Local TV Giant Nexstar Seals Deal to Buy 75 Percent Stake in The CW, Reshaping Broadcast Landscape

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The CW is getting new ownership.

The broadcast network, currently run as a joint venture between Warner Bros. Discovery’s Warner Bros. TV and Paramount Global’s CBS Studios, is selling a 75 percent stake to the local broadcast giant Nexstar. Paramount and Warner Bros. Discovery will each retain a 12.5 percent stake in the venture.

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The CW will also continue to order programming from the two entertainment giants, though Nexstar is likely to look elsewhere for originals as well.

During a call to discuss the deal, Nexstar executives said their plan is to bring The CW to profitability by 2025. Nexstar CEO Perry Sook touted the buy as a way to diversify his company’s content portfolio and strengthen its appeal to advertisers by increasing its exposure to the national ad market. “So, over time, we will be taking a different approach to our CW programming strategy and will leverage our experience in spending approximately $2 billion a year on programming, attracting and monetizing viewers, and transitioning NewsNation, our national cable news network, from WGN, while maintaining a strict focus on cash flow,” Nexstar COO Tom Carter said on the call.

News that The CW was on the block first leaked in January, with Nexstar cited as a likely suitor at the time. Other firms, most notably some major private equity players, have also kicked the tires on the broadcaster.

The CW chairman and CEO Mark Pedowitz confirmed that the younger-skewing broadcast network was for sale earlier this year, telling staff: “So, what does this mean for us right now? It means we must continue to do what we do best, make The CW as successful and vibrant as we have always done.”

Nexstar owns some 199 local stations in dozens of local markets, as well as the cable news channel NewsNation, and D.C. digital publication The Hill, among other properties.

Pedowitz will continue to serve as The CW’s chairman and CEO, with responsibility for day-to-day operations. The transaction is expected to close in the third quarter.

”Nexstar, together with its partner stations, is the nation’s largest local television broadcasting company and the largest CW affiliate group with 37 CW and CW Plus affiliates, including affiliates in five of the top 10 DMAs, accounting for 32 percent of the Network’s national reach,” the company said Monday. “The proposed transaction is expected to create value for Nexstar shareholders by solidifying the company’s revenue opportunities as the largest CW affiliate, diversifying its content outside of news, increasing its exposure to the national advertising market, establishing it as a participant in advertising video-on-demand services and improving The CW ratings, revenue and profitability, by prioritizing programing for the network’s broadcast audience.”

Nexstar CEO Sook said: “Our acquisition of The CW is strategically and operationally compelling, as it will enable us to leverage our operational experience to improve the network’s performance through our management of this powerful national platform. We plan to apply the same strict financial standards to operating The CW as we apply to our other businesses.”

George Cheeks, president and CEO of Paramount’s CBS, added: “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.”

And Channing Dungey, chairman, Warner Bros. Television Group, said: “For 16 seasons, The CW has been home to some of the most groundbreaking and generation-defining programming in television, from the iconic DC super heroes of Greg Berlanti’s Arrowverse series to The Vampire Diaries, and everything in between, including the All American franchise, the original Gossip Girl, Kung Fu, Nikita, Riverdale, Smallville, and many many more. The network was also the home of Supernatural, the longest-running live-action fantasy series in U.S. TV history, for 14 of its 15 seasons. We’re excited that the Supernatural story will continue with The Winchesters premiering this fall. We look forward to continuing to collaborate on our shared series and future projects to come under Nexstar’s leadership.”

The CW is unique among the national broadcast networks, with a strategy that has consisted of more narrowly focused target demographics (adults 18-34), and fewer hours of original programming than competitors NBC, ABC and CBS, though the network expanded in the past few years to seven nights a week. The network has never been profitable since its formation in 2006 when Warner Bros. TV and CBS Studios merged the former UPN and The WB Network. However, the parent companies have greatly benefitted from The CW, which has become a reliable and consistent buyer of their programming.

The network has consisted exclusively of scripted originals produced by both Warners and CBS Studios, supplemented by a few unscripted shows and low-cost Canadian series acquired to help flesh out its slate as Pedowitz evolved The CW into year-round originals. While the network itself hasn’t turned a profit — it wasn’t designed to do so — both studios made money hand over fist thanks in part to a $1 billion Netflix output deal as well as international sales for well-known titles like Dynasty.

While that model proved extremely fruitful, the network’s parent companies opted against extending the Netflix deal in order to bolster their respective streamers, HBO Max and Paramount+, with programming instead of seeing all of their future CW originals land on Netflix. What’s more, the need for all streamers to retain global programming rights as platforms expand into foreign markets meant an end to those lucrative international sales.

Without revenue streams from Netflix and foreign sales, The CW’s business model no longer proved beneficial and Warners and CBS Studios began exploring sale options.

The pending sale also meant that The CW, for the first time in the past few years, would be trimming its scripted ranks rather than renewing its entire slate. The network’s cancellations started in late April with the ax falling on Greg Berlanti DC Comics dramas Batwoman and Legends of Tomorrow; veteran series Charmed, Dynasty, Legacies (the last trace of The CW’s former defining series The Vampire Diaries), Roswell, New Mexico and In the Dark, along with first-year shows The 4400, Naomi and, more recently, Nancy Drew spinoff Tom Swift. The cancellation spree marked the first time in a decade that The CW axed more than half of its roster of U.S. originals.

Sources say The CW’s digital assets — including CW Seed, the CW app and CWTV.com — were of particular interest to Nexstar as the company looks to grow digital and ad revenue. Ironically, Pedowitz’s digital push is said to have “pissed off” those same affiliates who now want to cash in on his success.

It is not immediately clear what Nexstar’s programming strategy will be for The CW, though sources speculated to THR earlier this year that NewsNation-branded programming would likely join the lineup. Other sources expect Nexstar to open up the network to buying from outside studios while still working with the Channing Dungey-led Warners and David Stapf-fronted CBS Studios on a certain percentage of scripted originals that are expected to decrease over time. Both studios could fully divest the network over time, sources say.

With the deal just announced and regulatory approvals likely months away, The CW will need to operate with a business-as-usual attitude for the time being. Pedowitz has renewed All American, The Flash, Kung Fu, Nancy Drew, Riverdale, Superman & Lois and Walker for next season.

Pedowitz also ordered a handful of new series for the 2022-23 broadcast season. All three new shows are based on existing intellectual property: DC’s Gotham Knights, Supernatural prequel The Winchesters and Walker spinoff Independence. To help offset the cancellations, The CW has bulked up on low-cost foreign acquisitions with shows like Family Law helping to fill its schedule.

With the upfront complete, there likely won’t be many programming changes for Nexstar to make immediately. A source familiar with the business says the upfront wrapped in mid-June, with CPM increases in the high single digits and low double digits.

Ahead of its expected sale, The CW recently pulled out of its planned time before the press corps during the summer portion of the Television Critics Association’s semi-annual tour where Pedowitz had been a staple.

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