Nexstar has flirted with the purchase of The CW for longer than some of its broadcast networks viewers have been alive. The acquisition, which IndieWire said was likely to close next week after the Fourth of July holiday, will cost Nexstar all of $0 for 75 percent of The CW.
What a fantastic deal, right? When considering The CWs current losses, sources who spoke with The Wall Street Journal, the publication that first reported details on this round of negotiations, suggested they could reach $100 million. However, Nexstar''s challenges, as well as the relief for the current CW parents, Warner Bros. Discovery and Paramount Global.
Spokespeople for Warner Bros. Discovery and Paramount Global did not respond to IndieWires'' request for comment on this story. Nexstar''s spokesperson has declined to comment.
The CW is a youth-skewing free over-the-air network founded by CBS and Warner Bros. The companies that own The CW''s mom and dad, now known as Warner Bros. Discovery and Paramount Global, would retain individual 12.5 percent stakes apiece under the current terms of the discussions.
The CW as a business had two entities going in very different directions. As a broadcast network, it was 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''ll probably want it. The publicly-traded corporation (market cap: $6.69 billion) is the largest owner of local television stations in the United States. Perhaps unsurprisingly, Nexstar is the largest owner of the CW affiliates.
Paramounts CBS and WBDs Warner Bros. have planned to continue creating content for The CW. However, the CW will not only have a new majority owner, but also have a fresh approach that will attract younger audiences, like Nexstars local stations. Since the agreement was close, the CW had already begun doing so with rebooted efforts such as Walker and Dynasty.
The CWs lucrative agreement with Netflix requires Paramount and Warner Bros. Discovery to keep several hundred million dollars in long-tail licensing profits, according to the WSJ. According to IndieWire, the nine-figure ballpark was exact.
How vital has the Netflix agreement been? Not only did it raise money for the joint venture, but the bingeing of low-rated CW episodes on Netflix single-handedly kept series going for additional seasons on the broadcast network.
The 20-episode fourth season of the high school football drama, based on the real life story of former NFL player Spencer Paysinger, hit Netflix. That tally, set it in ninth place, with 26.69 million hours in length. Both weeks, individually, tallied more viewing hours than Season 4 racked up during its original run on linear television.
According to Nielsen, all American Season 4 episodes recorded a total of 1.562 million viewers per week during their initial episodes; this includes a one-week DVR-viewing per episode.
Season 3 of All American was on Netflix''s Top 10 for five weeks, ranked as high as number two. Netflix did not provide viewership statistics in time for Seasons 1 or 2. While the in-house metric vs. Nielsens does not provide a perfect apples-to-apples comparison, it is clear where the majority of all American viewers consumes the program. And frankly, all American might have been a one-and-done broadcast show that very few people ever experienced.
CW shows that have begun in recent years wont see the same Netflix bump or at least, not from Netflix specifically. In 2019, The CW concluded its licensing agreement with Netflix; new (-ish) shows are targeting Paramount Globals instead of Warner Bros. HBO Max. There are a lot of opportunities to monetize streaming content in 2022.
Nexstar is transitioning into content creation, notably with the introduction of the NewsNation cable channel in 2020. There are also observers for terminal value, which is used to describe the value beyond the period for which future cash flows can be accurately estimated.
They wrote in a note on Thursday that [Nexstar] is looking to balance [free cash flow] and shareholder returns with a focus on content creation, which was perceived to have terminal value.
Fireworks will be rolled out next week.