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Rating Action:

Moody's affirms Nexstar's B1 corporate family rating, assigns Ba3 to proposed credit facilities; outlook stable

31 May 2016

$5.5 billion of rated debt affected; increase in debt balances to fund Media General acquisition

New York, May 31, 2016 -- Moody's Investors Service ("Moody's") affirmed the B1 Corporate Family Rating of Nexstar Broadcasting, Inc. ("Nexstar"). Moody's also assigned Ba3 to the company's proposed sr secured revolving and term loan credit facilities. Proceeds from the new debt facilities will be used largely to repay debt of Media General, Inc. ("Media General") and to fund the cash portion of the $4.6 billion acquisition expected to close by year end. Moody's also affirmed the company's B1-PD Probability of Default Rating and SGL-2 Speculative Grade Liquidity Rating. The rating outlook is stable. After closing, the company's parent (Nexstar Broadcasting Group, Inc.) will be renamed Nexstar Media Group, Inc., and Moody's will withdraw existing debt ratings of Media General as well as of certain debt instruments of Nexstar upon repayment.

Assignments:

..Issuer: Nexstar Broadcasting, Inc.

....Sr Secured Revolving Credit Facility ($175 million), Assigned Ba3 (LGD3)

....Sr Secured Term Loan A-1 ($270 million), Assigned Ba3 (LGD3)

....Sr Secured Term Loan A-2 ($250 million cash flow bridge), Assigned Ba3 (LGD3)

....Sr Secured Term Loan B ($2,850 million), Assigned Ba3 (LGD3)

....Sr Secured Bridge Term Loan ($1,180 million), Assigned Ba3 (LGD3)

Assignments:

..Issuer: Mission Broadcasting, Inc.

....Sr Secured Revolving Credit Facility, Assigned Ba3 (LGD3)

....Sr Secured Term Loan B, Assigned Ba3 (LGD3)

Outlook Actions:

..Issuer: Mission Broadcasting, Inc.

....Outlook, Remains Stable

Assignments:

..Issuer: Marshall Broadcasting Group, Inc.

....Sr Secured Revolving Credit Facility, Assigned Ba3 (LGD3)

....Sr Secured Term Loan A-1, Assigned Ba3 (LGD3)

Outlook Actions:

..Issuer: Marshall Broadcasting Group, Inc.

....Outlook, Remains Stable

Assignments:

..Issuer: Shield Media LLC

....Sr Secured Revolving Credit Facility, Assigned Ba3 (LGD3)

....Sr Secured Term Loan A-1, Assigned Ba3 (LGD3)

Outlook Actions:

..Issuer: Shield Media LLC

....Outlook, Remains Stable

Affirmations:

..Issuer: Nexstar Broadcasting, Inc.

.... Probability of Default Rating, Affirmed B1-PD

.... Corporate Family Rating, Affirmed B1

.... Sr Unsecured 6.875% Notes due 2020, Affirmed B3 to (LGD6) from (LGD5)

.... Sr Unsecured 6.125% Notes due 2022, Affirmed B3 to (LGD6) from (LGD5)

.... Speculative Grade Liquidity Rating, Affirmed SGL-2

Outlook Actions:

..Issuer: Nexstar Broadcasting, Inc.

....Outlook, Remains Stable

Ratings to be Withdrawn upon repayment:

..Issuer: Nexstar Broadcasting, Inc.

....Sr Secured Revolving Credit Facility due 2017, Ba2 (LGD2)

....Sr Secured Term Loan A due 2018, Ba2 (LGD2)

....Sr Secured Term Loan B due 2020, Assigned Ba2 (LGD2)

..Issuer: Mission Broadcasting, Inc.

....Sr Secured Revolving Credit Facility due 2017, Ba2 (LGD2)

....Sr Secured Term Loan B2 due 2020, Ba2 (LGD2)

..Issuer: Marshall Broadcasting Group, Inc.

....Gtd Sr Secured Term Loan A due 2018, Ba2 (LGD2)

....Gtd Sr Secured Revolving Credit Facility due 2017, Ba2 (LGD2)

..Issuer: Media General, Inc.

.... Probability of Default Rating, B1-PD

.... Corporate Family Rating, B1

.... Speculative Grade Liquidity Rating, SGL-2

....Outlook, Stable

..Issuer: LIN Television Corporation

....Gtd Sr Global Notes due 2021, B3 (LGD5)

....Outlook, Positive

..Issuer: MGOC, Inc.

....Sr Secured 1st Lien Revolving Credit Facility due 2019, Ba3 (LGD3)

....Gtd 1st Lien Sr Secured Term Loan B due 2020, Ba3 (LGD3)

....Outlook, Stable

..Issuer: Media General Financing Sub, Inc (assumed by LIN Television Corporation)

....Global Notes due 2022, B3 (LGD5)

..Issuer: Shield Media LLC

....Sr Secured Term Loan A due 2018, Ba3 (LGD3)

RATINGS RATIONALE

Nexstar plans to raise over $4 billion of debt and will use net proceeds to fund the cash portion of its acquisition of Media General as well as refinance existing Media General debt and pay transaction expenses. Although this transaction will materially increase Nexstar's leverage at closing, Moody's affirmed the company's B1 corporate family rating, and the outlook is stable. At closing expected by year end 2016, Moody's estimates Nexstar's debt-2 yr avg EBITDA will be high at 5.9x (including Moody's standard adjustments) which weakly positions the company in the B1 rating. Debt ratings are forward looking as we expect debt-2 yr avg EBITDA to improve to less than 5.5x within 12 months of closing and annual free cash flow over odd-even years to exceed $450 million, or 9% of debt balances, allowing for continued improvement in credit metrics to better position the company within the B1 rating. Typical of television broadcasters, ratings are pressured by the company's vulnerability to cyclical advertising downturns and increasing media fragmentation. "Looking forward, debt ratings will be supported by the company's significantly increased scale with national reach, including entry into 15 of the 50 largest US markets, and with good diversification across the Big 4 networks. The transaction elevates Nexstar among the top four local broadcasters (including Sinclair Broadcast Group, Inc., TEGNA Inc., Tribune Media Company), each with annual television revenue in excess of $1.5 billion," stated Moody's Carl Salas. Nexstar will reach roughly 39% of US households, up from 18% today. The company will also be in a good position to expand its digital operations and will have an enhanced footprint in Florida, North Carolina, Ohio, and Virginia, political battleground states. We believe the scale of the combined Nexstar and Media General broadcast footprint provides operating efficiencies and better positions the company to compete in an increasingly fragmented environment for advertising and delivery of video content. The company will also be better positioned to negotiate competitive retransmission fees with its cable, satellite and telco distributors to offset expected increases in reverse compensation paid to networks. Post acquisition, we expect Nexstar to generate annual EBITDA of more than $850 million (2-yr avg) with high single-digit percentage free-cash flow-to-debt.

"Nexstar has successfully executed its acquisition growth strategy since 2011 while performing in line with its initial revenue and EBITDA targets,"added Salas. Despite potential challenges related to assimilating Media General stations which will more than double the company's revenue base, Moody's believes management will be successful in realizing most of the $76 million in planned synergies in the first year given Nexstar's success with prior acquisitions and given two-thirds of expected benefits comes from readily achievable elimination of redundant costs and an uplift in retransmission fees. We expect the company will maintain good liquidity leading up to the closing of the acquisition expected by the end of 2016 given significant cash inflows from political ad demand particularly in the second half of 2016.

The stable rating outlook reflects Moody's view that organic growth in core ad sales will be in the flat to low single digit percentage range over the next 12 months with total revenue increasing by 15% or more on a same station basis in FY2016 due to significant political advertising largely in the second half of the year as well as growing retransmission fees. Despite the absence of significant political ad demand in 2017 and restructuring costs related to achieving targeted synergies, we expect leverage and coverage ratios will improve within the first 12 months of transaction closing consistent with management's commitment to apply most of its free cash flow to reduce debt balances. Moody's could consider an upgrade of ratings if operating performance tracks management's plan, including realization of most of its anticipated synergies, resulting in debt prepayment and sustained debt-to-2 yr avg EBITDA below 4.50x with minimum 2-yr avg free cash flow-to-debt in the high single digit percentage range. Liquidity would also need to remain good with comfortable EBITDA cushion to financial covenants, and Moody's would need to be assured that management would maintain operating and financial policies that would be consistent with the higher rating. Nexstar's debt ratings could be downgraded if revenue or EBITDA deteriorate due to economic weakness or underperformance in key markets, or if debt financed transactions including digital acquisitions, leads Moody's to believe that debt-to-2 yr avg EBITDA will be sustained above 5.50x (including Moody's standard adjustments) or 2-yr avg free cash flow-to-debt will remain below 5%.

The principal methodology used in these ratings was Global Broadcast and Advertising Related Industries published in May 2012. Please see the Ratings Methodologies page on www.moodys.com for a copy of this methodology.

Headquartered in Irving, TX, Nexstar Broadcasting, Inc. will be one of the largest U.S. television broadcasters and is expected to own, operate, or provide sales and services to 171 television stations across 100 markets covering 39% of U.S. television households pro forma for the Media General acquisition and planned divestitures. Nexstar is publicly traded and, upon closing of the acquisition, existing Nexstar shareholders will own roughly 66% of the combined company with Media General shareholders owning the remaining 34%. Shares of Nexstar are widely held and current large owners include Neuberger Berman (roughly 9.4%), MSD Partners (8.9%), Vanguard Group (6.6%), and Fidelity Investments (6.4%). Annual revenue pro forma for the transaction exceeds $2.5 billion with more than 80% of revenue generated from Big 4 network affiliates.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Carl Salas
VP - Senior Credit Officer
Corporate Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

John Diaz
MD - Corporate Finance
Corporate Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's affirms Nexstar's B1 corporate family rating, assigns Ba3 to proposed credit facilities; outlook stable
No Related Data.
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