Nexstar Acquiring Majority Stake in The CW in Cashless Deal

After more than six months of negotiations, Nexstar Media Group has struck a deal with Paramount Global and Warner Bros. Discovery to acquire a 75 percent stake in The CW Network. Paramount and WBD will each continue to hold a 12.5 percent stake in The CW and will continue to provide scripted programming for it through the 2022-23 season after the deal closes, which Nexstar expects to happen in Q3. Financial terms were not disclosed, though Variety reports Nexstar is not paying cash, but rather assuming “a large chunk” of The CW’s “more than $100 million” in debt.

Nexstar CFO Lee Ann Gliha said The CW’s financial straits are unusual in that “no other broadcast network operates at an ongoing loss,” Variety writes, quoting Gliha as saying Nexstar’s plans are “to bring The CW to profitability by 2025, and we expect to invest a low 9-figure amount over this three-year period as we implement our plan.”

Gliha said Nexstar views that investment “as a proxy for a purchase price — or an investment made over time — rather than an ongoing drag on cash flow.”

Nexstar president and COO Tom Carter said that while The CW will rely on Paramount and WBD scripted original series for near term, beyond 2022-23 “Nexstar ‘will have the option to extend the partnership,’ but nothing on that score is guaranteed,” Deadline reports, noting the announcement was light on specifics, but Carter did signal “clearly that the focus will be on retooling The CW, specifically its previous cost structure.”

The CW, Deadline writes, “discontinued its longtime output deal with Netflix in 2019 as both parent companies stepped up their respective investments in new SVOD offerings.”

Carter said that under Nexstar The CW’s approach “will be unlike other broadcast network owners” in that “the company would develop its programming ‘without a dual agenda of greenlighting programming with potential to cross over to SVOD,’” Deadline writes.

The demographic focus is expected to evolve, according to Carter. Historically, original series on The CW have targeted viewers in their teens through 30s, though, but the average CW viewer is actually around 58 years old.

Lower unscripted costs and heavier reliance on syndicated shows are part of Nexstar’s turnaround plan. The CW has in recently years programmed 13 hours in prime time, six nights a week.

“Warner Bros. Discovery (formed through the recent merger of WarnerMedia with Discovery) and Paramount (rebranded from ViacomCBS earlier this year) have co-owned the network since early 2006, when The WB and UPN were merged after nearly a dozen years on the air into a single entity, so named for the “C” in CBS and “W” in Warner Bros,” Variety explains.

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