As the pay TV universe shrinks, Nexstar Media Group Inc. is eyeing major revenue opportunities tied to the adoption of new broadcast technology.

Chairman and CEO Perry Sook told investors at a March 14 conference that by the end of the decade, the Advance Television Systems Committee 3.0 standard, also known as Next Gen TV, may yield "spectrum monetization that could rival distribution revenue today." In 2021, Nexstar registered distribution revenue of $2.47 billion, up 14.9% year over year.

Distributors pay retransmission-consent fees to stations to transmit their broadcast signals. While rising rates have kept distribution revenues from retransmission growing, cord-cutting has put pressure on the revenue stream.

Roughly $2.5 billion would mark quite a step-up from $80 million in current revenue contributions tied to running multicast networks, including Nexstar's Rewind and Antenna TV, or leasing spectrum.

The nation's largest operator of TV stations launched Next Gen TV in a dozen markets in 2020 and 17 in 2021. It plans to add 20 more in 2022 and reach 50% of U.S. markets by year-end.

At the moment, Sook said overall revenue projections are speculative. But, Sook is confident that Next Gen TV will be a significant contributor for Nexstar and across the industry.

"It's like the oil's in the ground. We haven't figured out how to drill to it and monetize it," said Sook. "But I'm spending a lot of my time on this because I think it is the single largest value lever that we can pull over the next 10 years to focus on monetizing our excess spectrum."

Now, Sook said, Nexstar can perhaps "build five houses on its spectrum real estate," with that number trebling upon conversion to ATSC 3.0. "I don't know what kind of development I want to build there, but I just have more capability."

Sook highlighted opportunities with the automotive realm. The executive noted that the company has been involved with a test in Michigan, working with The E.W. Scripps Co. station in Detroit and Nexstar's stations in East Lansing, among other parties.

Sook said the goal is to determine whether the standard could hold a video signal continuously in driving across those locales, "much like the early days of cellphones."

There are also auto category possibilities around entertainment, navigation and data transmission. GPS and navigation aids can be sent to within a meter of a vehicle, Sook said.

"There's a lot of interest in automotive."

Sook said Nexstar believes that there are two dozen base Next Gen TV uses, including conditional access and distance learning. Nexstar's investor deck also lists telemedicine and digital signage among the long-term datacasting applications.

Overall, Sook said investors should think about Nexstar's Next Gen TV capabilities as "a wireless connector of the internet of things." Despite the capability to vastly bolster diginet additions, that will not be the primary use of this spectrum. "I think the data transmission opportunities are substantial and varied," the CEO said.