- Nexstar is worst hit due to new joint sales agreement (JSA) regulation as it has high JSA revenue exposure.
- Nexstar's growth story is likely to unravel as it has to adjust to new regulation.
- My base and pessimistic case point to a steep 31-45% downside potential.
- Catalysts to de-rate Nexstar substantially are 1) its eventual disclosure of sizeable JSA sales exposure 2) growth story unraveling and 3) some pending acquisitions not obtaining regulatory approval.
- Market-neutral pair trade strategy: Short Nexstar, Long Gray Television.