? And maybe the agreement you've struck so far, and is that what you're fighting against with FOX is that it wouldn't be a profitable proposition? Just how do you think about that? What you're getting in the door from cable and satellite, and what's going out to the affiliates?

Perry Sook

I guess conceptually, and I'm not sure really if it has anything to do with Evansville, but conceptually, no network in their most aggressive ask has asked for more than 50% of retrans revenues. And that's conceptual ask. So I think anything at a 50% margin is pretty profitable. And we'll see how it all plays out. We just did a new agreement with ABC for 10 ABC affiliates. The station Evansville who has a current agreement with NBC, it runs for another several years with ABC I should say, will be our 11th ABC affiliate. We continue to have discussions with FOX and we're now having discussions with NBC So -- and we are down to the last moment of renewing our CW affiliation in Jacksonville for another 5 years. So the discussions are ongoing all the time. I'd really decoupled the 2. One is a revenue relationship, the other is a vendor relationship. So I've got revenue and costs and the negotiations are not directly tied because the contracts obviously don't sync up. So from our perspective, we'll just continue to negotiate with our vendors and our network partners to try and reach equitable agreements for both parties, and we'll continue to negotiate aggressively to grow our retrans revenue stream as we've demonstrated in our history.

Aaron Watts - Deutsche Bank AG

Okay, that's helpful. And then, last one from me. Just thinking about the nervousness and the markets right now and whether that translates to your advertising customers. Can you kind of compare what's being felt out there so far to a couple of years ago, and maybe specifically, how we should think about where auto stands now versus a couple of years ago. So in a kind of a downside scenario, if advertising continues to pull back, how should we compare that to the pullback that was experienced in '09 for instance?

Perry Sook

The pullback in '09 was driven by a lack of available credit. As long as the credit markets remain open, we think that advertising, particularly for big-ticket items like auto and furniture, will continue to be available here. And we see continued opportunity for growth in the auto category that most people point toward a Czar this year of kind of sub-$13 million and an eventual steady-state Czar of new car sales of $15 million, $15.5 million. And so again, I don't think the stock market affects mainstream as much as the availability of credit. And 2 years ago, when the credit market seized up, or I should say, 4 years ago, 2007, when the credit market seized up, that's what -- when you can't finance a car, you can't sell a car. That isn't the case today. We do have high unemployment, we do have nervousness about Wall Street but that makes for good watercooler discussion. But I think as long as credit is available, advertising of big-ticket items will continue to be available. I don't see the -- a correlation and we don't see a pullback at this point.

Operator

Our next question comes from Edward Atorino of Benchmark.

Edward Atorino - The Benchmark Company, LLC

So to ask the same question that Bishop said. So the $10 million is in the second half, the acquisition?

Perry Sook

Right. The $10 million of net revenue and $5 million of EBITDA would be incremental to a second-half model that currently exist. That is the realtime effect of the acquisition, not pro forma, but the realtime impact of the acquisition on the back half of this year. And then for the full year of next year, $30 million of revenue, $17 million of EBITDA, and as Tom illustrated, from where we are today, incremental $37 million-revolver borrowing, but that will produce $17 million of EBITDA which is roughly a 2x multiple. So we'll take that.

Thomas Carter

And Ed, think about it this way. The DIRECTV contract and Green Bay both have effect in the second half of the year. Those 2 get a full year effect in 2012, plus you add on Evansville. Building blocks.

Edward Atorino - The Benchmark Company, LLC

Anything going on in the political arena? You seeing any early political?

Perry Sook

Yes. Our political for the month of July was about 3x what we had budgeted, Ed. And for the quarter, it's thematically in the same place. As I mentioned, we took over the Green Bay station on July 1. We've got $1 million of political on the books in the third quarter, just for those recall elections that are going on in upstate Wisconsin. And political continues to be robust around the horn, as we see people buying time and special interest groups buying time to influence legislation and not just influence candidate elections.

Edward Atorino - The Benchmark Company, LLC

Are you giving a number for political this year? Including this one?

Perry Sook

No, we haven't given the full year guidance on that, but it's generally 5% of our revenues in an odd-numbered year. I bet the over on that and can be as high as 15% of our revenues in an even-numbered year, and we're feeling pretty peppy about that for 2012.

Operator

Our next question comes from Dennis Leibowitz of Act II Partners.

Dennis Leibowitz - Palisades Ventures Management

I was wondering on the FOX situation, can you just review where you are in terms of affiliation changes and what that means to the P&L versus what the substitute programming in affiliations are?

Thomas Carter

Sure, Danny, I'll take that. We have -- Evansville has changed that was effective, July 1. Fort Wayne changed affiliations effective, August 1, and Springfield takes effect, September 1. That then leaves us with 8 remaining FOX affiliation agreements that continue to be month-to-month, if you will, there are a couple, Beaumont is -- the affiliation agreement isn't out there until year end, 2013. And then the 2 FOX affiliates in Peoria and in Rochester are actually Sinclair stations that we manage. So it really kind of comes down to the group of 8, as we call it, which all are parts of existing virtual duopolies. So we think that we have a very strong position in those 8 remaining markets. And as Perry mentioned, we continue to have ongoing dialogues with FOX regarding those. But yet to have come to any sort of a resolution. And I think the only comment we've made in a public forum with regard to kind of sizing the potential impact of those 8 remaining stations is a nominal affect on BCF. Something less than, potentially 3% diminution of BCF in those 8 remaining markets.

Dennis Leibowitz - Palisades Ventures Management

And what about the 3 that you've done already?

Thomas Carter

When you say what about them, you mean?

Dennis Leibowitz - Palisades Ventures Management

In terms of P&L effect of change in affiliations.

Thomas Carter

Less than 1% on BCF.

Perry Sook

Just some anecdotes there, Dennis. Fort Wayne, which switched to a local station as of August 1, exceeded their August budget. We doubled the amount of local news that we have available in that marketplace. And it will become the market's first HD station later this year. Full HD. And so we really haven't missed a beat there. In Evansville, just anecdotally, we have introduced to the market a high school sports package where we'll have live high school sports, 41 weeks of the year, on Friday night. In about 4 weeks of selling, we now have more revenue on the books in sponsorships for those high school sports than we did for the full year of FOX prime on Friday night. So that would be incremental revenue gain. We've also increased our local news which was 55% of the revenue of this television station to begin with in Evansville by 25%. So we -- our goal is to try and make agreements with all of our network partners and we don't comment on but we continue to have discussions with FOX. But we continue to have conversations with all of our networks pretty much all the time about a wide range of topics.

Dennis Leibowitz - Palisades Ventures Management

Has FOX given any concession at all to the demand for a certain dollar amount as opposed to a percentage anywhere?

Perry Sook

I really can't comment on that. I know that we continue to have discussions with them, but we don't have an agreement with them. And we're hopeful we we'll be able to work something out, an agreement that works for both parties. But we've shown our ability to make deals with the CW, with CBS, with ABC, and we're in discussions with NBC for our maturities at the end of this year. We've also had early and preliminary conversations with CBS about some of our 2012 maturities. So it's just part of the job. It's an ongoing discussion of negotiations and discussions with our network partners. So it's just part of what we do.

Operator

Our next question comes from Barry Lucas of Gabelli & Company.

Barry Lucas - Gabelli & Company, Inc.

Maybe you could sort of size this GoLocal opportunity, what you think that can be a couple of years down the road?

Perry Sook

Well, it's obviously, it is the technology platform for our online and mobile classifieds program, and we're doing a lot with that in terms of video, mobile couponing, deals of the day, those kinds of things. So there is the contribution of revenue in EBITDA to Nexstar just from the technology that now we own the [ph] intellectual properties for. And that for a full year of this year will be probably somewhere between $4 million and $5 million, and that was $200,000 in a test market or 2 last year. Where we see opportunity is, this is a scalable platform and we think there are opportunities to, for lack of a better word, syndicated beyond our group to other groups that we -- we're not direct competitors in marketplaces. So and I think we feel that, that has a similar $4 million to $5 million revenue and EBITDA potential on a going-forward basis. But we are in the early stages of developing that. And as I think Tom has mentioned in the past, the acquisition of GoLocal was a low seven-digit acquisition for us, primarily for us to have access to this intellectual property. But then we also see this syndication opportunity which we think will play out over the next couple of years.

Barry Lucas - Gabelli & Company, Inc.

If -- I don't want to beat this to death but I just want to make sure -- the $30 million of revenues and $17 million that we're talking about, or ballparking for '12. Does that include or exclude the change in Evansville, or is it just the incremental retrans coming from DIRECTV and the 2 CBS stations that you just finished acquiring?

Perry Sook

That would be net of any effect of losing a FOX affiliation in Evansville. So that would be true incremental revenue.

Barry Lucas - Gabelli & Company, Inc.

Okay, that's helpful. And last area again, when you're thinking about auto in Q3 and what you've seen thus far as you talk about guidance, what you feel for the quarter. You're talking about, again, what you've got on the books for auto? Or are you anticipating some ramp in September either early or late, as new Japanese models are introduced and Japanese inventories starts to hit the showrooms?

Perry Sook

Well, Barry, everybody's talking about the September push. We don't have any of their request yet that would prove that out. I look at our automotive spend. Our local dealers spend which was up 30%. Local dealers were $6 million of the $11.7 million in total auto ad spend we had in the quarter. I think our model and our approach to auto is maybe different than what you hear from a lot of other folks. But this is basically on our local dealer ad spend. Their commitments, and of the anecdotal discussions we have at lunch or at church or on the golf course or wherever we interact with these folks, we're dealing with the owner of the business. So our local dealer ad spend continues to be strong, and that's driving our automotive category. And again, we think that the third quarter will look a lot like second quarter in terms of our final results where our domestic spending as a category. Those nameplates were down a little bit in Q2, the foreign ad spending was down double-digit percentages in Q2, offset by the local dealers' spending. Now, if we do get a September push by the foreign, and I would bet the over on those numbers, I don't have visibility into that. Our rec firms [ph] are talking about it, and I've heard and read transcripts of other calls where people expect for it to happen, we would like for that to happen. But as of yet, I don't have any of their request on the books that would say okay, we're planning a flight after Labor Day. Again, automotive and particularly as supply chains build back up, probably we'll get booked pretty close to the air dates. So it may well be that those are in the works but they have not manifested themselves and request for rates and avails at our local stations at this point.

Operator

Our next question comes from Tracy Young of Evercore.

Tracy Young - Evercore Partners Inc.

Few questions, one was again on auto. But could you tell us how July came out? And also, can you remind us of your retrans sales coming out this year and next year?

Perry Sook

We, on retrans, we have over 120 agreements that expire between now and the end of the year. And of that, there are only about a dozen that are over 10,000 subscribers, but they're one of our top 5. Retrans agreements expires between now and the end of the year. So collectively, when you take in the Direct deal, and the remaining deals that would cover about 50% of our subscribers, maybe a little bit more. As for next year, I have not looked at the end of '12 maturities beyond focusing on what's on this year. And as I mentioned on July, we saw core revenue up in the mid-single digits for the month of July, retrans, political, e-MEDIA, all up beyond our expectations. So climatically, I think that's about as deep as we'll go with July right now.

Operator

Our next question comes from Bishop Cheen of Wells Fargo.

Bishop Cheen - Wells Fargo Securities, LLC

I've threatened to follow-up. Look, Perry and Tom, 2 guys I know who know a thing or 2 about capital markets. So let's go back 15 minutes or so ago. Talking about what this air pocket free fall much better today has been like. In terms of capital flow, Perry, we know that the bank's flex market has gotten wider. We know that the high-yield market, and it opens and closes like some sort of exotic orchid has kind of locked up. And we know from yesterday, and you saw it. Your own stock got bashed, that the markets really tumbled the smaller cap lower-rated names. I think on the thesis that they wouldn't have access to capital. So if that was a big fear 24 hours ago, and as we look forward on that, tell me how you would debunk that fear or think all those fears are overplayed into capital flow and liquidity of our markets?

Perry Sook

Are you speaking, Bishop, in relationship to our ad market or to our strategic process?

Bishop Cheen - Wells Fargo Securities, LLC

I think I don't want to get into your strategic process directly because we agreed not to get into that. But I think that liquidity and capital flow affects everything, and it affects the ad market and it affects the auto dealer, and the close year, and the brand marketeer, and what they are comfortable with on spending and investing for futures.

Thomas Carter

I understand, Bishop. And I've got an opinion just like everybody else. I think as it relates to Nexstar in particular, Perry mentioned, and we're very focused on the positive free cash flow that we have on a quarterly basis for Nexstar. And that business model we don't believe changes appreciably. It may, on the margin, if there's a slowdown. But we have positive free cash flow and we'll have substantial positive free cash flow. I think the difference from our perspective in back to Perry's comments about what's different now than 4 years ago, is the banks are much better capitalized now than they were 4 years ago. And I think that the flow of funds there will continue in terms of availability of credit. That's my perspective. And I think the U.S. is better prepared for this, perhaps, than other areas of the world in terms of capitalization of their financial institutions. But that remains to be seen.

Bishop Cheen - Wells Fargo Securities, LLC

Again, no argument from me. I just wanted to hear it from your perspective. Perry, anything you'd like to add?

Perry Sook

No. Again, I think when you tell me that people can no longer get car loans or get loans to buy furniture or refrigerators or appliances, I'll tell you that there will be a direct effect, negative effect on our ad market. But again, our auto ad spend, 50% of it was from local dealers in the second quarter. That's Main Street, that's where we live, that's the folks that we talk to on a daily basis. They are concerned about what's going on, on Wall Street but it's not their life. And I think that you kind of have to get out of that bubble to see what's going in Main Street America and our mid-markets where we operate. And we talk to these people everyday. The owners of these businesses. And we've got 335 local salespeople that knock on doors and go to lunch with owners and managers of businesses every day, so I get realtime feedback. Most of our television stations have a 5 at 5, a 5-minute meeting at 5:00 to talk about what they learned today. So I mean, we're getting continuous closed-loop feedback from the local business community, and we have not heard anything to date that I would consider to be alarming. And I think high unemployment is factored in. I think that state government spending and cutbacks and those kinds of things are being dealt with in realtime. What's playing out in Washington, I think will continue to play out probably through the 2012 elections and beyond. And I think that real constructive progress there on the margin would be helpful to Main Street, Wall Street and every other street. But I think that life goes on. Traffic was just as bad coming into the office today as it was 3 months ago. And people have to go to work, they have to earn a living, they have to replace their car, they have to fix their air-conditioner, and those are the folks that we do business with at the local market levels. So I don't want to be Pollyanna about it, but I do think that the slowdown in '07 and '08 was driven by the lack of credit that is at the Main Street level. I don't think you need to extrapolate much more than that out of -- this was an equity market correction, when we're reading all about head and shoulders, and double dips and false bottoms and all the technical terms. But -- and yes, our stock was down 2% yesterday, we weren't really happy about that. But it wasn't as badly hit as some of the peer group. And I guess, as it relates to our process, the only thing I'll say is, it is in full swing. This week, and when we have something to announce, we will but it is in full swing as we speak.

Operator

Next question comes from Edward Atorino of Benchmark.

Edward Atorino - The Benchmark Company, LLC

Follow-ups. Elaborate a little bit on this little company you bought. Is that going to add $4 million to $5 million in revenues next year? And does it have a proprietary content of anything like that? And secondly, can you talk a little bit about that if there's an acquisition market out there, what pricing's all about?

Perry Sook

The GoLocal acquisition, I'll repeat what I said. That would generate for the Nexstar account, somewhere between $4 million and $5 million of e-MEDIA revenue this year. It is one of the reasons why we continue to put up for the full year. But we've already seen a couple of quarters of that. But our GoLocal.Biz products are driving the trajectory of the Nexstar e-MEDIA revenue. So for a full year run rate that will be somewhere between $4 million and $5 million. This year, growth trajectory off of that next year. What we said is we think that there is a syndication possibility for this product it to online publishers in markets that we're not in. And we think that could potentially be $4 million to $5 million. But that's not embedded in any of the 2012 trajections that we gave you because that's much more speculative. We are just finalizing, formulating our business plan for that now. Whether or not that will happen, is up to our ability to size the opportunity to execute. But that's not embedded in any of the 2011 second half or 2012 full-year projections of incremental revenue and EBITDA that we gave you earlier.

Edward Atorino - The Benchmark Company, LLC

And on the acquisition market?

Perry Sook

Well, you know, we bought a station yesterday and that will be a very -- a highly accretive acquisition for us because we'll be able to create our 22nd virtual duopoly with our existing station there, which we will transfer the FCC license assets to Mission, sell them the Mission to facilitate the transaction under the current rules. And there are other properties out there, people know about the McGraw-Hill process ongoing. We announced a process which, as I said earlier, is in full swing and a very active week this week for us. And regarding that, and obviously, when we have something to announce about that, we will. But I think that people looking forward, which I think is how most people will tend to look in equity investors tend to look, 2012 looks like a good year to be in this business and 2011, at least for us, is turning out to be even a better year than our plans. So despite what you see on CNBC, the Drumbeats for 12 hours during the business day. And again, I don't want to be Pollyanna about this. All of this does affect the Main Street and our business eventually but right now, we think this is a pretty good time to be in this business. And as I said in my comments, we see the television stations as a solid foundation for building a local market multimedia platform and that's really the business we're in.

Operator

And as there are no further questions in queue, I'd like to turn the call back over to Mr. Sook for any closing remarks.

Perry Sook

Thank you, Latif. I want to thank everyone for joining us here this morning, and we look forward to discussing our third quarter results with you and potentially we'll be back with you sooner if we have anything else to talk about. Have a great day.

Operator

Thank you, Mr. Sook, and thank you ladies and gentlemen for your participation. That does conclude your call. You may disconnect your lines at this time. Have a great day.

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