In Streaming Period, CW Community’s Worth to Its House owners Has Diminished

Now, each

AT&T Inc.’s

T 3.27%

WarnerMedia and ViacomCBS have their very own content-hungry streaming platforms—HBO Max and Paramount+, respectively—making CW much less of a precedence for both firm, the individuals stated.

The Wall Avenue Journal reported Wednesday that CW’s joint homeowners are exploring a attainable sale of a big stake or all the community.

In a memo to workers Thursday, CW Chief Govt Officer Mark Pedowitz acknowledged the discussions happening on the CW’s guardian firms and cited a transformative interval within the media panorama.

“On condition that setting proper now, ViacomCBS and Warner Bros. are exploring strategic alternatives to optimize the worth of their three way partnership in The CW Community,” Mr. Pedowitz stated within the memo.

The most probably purchaser is

Nexstar Media Group Inc.,

the Journal reported Wednesday. Nexstar, the nation’s largest proprietor of TV stations, is the largest affiliate of the CW.

What type a deal might take remains to be being decided. Essentially the most-discussed situation has Nexstar taking a big stake within the CW, maybe even turning into majority proprietor, the individuals near the talks stated. WarnerMedia and ViacomCBS would seemingly additionally obtain commitments to supply programming.

Individuals near the talks cautioned no agreements have been reached and a deal isn’t a certainty.

Earnings on the CW have been elusive, regardless of the community being dwelling to many profitable tv exhibits interesting to hard-to-reach youthful viewers over its 15-year existence—together with “One Tree Hill” and “Jane The Virgin” and more moderen cult hits “The Flash” and “Riverdale.”

Individuals with information of its operations say the CW has been shedding greater than $100 million yearly in recent times. Based on monetary info despatched to would-be suitors, the CW had $272 million in income in 2020, which was down from $366 million in 2019, largely due to the pandemic limiting the quantity of recent content material accessible on the community. That determine doesn’t embrace $129 million of income in 2020 from its minimize of charges Netflix pays to stream CW exhibits after they’ve aired on the community.

With ViacomCBS and WarnerMedia now giving precedence to their very own streaming providers, the take care of Netflix wasn’t renewed in 2019. Warner Bros.-produced content material will land on HBO Max going ahead.

WarnerMedia guardian AT&T can be within the means of merging WarnerMedia with

Discovery Inc.

and creating a brand new stand-alone firm dubbed Warner Bros. Discovery.

Prematurely of that deal closing, AT&T has been scrutinizing WarnerMedia belongings and unloading these whose long-term prospects aren’t vibrant or don’t match strategically. AT&T bought the gossip and information platform TMZ to

Fox Corp.

final September.

ViacomCBS has additionally seemed to exit some companies to deal with streaming. It agreed to promote CNET Media Group to Crimson Ventures LLC, and is trying to promote its publishing unit Simon & Schuster to Penguin Random Home, a deal that the Justice Division has sued to dam. The corporate has additionally just lately bought or entered into agreements to promote a few of its actual property holdings.

For Nexstar, shifting deeper into the content material enterprise is a part of its long-term technique.

“I believe you’ll see us do extra content material acquisitions and fewer technical acquisitions or the precise plumbing,” stated

Thomas Carter,

Nexstar’s president and chief working officer, throughout the firm’s third-quarter earnings name with traders in November.

If a deal goes via, Nexstar could attempt to create a broader programming slate for the CW, an individual acquainted with the broadcaster’s considering stated. The community’s young-skewing exhibits aren’t a match with the older audiences that watch native TV.

“Nexstar will actually need to determine methods to develop and personal extra content material that caters to its native markets to construct viewers loyalty,” stated Jason Anderson, CEO of Quire, a boutique funding financial institution.

The CW averaged about 730,000 viewers in prime time within the fourth quarter of 2021, about flat with the identical interval in 2020, in keeping with Nielsen. It made slight features within the 18-49 demographic.

Regardless of shoppers’ shift away from watching conventional TV in favor of streaming providers, native broadcast TV continues to generate wholesome earnings, partially due to the profitable retransmission charges acquired for being carried in cable packages. Native TV stations additionally obtain vital political promoting {dollars} throughout huge election years.

Nexstar has already gotten into the TV information enterprise with its transformation and rebranding of cable channel WGN America, beforehand recognized for airing reruns like “Final Man Standing,” into the NewsNation community. Since launching in 2020, NewsNation programming has gone from solely airing throughout prime time to 13 hours a day within the morning and night, with aspirations of turning into a round the clock cable information community.

Whereas NewsNation usually averages lower than 50,000 prime-time viewers, Nexstar CEO

Perry Sook

stated within the November earnings name with traders that the community is “seeing new ranking highs each week,” and that it’s worthwhile.

Final summer time, Nexstar paid $130 million for The Hill, a political-news group recognized for its inside-the-Beltway protection. Mr. Sook stated on the November name the corporate intends to develop its viewers “by scaling The Hill’s content material on Information Nation and throughout our native stations.”

Wells Fargo analyst

Steven Cahall

in a Thursday notice referred to as a possible Nexstar acquisition of the CW a logical use of capital for the corporate because it seems to be to broaden its portfolio and steadily transfer away from its dependence on so-called retransmission charges.

Write to Joe Flint at joe.flint@wsj.com and Lillian Rizzo at Lillian.Rizzo@wsj.com