In the latest shake-up made as part of CEO David Zaslav’s attempt to wright the company’s production ship, Warner Bros. Discovery and their partner Paramount Global have reached an agreement to sell a majority stake in their co-owned network The CW to Nexstar Media Group, who will seek to turn it profitable after years of it “operating at an ongoing loss.”
As announced on August 15th, Nexstar Media Group has entered a deal to purchase a 75% stake in the Arrowverse home from its current owners, both of whom will retain a 12.5% interest in the network and continue to produce scripted content for its airwaves through 2023, at which time the three entities will discuss the possibility of extending the terms of their agreement.
Further, current The CW chairman and CEO Mark Pedowitz will continue on in his role under Nexstar once the deal finalizes sometime in the third quarter of 2022.
The largest owner of local television stations in the United States – 197 in total – Nexstar Media Group also serves as a partial owner (31%) of fellow television broadcast networks the Food Network and the Cooking Channel, as well as the parent company of political news outlet The Hill.
During a recent conference call regarding the company’s newly-announced purchase, Nexstar Media Group CFO Lee Ann Gliha informed the various Wall Street analysts who were in attendance that their goal for The CW was to have it turn a profit by 2025.
“It’s no secret that the CW is not profitable, but this is not typical for fully-distributed broadcast or cable networks,” said the executive. “In fact, according to SNL Kagan data, no other broadcast network operates at an ongoing loss.”
To this end, Gilha explained that Nexstar currently “expect to invest a low 9-figure amount over this 3-year period as we implement our plan.”
“We view this amount as a proxy for a purchase price – or an investment made over time — rather than an ongoing drag on cash flow,” she said. “You know us. We are profit and cash flow focused and expect this asset to achieve profitability.”
Following his colleague, Nexstar President and COO Tom Carter further emphasized that “our approach will be unlike other broadcast network owners.”
Specifically, he noted, The CW would no longer develop projects “without a dual agenda of greenlighting programming with potential to cross over to SVOD.”
As part of this content restructuring, Carter noted that they would slowly change the network’s focus from young-adult oriented dramas with a focus on contemporary sociopolitical identity discussions such as Naomi, Tom Swift, and In The Dark, to programs that would appeal to the The CW’s actual main demographic – which they recently discovered is not the young Twitter users they were hoping to pander to, but rather a significantly older audience with an average age of 58.
Ultimately, Carter summarized Nexstar’s strategy as, “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.”
As of writing, the final purchase price for Nexstar’s 75% stake in The CW has not yet been publicly disclosed.
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