How Nexstar Can Buy The CW Without Any Cast

The largest owner of a TV station in the US wants Warner Bros. Release Discovery and Paramount from their joint venture.

It feels like Nexstar has been flirting with buying The CW longer than some of the broadcast network’s viewers have been alive. The acquisition, which two people told IndieWire is likely to close next week after the July 4 holiday, will cost Nexstar $0 for 75 percent of The CW.

Quite a nice deal, right? Things get a little sour when we factor in The CW’s current losses, whose sources speaking to The Wall Street Journal, the publication that first reported details on this round of negotiations, could exceed $100 million. But that’s the burden Nexstar would take on, and the relief for the respective balance sheets of current CW parents Warner Bros. Discovery and Paramount Global.

Spokespersons for Warner Bros. Discovery and Paramount Global did not immediately respond to IndieWire’s request for comment on this story. A Nexstar spokesperson declined to comment.

Our readers are certainly familiar with The CW, although the channel may have been called The WB or UPN when they last watched it. The CW is a free over-the-air youth network, a joint venture originally founded by CBS and Warner Bros. The entities that house the father and mother of The CW, now called Warner Bros. Discovery and Paramount Global), would retain each individual 12.5 percent stake under the current terms of the ongoing discussions.

The CW as a company had two entities that moved in very different directions. As a broadcast network, it is losing money. As a content feeder for Netflix and other global platforms, The CW is profitable.

If you don’t know Nexstar Media Group, you probably should. The publicly traded company (market capitalization: $6.69 billion) is the largest owner of local television stations in the US. Perhaps unsurprisingly, Nexstar owns the most CW affiliates.

After the deal closes, CBS and WBD’s Warner Bros. studio Paramount plan to continue creating content for The CW. But not only will The CW have a new majority shareholder, it will also have a new approach — one designed to attract an older audience, as Nexstar’s local broadcasters do. Anyway, the CW had already started that way with rebooted efforts like “Walker” and “Dynasty”.

“Dynasty” – The CW

the CW

Paramount and Warner Bros. Discovery is holding “several hundreds of millions of dollars” in long-tail licensing revenue from pre-existing deals, WSJ wrote, most notably from The CW’s lucrative deal with Netflix. A source told IndieWire that the nine-digit margin was correct.

How important has the Netflix pact been? Not only did it bring in huge amounts of money for the joint venture, the bingeing of low-rated CW shows on Netflix single-handedly kept series going for additional seasons on the broadcast network.

“All American” is an excellent example. From May 30 to June 5, 2022, the 20-episode fourth season of the high school football drama, based on the true story of former NFL player Spencer Paysinger, had 30.64 million hours of Netflix viewing. That number counted only six days of availability and was good enough to finish sixth on Netflix that week. The following week, the season came in ninth place on Netflix with 26.69 million hours streamed. Both weeks, individually, totaled more hours of viewing than season 4 during its original run on linear television.

According to Nielsen, season 4 episodes of “All American” averaged 1,062 million viewers per week during its original run on The CW; that includes one week (usually) of DVR viewing per episode.

Season 3 of “All American” spent five weeks in the Netflix Top 10 and was at number two. Netflix did not release the viewership statistics for season 1 or 2 in time. While Netflix’s in-house statistic versus Nielsen’s doesn’t provide a perfect apples-to-apples comparison, it’s clear where the majority of the “All American” audience sees the show. And frankly, without the catch-up opportunity through Netflix, “All American” would probably have been a one-off broadcast that very few people have ever experienced.

CW shows launched in recent years won’t see the same Netflix bump — or at least not from Netflix specifically. In 2019, The CW terminated its licensing deal with Netflix; new (ish) shows go to Warner Bros. instead.” HBO Max or Paramount Global’s Paramount+. Fortunately, in 2022, there are many ways to monetize streaming content.

Soon we might be talking the same way about Nexstar originals. Nexstar has started creating content, most notably with the launch of the NewsNation cable channel in 2020. Wells Fargo media analysts see “final value,” a term used to indicate value beyond the period for which future cash flows can be accurately determined. estimated there.

“We think [Nexstar] is looking for balance [free cash flow]/shareholder returns with a focus on creating content that is perceived to have terminal value,” they wrote in a note on the pending acquisition on Thursday.

There will be fireworks next week.

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