The CW Majority Stake Sale Explored By WarnerMedia & ViacomCBS; Nexstar Among Suitors

The CW may get a new majority owner. Fifteen years after the broadcast network’s launch, its co-parents, ViacomCBS and WarnerMedia, are considering a controlling stake sale, sources confirm to Deadline. Nexstar Media Group, which is the CW’s largest affiliate group following its acquisition of Tribune, is believed to be among interested buyers. Sources caution that conversations with multiple suitors are in exploratory stages and no deal is imminent.

The potential sale, first reported by the WSJ, comes amid an ownership change for WarnerMedia, which is being acquired by Discovery, pending regulatory approval. None of the architects of the CW, which replaced the WB and UPN in 2006, are still around, most notably former CBS CEO Les Moonves, who was the driving force behind it. Since the CW’s creation, CBS merged with Viacom while WarnerMedia was acquired by AT&T which is now selling it to Discovery.

The CW, which caters to young adults, has defied expectations getting to 15 years when many had predicted that it would fold or move to cable/digital early in its run. The network’s business model has worked because of its unique setup, being co-owned by two major studios that supply all of its scripted programming. While the CW has never been profitable as a standalone entity, it has created value for its studio parents, providing U.S. broadcast distribution for shows that they can then exploit internationally and on streaming. Among valuable assets the CW has helped create for its studio partners include the Arrowverse, Riverdale, All American and Gossip Girl (Warner Bros.) and Walker, Dynasty and Jane the Virgin (CBS Studios)

That is hard to replicate, which is why I hear the most likely scenario would be for WarnerMedia and ViacomCBS to sell a majority stake in the CW while retaining minority ownership and remaining suppliers. The current CW model makes it unfeasible for outside studios to produce shows for the network; it would be interesting to see if a new majority owner would change the terms so other studios can supply the network alongside Warner Bros. TV and CBS Studios.

The CW received a major shot in the arm in 2011 when Netflix paid $1 billion for the streaming rights of the network’s entire lineup. A number of CW shows remain on Netflix, brining in fees, but in 2019 WarnerMedia and CBS Studios opted to end the agreement and instead steer the series they produce for the CW to their own streamers. (In the early going, all CW shows were steered to WarnerMedia’s HBO Max, which emerged as the streaming destination for the CW content.)

The end of the Netflix deal gave the CW in-season stacking rights to their shows, which has been key to the network growing its digital footprint. An early adopter of streaming, the CW has a formidable digital operation and outsized social media reach, which could be attractive to buyers, which could potentially include streamers, I hear.

A Nexstar deal would bring the CW in line with the other broadcast networks, following the traditional model of a network controlling its main affiliate stations. It would eliminate the stress over the network’s future every time the contracts with the major CW affiliate groups are up for renewal.

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