The CW Majority Stake Sale Explored By WarnerMedia & ViacomCBS – Deadline

UPDATED with comments from Mark Pedowitz, 7:50 AM: The CW could get a new majority owner. Fifteen years after the broadcast network’s launch, his co-parents, ViacomCBS and WarnerMedia’s Warner Bros., are considering a controlling stake sale, sources confirmed to Deadline. Nexstar Media Group, which is CW’s largest affiliate group after the Tribune acquisition, is believed to be among interested buyers. Sources warn that conversations with multiple suitors are in exploratory stages and that no deal is imminent.

The potential sale, first reported by the WSJ, comes amid a change in ownership of WarnerMedia, which is being acquired by Discovery, pending regulatory approval. None of the CW architects, who replaced WB and UPN in 2006, are still around, most notably former CBS CEO Les Moonves, who was the driving force behind this. Since the creation of the CW, CBS merged with Viacom, while WarnerMedia was acquired by AT&T, which now sells it to Discovery.

Hours after news of the possible sale broke Wednesday night, CW President and CEO Mark Pedowitz addressed “recent media speculation about The CW” Thursday morning in an internal memo. to the staff.

“As many of you know, over the past year, this time of transformation in our industry has led to a number of business activities at content and media companies,” he wrote. “Given that environment at this time, ViacomCBS and Warner Bros. are exploring strategic opportunities to optimize the value of their joint venture on The CW Network.”

He stressed that “it is too early to speculate on what could happen.” (You can read the full note below the story).

The CW, which serves young adults, has defied expectations by reaching age 15 when many had predicted it would retire or switch to cable / digital early in its run. The network’s business model has worked due to its unique setup, being co-owned by two major studios that supply all of its scripted programming. While CW has never been profitable as an independent entity, it has created value for its parent studios, providing broadcast distribution in the US for shows that they can then exploit internationally and on broadcast. Valuable assets the CW has helped create for its studio partners include the Arrowverse series, Riverdale, all american Y Gossip Girl (Warner Bros.) and Walker, dynasty Y Jane the virgin (CBS Studios)

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

For the past decade, the CW has been run by Pedowitz, who took the then-female biased network and broadened its appeal and balanced its audience with shows like DC dramas and Riverdale while forging a digital path for the brand.

The CW took a big hit to the arm in 2011 when Netflix paid $ 1 billion for streaming rights to the entire network line. Several CW shows remain on Netflix, generating fees, but in 2019 WarnerMedia and CBS Studios chose to terminate the deal and instead directed the series they produce for the CW to their own streamers. (Initially, all CW shows were directed to WarnerMedia’s HBO Max, which emerged as the streaming destination for CW content.)

The end of the Netflix deal gave CW season-long accrual rights to its 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 huge reach on social media, which could be attractive to buyers, which could include streamers, I heard.

In his memo, Pedowitz touted what awaits the CW this year: “more original programming than ever, this season’s expansion through Saturday night, our growing streaming and digital platforms.”

An agreement with Nexstar would bring CW in line with the other broadcast networks, following the traditional model of one network controlling its main affiliated stations. It would take the stress out of the future of the network whenever contracts with the main CW affiliate groups are ready to be renewed.

Here is Pedowitz’s note:

To our valued CW team

I’m sure you’ve seen the recent speculation in the press surrounding The CW, so I wanted to take the opportunity to address this with you directly and share what we know with you.

First, as many of you know, over the past year, this transformational time in our industry has led to a number of business activities at content and media companies. Given that environment at this time, ViacomCBS and Warner Bros. are exploring strategic opportunities to optimize the value of their joint venture on The CW Network.

It’s too early to speculate what could happen, but we promise to keep you posted as we learn more.

So what does this mean for us right now? It means we must continue to do what we do best, make The CW as successful and vibrant as we’ve always done. We have a lot of work ahead of us, with more original programming than ever, expanding this season into Saturday night, our growing streaming and digital platforms, and we thrive when we come together and build The CW together.


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