Nexstar Buys the CW Network
Nexstar bought a controlling interest in the CW network, the broadcaster announced Monday. Other broadcasters have purchased content networks in the past, but the largest U.S. station owner buying a national network just beneath the scope of the big four is a new sign of broadcast groups’ increasing drive to own programming, analysts and industry officials said. The deal is intended to give Nexstar “a seat at the table regarding future changes in the network affiliate ecosystem,” and increased exposure in the national ad market, said Nexstar CEO Perry Sook on a press call about the transaction Monday.
Sign up for a free preview to unlock the rest of this article
Export Compliance Daily combines U.S. export control news, foreign border import regulation and policy developments into a single daily information service that reliably informs its trade professional readers about important current issues affecting their operations.
Nexstar will acquire 75% ownership of CW network, with current owners Warner Brothers Discovery and Paramount Global each retaining a 12.5% interest. The deal doesn’t require regulatory approval and will close in Q3, said Nexstar CFO Lee Ann Gliha, who said Nexstar will take control of the network immediately. Current CW CEO Mark Pedowitz will continue in that post after the transaction is complete, said the Nexstar release. Nexstar is the biggest owner of CW affiliates, Sook said.
“The whole point is content,” said BIA analyst Nicole Ovadia in an interview. In earnings calls earlier this month, Sook and other broadcast CEOs said networks such as CBS reserving their most popular content for their own streaming services was a growing issue that affected affiliation negotiations and reverse retrans fees. Owning its own national network likely gives Nexstar more leverage in such negotiations, Ovadia said. Sook also said Monday the deal would establish Nexstar in the world of ad-supported streaming video.
Broadcasters buying programmers on this scale isn’t quite “unprecedented” but is noteworthy, said Patrick Communications broadcast broker Gregory Guy. E.W. Scripps’ buy of Ion involved stations changing hands, and other broadcaster-owned networks are much smaller than the CW, he said. It’s also unlikely to be mimicked by other broadcasters -- there isn’t a network of comparable scale likely to be for sale anytime soon, Guy said. He said the deal doesn’t really indicate much about the currently slow deal market for broadcast stations: since Nexstar is up against the national ownership cap, buying content is one of the areas in which the company can grow under current regulations. Industry officials said they don't expect the deal to immediately affect non-Nexstar CW affiliates, but it could eventually have ramifications on affiliate negotiations for smaller groups in markets where Nexstar has a station that isn't a CW affiliate. For the most part, Nexstar is incentivized to give the CW the broadest reach possible, Ovadia said.
Nexstar executives indicated plans to cut costs at the CW and make its programming more profitable. Nexstar COO Tom Carter said the CW is the lowest-rated broadcast network and has been focused on scripted programming targeting the 18-34 demographic, when the average viewer of the CW is 58 years old. “We will strive to grow the broadcast audience without a dual agenda of greenlighting programming capable of crossing over” to streaming services, he said. The CW under Nexstar will feature more unscripted and syndicated content, intended to appeal to a broadcast audience, Carter said. Warner and Paramount will still provide content for the network into 2023, and Nexstar has the option to extend that agreement, Sook said.