Nexstar's 2026 Outlook: Navigating Political Cycles and a Strategic Merger

The full-year 2025 story for Nexstar was defined by a stark political swing. The company reported Q4 net revenue of $1.29 billion, a 13.4% year-over-year decline. The entire drop was driven by a collapse in political advertising, which fell by $233 million to just $21 million in the quarter. This cyclical volatility overshadowed a more resilient underlying trend: non-political advertising grew 4.5% in the quarter, outperforming expectations and showing strength across local, national, and digital segments.

Against this backdrop of political noise, the company demonstrated clear financial discipline. Nexstar ended the year with a $280 million cash position and a first lien net leverage ratio of 1.71x, well within its covenant. This liquidity buffer, coupled with a $351 million return to shareholders and $185 million in debt repayments during the year, underscores a balance sheet built for strategic maneuvering. The full-year picture was one of pressure: 2025 Adjusted EBITDA declined to $1.56 billion from $2.00 billion, and net income fell to $83 million from $683 million, largely due to a $381 million impairment on its equity stake in TV Food Network.

The bottom line is that 2025 was a year where cyclical political volatility masked structural progress. The sharp revenue and profit declines were not a sign of business decay, but a direct consequence of a non-recurring election cycle lull. The company's ability to maintain a strong capital position while navigating this storm sets the stage for the anticipated rebound.

The 2026 Financial Engine: Political Rebound and Digital Acceleration

The financial engine for 2026 is now clearly defined. Nexstar has set a standalone Adjusted EBITDA guidance range of $1.95 billion to $2.05 billion, excluding the TEGNA acquisition. This targets a significant recovery from the $1.56 billion reported in 2025, framing a year of structural rebound and strategic acceleration.

The primary catalyst is the expected return of political advertising. Management is counting on a midterm-driven cycle, with a critical detail shaping the timing: roughly 80% of full-year political advertising revenue is earned in the second half of the year. This creates a powerful back-half ramp, making the second quarter a pivotal period for execution. The company's regulatory timeline aligns with this, as it expects to close its proposed acquisition of TEGNA by the end of the second quarter. Completing the deal before the political ad surge hits would position Nexstar to capture the full benefit of the cycle, both from its existing footprint and the expanded reach from TEGNA's stations.

Simultaneously, the company is actively building a new pillar of growth. The strategic plan is to accelerate digital revenue, which is forecast to surpass national advertising revenue in 2026. This isn't just a hope; it's a forecast built on the strength of non-political advertising, which grew 4.5% last quarter and showed broad-based improvement. By directing resources toward this segment, Nexstar aims to diversify its revenue base and reduce future political volatility.

Cost controls remain a constant. The company has demonstrated its ability to manage expenses, with recurring cash operating costs reduced by 1.6% last quarter through restructuring. This discipline, combined with continued distribution renewals, will help protect margins as the top line expands.

The bottom line is a dual-engine setup. The first engine is the predictable political rebound, with its revenue concentrated in the second half. The second is the deliberate build-out of digital, which is projected to become the largest advertising segment. Together, they form a clear path to the 2026 EBITDA target.

Digital Transformation and Competitive Positioning

Nexstar's strategic positioning is being forged in the crucible of a media landscape undergoing a profound, dual-layered shift. On one front, the company is aggressively building a new growth engine through digital acceleration. On the other, it is leveraging a powerful, if evolving, moat in linear television, particularly in the political cycle. The result is a balanced, albeit complex, setup for 2026.

The digital push is most evident in the performance of The CW network. Viewership has surged 19%, propelling it to rank as the tenth most-watched ad-supported network and the second fastest-growing. More importantly, this viewership growth has translated directly into financial health, with cash flow improved 32%. This demonstrates that Nexstar's content and distribution strategy is successfully converting audience attention into stronger operational returns. The company is directing resources to this segment, aiming to make digital revenue the largest advertising pillar in 2026, a forecast built on the broad-based strength of non-political advertising.

Yet the broader advertising market tells a different story of fragmentation. Global ad spend is projected to grow by 5.1% in 2026, but the composition is shifting decisively. Digital and alternative media now command 55% of all worldwide media spending, a significant increase from just a few years ago. This trend is pressuring traditional broadcast, with political campaigns actively cutting back on linear TV as younger audiences migrate to streaming. In this context, Nexstar's bet on digital is not just about growth-it's about survival and relevance.

The company's moat, however, is not in the past but in a specific, high-value application of linear TV. For the 2026 political cycle, Nexstar is positioned to capture a massive surge in video advertising spend. The projected $11.2 billion in political video advertising dwarfs the 2022 midterm total. Crucially, the spending is expected to be heavily concentrated in traditional formats: TV is projected to rise to 85% of political video spend, its highest share since 2016. This is driven by the targeting capabilities of connected TV (CTV), which combines the reach of linear with digital precision. Nexstar's extensive station footprint, especially after the TEGNA acquisition, is perfectly aligned to serve this demand.

The bottom line is a company navigating two powerful currents. It is building a digital future through networks like The CW, while simultaneously capitalizing on a cyclical resurgence in linear TV for political advertising. This dual focus-digital acceleration paired with a linear TV moat in a critical niche-defines Nexstar's competitive positioning. It is a strategy that seeks to diversify its revenue base while also capturing the most lucrative, albeit temporary, opportunity in the market.

The TEGNA Merger: A Strategic Catalyst and Regulatory Hurdle

The proposed acquisition of TEGNA is the single largest strategic catalyst for Nexstar in 2026, a transformative deal that would reshape the local television landscape. The transaction, valued at $6.2 billion, would create the nation's largest local TV owner, with a combined reach to 80% of U.S. households. This scale is not just about size; it is about creating a more formidable platform to capture the massive political ad spend expected this cycle and to accelerate digital growth. The company's entire 2026 financial engine is calibrated to this deal, with management expecting to close by the end of the second quarter to position for the political rebound.

Yet the path to closing is a clear regulatory hurdle. The deal requires a waiver of the outdated federal ownership cap, a rule from the 1990s that limits ownership to stations reaching 39% of the U.S. population. This is the primary obstacle. While the company has received notable political support, with President Trump backing the transaction and FCC Chairman Brendan Carr expressing his backing, approval remains pending. The company is actively engaging with the Department of Justice and the FCC, providing extensive information to redefine the competitive market. The FCC's internal "shot clock" for review is due to expire on June 1, adding a tangible deadline to the process.

The critical variable for 2026 is execution on this timeline. Nexstar has stated it expects to close by the end of Q2, with any required divestitures likely to be "de minimis". The company's strategy hinges on this. A successful close would immediately expand its footprint to capture the 80% of political advertising revenue earned in the second half of the year. It would also provide a larger, more diversified base to drive digital acceleration. Conversely, a delay or a requirement for significant asset sales would undermine the timing and financial calculus of the entire 2026 plan.

The bottom line is that the TEGNA deal is a high-stakes variable. Its success depends entirely on regulatory approval, which is not guaranteed despite political backing. For Nexstar, 2026 is a year of decisive action, where the outcome of this merger will determine whether the company captures its full potential or is left navigating the political cycle with a smaller platform.

Catalysts, Risks, and What to Watch

The 2026 thesis now hinges on a clear checklist of forward-looking events and metrics. For investors, the path to validating the rebound is defined by three critical areas: the execution of a major strategic deal, the performance of a volatile cyclical driver, and the company's ability to navigate a shifting competitive landscape.

The primary catalyst is the execution of the TEGNA merger. Nexstar has set a firm internal target to close the $6.2 billion deal by the end of the second quarter. This is not a mere formality; it is a material event that will alter the company's scale and financial profile. A successful close would immediately expand Nexstar's reach to 80% of U.S. households, positioning it to capture the full surge of political ad spend. Any delay beyond this timeline would undermine the entire financial engine, which is calibrated for a mid-year political rebound. The regulatory process, while supported by political figures, remains pending with a potential FCC deadline in June, making this the single most important event to monitor.

Key risks are layered on top of this catalyst. First is regulatory uncertainty. Despite political backing, approval is not guaranteed, and the process could require divestitures that are not "de minimis." Second is the forecast for political advertising spend itself. The projected $11.2 billion in 2026 video ad spending is the engine for the rebound, but it is a cyclical variable. Any significant shortfall would directly pressure the company's Adjusted EBITDA guidance. Third is the persistent, structural pressure from digital. The broader media market is fragmenting, with digital and alternative media now commanding 55% of all worldwide spending. This trend pressures traditional broadcast, and Nexstar's bet on digital revenue growth is its hedge against this long-term shift.

The specific metrics to watch are the pace of political ad spending in the second half of the year and the company's progress on cost rationalization and digital acceleration. The financial model depends on the 80% of political advertising revenue earned in the second half, making Q3 and Q4 results pivotal. Simultaneously, investors must track whether Nexstar can sustain its 4.5% growth in non-political advertising and convert that into the forecasted digital revenue that surpasses national advertising. Continued discipline in managing recurring cash operating expenses will be critical to protecting margins as the top line expands.

The bottom line is that 2026 is a year of decisive action. The TEGNA merger is the make-or-break event. The political ad cycle is the primary financial driver. And the company's digital and cost management execution is the hedge against a fragmented future. For the outlook to hold, all three must align.