“Reflecting growth in four of our top five, and seven of our top ten ad categories, as well as a 17.0% year-over-year increase in new business development, first quarter core ad revenue rose 11.4%, inclusive of 9.5% first quarter growth in local spot revenue and 16.3% growth in national spot revenue. Nexstar’s gross revenue growth in the first quarter excluding political was a robust 16.5% while first quarter political revenue rose over five-fold compared to the same period last year and by 43.3% over comparable first quarter 2012 levels.
“Strong gains in our core television operations were complemented by significant double digit growth in first quarter retransmission fee revenue which rose 31.0% on a quarterly sequential basis and 47.6% year-over-year to $35.1 million, which marks a record level of quarterly revenue from this source. With the renewal of retransmission consent agreements representing approximately 22.0% of our subscriber base in late 2013 we project highly visible and significant revenue growth from this source throughout the year. Digital media revenue declines were due to non-recurring revenue at Inergize related to contract buyouts in 2013, while station-level digital revenue grew by 18.4% year-over-year. Expected digital media revenue growth in 2014 will reflect our accretive acquisition in April 2014 of Internet Broadcasting Systems, a digital publishing platform and digital agency services provider that strengthens our position as a leading local technology and services provider for businesses. In total, retransmission fee and digital media revenue grew 36.7% year-over-year to $41.4 million and accounted for 30.9% of 2014 first quarter net revenue. By comparison, total first quarter 2013 retransmission fee and digital media revenue comprised 27.0% of net revenue and 22.3% of net revenue in the 2012 first quarter.
“With a focus on generating free cash flow, we remain disciplined in managing costs and in addressing our capital structure, leverage and cost of capital. The rise in first quarter station direct operating expenses (net of trade expense) and SG&A primarily reflects higher variable costs related to the significant increase in national and local revenues and the operation of acquired stations. Similarly, the increase in first quarter corporate expense reflect increased staffing and infrastructure to manage and operate the additional stations as well as the previously disclosed expected increase in non-cash stock compensation expense of approximately $1.1 million.
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