The CW is about to enter a new ownership era, as local TV giant Nexstar Media Group has confirmed a pending deal to acquire a 75% stake in the 16-year-old broadcast operation.
Warner Bros Discovery and Paramount Global will each retain a 12.5% ownership interest in the CW and will continue to produce scripted content for the network. Nexstar had not previously addressed months-long press speculation about the move, but finally confirmed it this morning in an SEC filing and press release.
Mark Pedowitz will continue as chairman and CEO of the CW. The transaction is expected to close in the third quarter. Financial terms have not been disclosed.
Nexstar, the No. 1 owner of local TV stations in the U.S., whose portfolio also includes cable network NewsNation and digital brands like The Hill, is a logical new boss of the CW. It already owns the largest collection of affiliates of the network, giving it a clear incentive to try to make the CW flourish. Longtime parents Paramount and Warner Bros Discovery (each of which has been reshaped themselves through major mergers in recent years) have both been looking to tighten up their balance sheets.
While Nexstar CEO Perry Sook didn’t explicitly confirm the deal earlier this month when the company reported quarterly results, but neither did he dodge the question when one analyst asked about the deal on the company’s earnings call. “Anyone that’s paying attention could discern the industrial logic of being the largest CW affiliate, kind of controlling your destiny there, distribution revenue tied to those stations and also potentially giving you a different point of leverage in negotiations with other networks, if you happen to own one,” he said.
Created in 2006 as a way of consolidating at UPN and the WB, the CW has been a 50-50 venture between the various owners of CBS and Warner Bros since then, generating a string of shows with youth appeal like Vampire Diaries, Arrow, Gossip Girl, Riverdale and All American. Viewership on the linear network, consistent with that on across broadcast TV, tends to be 50 and older, but the network’s free, ad-supported streaming app and social channels draw younger, avid audiences concentrated in the desirable 18-to-34-year-old demographic.
The economy has worsened considerably since the deal first became public at the start of 2022, with skyrocketing inflation and rising interest rates conspiring against a number of business deals. For Nexstar, however, the acquisition brings no upfront costs. Instead, the company has agreed to shoulder the losses at the network, which are projected to be north of $100 million this year.
The strategic plan moving forward is to run the CW as a fully sustainable broadcast network, rather than optimizing it for streaming. Even though the network itself has consistently spilled red ink, the joint venture partners have booked hefty profits by licensing CW shows to Netflix, sometimes agreeing to renew shows whose linear ratings did not appear to justify those re-ups. As they started to plan investments in their own streaming services, HBO Max and Paramount+, the previous parents decided to end the CW output deal with Netflix in 2019.
Sook described the deal as “strategically and operationally compelling” for Nexstar, which has built a local broadcast empire from a single radio station over the past two-plus decades. “It will enable us to leverage our operational experience to improve the network’s performance through our management of this powerful national platform,” he said in the release. “We plan to apply the same strict financial standards to operating the CW as we apply to our other businesses.”
CBS chief George Cheeks saluted the run of the CW to this point. “Together, with our partners at Warner Bros. and the CW, we have created a welcome home for content that has resonated with viewers on the network and on platforms around the world,” he said. “This new ownership structure enables us to partner with Nexstar and Warner Bros Discovery on the next chapter of the CW while re-deploying capital to other content platforms at Paramount.”
Warner Bros Television Group chief Channing Dungey said the CW “has been home to some of the most groundbreaking and generation-defining programming in television” and said the company anticipates “continuing to collaborate on our shared series and future projects to come under Nexstar’s leadership.” She added, “We are forever grateful to our partners at the CW, especially Mark Pedowitz, who has been a great friend to the studio for so many years, and to me personally. We know that the network will continue to thrive under his leadership.”