How Valuable Is The CW in the Streaming Era? | Analysis

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The youth-skewing broadcast network is on the auction block — but is it worth buying?


Given the state of broadcast television in 2022, it’s no surprise that The CW is on the block — with local station giant Nexstar emerging as the front runner to snap up the youth-skewing broadcast network. From the perspective of ViacomCBS and WarnerMedia, which have jointly run The CW since 2006, the move makes a lot of sense.

While The CW has been a reliable source of income for its two parent companies thanks to licensing deals for hits like “Arrow” and “Riverdale,” it has never turned a profit as a standalone entity. Worse, the network has seen its value proposition plunge during the streaming era.

But the two hours of primetime space programmed each night (or six nights a week until just last fall) has given CBS Studios and Warner Bros. TV a distribution mechanism for shows — primarily Warner, which is not tied to another broadcast network the same was CBS Studios is — which the studios have used to sell lucrative streaming and international rights.

That is increasingly not the case anymore.

In 2011, Netflix paid $1 billion to grab streaming rights for The CW’s entire library. That relationship was symbiotic: Low-performing shows on The CW’s airwaves gained a second life on Netflix, which in turn kept audiences returning to The CW for the latest episodes. The network’s high school football drama “All American,” which is getting its own HBCU-themed spinoff, has been a particular beneficiary of this relationship. The drama was on the chopping block during its first season, but landed a renewal after it became available on Netflix and has been among the streaming service’s top shows in the weeks after a new season premieres.

Unfortunately for The CW, its studio parents walked away from the Netflix deal in 2019 and has since migrated their streaming rights towards their respective streaming services, particularly HBO Max in the case of Warner-produced shows. Some series have remained on Netflix due to remnants of that since-expired deal, such as “All American.” At the same time, The CW gained so-called “stacking rights” for its own shows, which has beefed up its own digital footprint. In addition to the broadcast network, The CW makes its shows available on its digital platforms and has bundled digital ad sales with linear over the past few years.

At the same time, revenues from international sales of TV shows have dropped as CBS and Warner Bros. are increasingly keeping those rights for their own in-house streaming services’ global expansions.

As first reported by The Wall Street Journal on Wednesday, Nexstar Media Group is seen as the likely buyer of The CW. The broadcast giant would take a controlling stake in the network, with WarnerMedia and ViacomCBS staying on as minority owners with an agreement to keep them as the network’s primary content suppliers.

For Nexstar, which is already the largest owner of local station groups in the U.S., an acquisition of The CW would be its latest move into a building a national presence. Nexstar owns more than two dozen local CW affiliate stationsthanks to its $4 billion deal with Tribune, which was completed in 2019.

Last year, the company rebranded WGN America (which it also gained from the Tribune deal) into NewsNation, which it had hoped to compete in the cable news space. A deal for The CW would put the company on par with the other major broadcast networks, where the parent company owns some of the network’s affiliates in the biggest markets.

Neither Nexstar or the parent companies have commented on the potential deal, but CW CEO Mark Pedowitz acknowledged the speculation in an internal memo on Thursday. “First, as many of you are aware, over the past year or so, this transformative time in our industry has led to a series of business activity across media and content companies,” Pedowitz wrote in the email, which was obtained by TheWrap. “Given that environment right now, ViacomCBS and Warner Bros. are exploring strategic opportunities to optimize the value of their joint venture in The CW Network.”

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