Owner of local TV stations is looking to broaden CW’s programming to cater to older audience
Nexstar Media Group Inc., the nation’s biggest owner of local television stations, is close to a deal to acquire majority control of the CW Network from co-owners Warner Bros. Discovery Inc. and Paramount Global, according to people familiar with the matter.
Under the terms being discussed, Nexstar would acquire 75% of the CW, a broadcast network aimed primarily at teens and young adults, with Paramount and Warner Bros. Discovery each retaining 12.5% stakes, the people said.
Nexstar isn’t expected to pay cash for the CW but instead would assume at least a significant portion of the network’s current losses, which could exceed $100 million, some of the people said. The talks could still fall apart, but the people familiar with the matter say an agreement could be finalized in the coming weeks.
CBS—the broadcast network of Paramount—and Warner Bros. are expected to continue to create content for the CW going forward, but Nexstar is also planning to acquire shows from other producers as well, the people said. In addition, Paramount and Warner Bros. Discovery are expected to retain several hundred million dollars in content-licensing revenue from pre-existing deals, including a significant pact with Netflix Inc., some of the people said.
Nexstar already is the largest owner of CW affiliates. By taking over control of its operations, the broadcaster is continuing a strategy to invest further in creating and owning content. Over the past few years, it has launched the NewsNation cable channel and acquired the political news outlet The Hill.
One of the motivations for Nexstar is to pivot the programming on the CW to something closer to the older audience of its local stations, a person familiar with the broadcaster’s thinking said. The CW already has taken some steps in that regard by veering slightly away from teen-angst dramas such as “Riverdale” and adding shows such as “Walker,” about a Texas lawman, and “The Professionals,” a new action hour about a private security firm premiering this season.
The CW was born out of the 2006 merger of Warner Bros.’ WB and CBS’s UPN networks, both which had been struggling. The rationale behind the merger was that it would provide a platform for the companies’ production arms to place content at a time when selling to other networks was becoming more difficult as a result of industry consolidation.
Although the CW itself rarely made a profit, it was very successful for its parent companies, thanks primarily to the Netflix licensing agreement. While the audience for the CW was often small compared with other broadcast and cable networks, its shows such as “Riverdale” and “Arrow” developed big followings on Netflix. On Wednesday, two CW dramas—“Legacies” and “All American”—were ranked in the U.S. top 10 of most-popular shows on the streaming service.
The license fees from Netflix made the CW profitable for its partners. At the same time, it also sometimes created differing priorities between the partners on one hand and the CW Network and its local station affiliates on the other, people close to the network said. Shows whose ratings had declined, such as “Dynasty” and “Charmed,” were renewed for years because Netflix would continue to pay for global distribution rights despite their weak performance on the network.
In 2019, the CW’s parent companies decided to end the Netflix agreement because both wanted CW content for their own streaming services—Paramount+ and HBO Max, respectively. That meant shows created after the agreement expired wouldn’t go to Netflix but shows currently available on Netflix would remain for several more years.
While the decision was motivated by a desire to bolster their own platforms, it also meant increased costs to license the content on top of the loss of fees from Netflix.
That, combined with a shift in priorities at both Paramount Global and Warner Bros. Discovery, meant that the CW became something of an afterthought. Paramount Global is focused on its own streaming service as well as rebuilding its Paramount movie studio, while Warner Bros. Discovery, which is under new ownership, is looking to cut costs and determine which businesses aren’t a priority.
Immediate on-air changes aren’t expected at the CW, the people familiar with the matter said. In May, the network announced its lineup of new shows for the upcoming 2022-23 season, and that isn’t expected to change in the event of the sale. The CW also just completed selling ad inventory for its new lineup, which would also make any immediate changes challenging.
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