The CW may get a new majority owner. Fifteen years after the broadcast network’s launch, its co-parents, ViacomCBS and WarnerMedia, are considering a controlling stake sale, sources confirm to Deadline. Nexstar Media Group, which is the CW’s largest affiliate group following its acquisition of Tribune, is believed to be among interested buyers. Sources caution that conversations with multiple suitors are in exploratory stages and no deal is imminent.

The potential sale, first reported by the WSJ, comes amid an ownership change for WarnerMedia, which is being acquired by Discovery, pending regulatory approval. None of the architects of the CW, which replaced the WB and UPN in 2006, are still around, most notably former CBS CEO Les Moonves, who was the driving force behind it. Since the CW’s creation, CBS merged with Viacom while WarnerMedia was acquired by AT&T which is now selling it to Discovery.

The CW, which caters to young adults, has defied expectations getting to 15 years when many had predicted that it would fold or move to cable/digital early in its run. The network’s business model has worked because of its unique setup, being co-owned by two major studios that supply all of its scripted programming. While the CW has never been profitable as a standalone entity, it has created value for its studio parents, providing U.S. broadcast distribution for shows that they can then exploit internationally and on streaming. Among valuable assets the CW has helped create for its studio partners include the Arrowverse series, Riverdale, All American and Gossip Girl (Warner Bros.) and Walker, Dynasty and Jane the Virgin (CBS Studios)

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

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

The CW received a major shot in the arm in 2011 when Netflix paid $1 billion for the streaming rights of the network’s entire lineup. A number of CW shows remain on Netflix, brining in fees, but in 2019 WarnerMedia and CBS Studios opted to end the agreement and instead steer the series they produce for the CW to their own streamers. (In the early going, all CW shows were steered to WarnerMedia’s HBO Max, which emerged as the streaming destination for the CW content.)

The end of the Netflix deal gave the CW in-season stacking rights to their 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 outsized social media reach, which could be attractive to buyers, which could potentially include streamers, I hear.

A Nexstar deal would bring the CW in line with the other broadcast networks, following the traditional model of a network controlling its main affiliate stations. It would eliminate the stress over the network’s future every time the contracts with the major CW affiliate groups are up for renewal.

The CW is about to enter a new ownership era, as local TV giant Nexstar Media Group has confirmed a pending deal to acquire a 75% stake in the 16-year-old broadcast operation.

Warner Bros Discovery and Paramount Global will each retain a 12.5% ownership interest in the CW and will continue to produce scripted content for the network. Nexstar had not previously addressed months-long press speculation about the move, but confirmed it this morning in an SEC filing and press release.

Mark Pedowitz will continue as chairman and CEO of the CW. The transaction is expected to close in the third quarter.

Nexstar, the No. 1 owner of local TV stations in the U.S., whose portfolio also includes cable network NewsNation and digital brands like The Hill, is a logical new boss of the CW. It already owns the largest collection of affiliates of the network, giving it a clear incentive to try to make the CW flourish. Longtime parents Paramount and Warner Bros Discovery (each of which has been reshaped themselves through major mergers in recent years) have both been looking to tighten up their balance sheets.

Created in 2006 as a way of consolidating at UPN and the WB, the CW has been a 50-50 venture between the various owners of CBS and Warner Bros since then, generating a string of shows with youth appeal like Vampire Diaries, Arrow, Gossip Girl, Riverdale and All American. Viewership on the linear network, consistent with that on across broadcast TV, tends to be 50 and older, but the network’s free, ad-supported streaming app and social channels draw younger, avid audiences concentrated in the desirable 18-to-34-year-old demographic.

The economy has worsened considerably since the deal first became public at the start of 2022, with skyrocketing inflation and rising interest rates conspiring against a number of business deals. For Nexstar, however, the acquisition brings no upfront costs. Instead, the company has agreed to shoulder the losses at the network, which are projected to be north of $100 million this year.

The strategic plan moving forward is to run the CW as a fully sustainable broadcast network, rather than optimizing it for streaming. Even though the network itself has consistently spilled red ink, the joint venture partners have booked hefty profits by licensing CW shows to Netflix, sometimes agreeing to renew shows whose linear ratings did not appear to justify those re-ups. As they started to plan investments in their own streaming services, HBO Max and Paramount+, the previous parents decided to end the CW output deal with Netflix in 2019.

Nexstar CEO Perry Sook said the deal was “strategically and operationally compelling” for the company, which has risen from a single radio station in the 1990s to the top ranks of station stewardship. “It will enable us to leverage our operational experience to improve the network’s performance through our management of this powerful national platform,” he said in the release. “We plan to apply the same strict financial standards to operating The CW as we apply to our other businesses.”

CBS chief George Cheeks saluted the run of the CW to this point. “Together, with our partners at Warner Bros. and The CW, we have created a welcome home for content that has resonated with viewers on the network and on platforms around the world,” he said. “This new ownership structure enables us to partner with Nexstar and Warner Bros Discovery on the next chapter of The CW while re-deploying capital to other content platforms at Paramount.”

Warner Bros Television Group chief Channing Dungey said the CW “has been home to some of the most groundbreaking and generation-defining programming in television” and said the company anticipates “continuing to collaborate on our shared series and future projects to come under Nexstar’s leadership.” She added, “We are forever grateful to our partners at The CW, especially Mark Pedowitz, who has been a great friend to the studio for so many years, and to me personally. We know that the network will continue to thrive under his leadership.”

As it transitions to new ownership, the CW will likely not look dramatically different in the near term, but Nexstar Media Group intends to turn it into a more broad-audience and cost-conscious broadcast network.

The company earlier today confirmed it is set to take a 75% ownership stake in the network, with previous 50-50 owners Paramount Global and Warner Bros Discovery each retaining 12.5%.

Executives articulated some of their initial plans during a 15-minute conference call with Wall Street analysts, though the presentation included only prepared remarks and no Q&A session.

After Nexstar CEO Perry Sook reaffirmed the rationale for the deal, which will see the company absorb the CW’s debt but not pay any cash or stock up front, other executives delivered more tangible news.

CFO Lee Ann Gliha said the goal would be to make the CW profitable by 2025.

“It’s no secret that the CW is not profitable,” she said, “but this is not typical for fully-distributed broadcast or cable networks. In fact, according to SNL Kagan data, no other broadcast network operates at an ongoing loss.”

One key step on the path to profit would be dramatically cutting expenses. “We expect to invest a low 9-figure amount over this 3-year period as we implement our plan,” Gliha said. “We view this amount as a proxy for a purchase price – or an investment made over time — rather than an ongoing drag on cash flow. You know us. We are profit and cash flow focused and expect this asset to achieve profitability.”

Nexstar President and COO Tom Carter said Paramount and WBD will continue to produce scripted originals for the network, but he said that arrangement would be “primarily” for 2022-23. Beyond that, Nexstar “will have the option to extend the partnership,” but nothing on that score is guaranteed.

While the remarks didn’t include too many specifics, Carter signaled clearly that the focus will be on retooling the CW, specifically its previous cost structure under founding partners CBS and Warner Bros. In many cases, as suppliers as well as network owners, those companies saw more financial upside in programming shows that could be sold at great margins to subscription streaming outlets. The CW discontinued its longtime output deal with Netflix in 2019 as both parent companies stepped up their respective investments in new SVOD offerings.

“Our approach will be unlike other broadcast network owners,” Carter said. The company would develop its programming “without a dual agenda of greenlighting programming with potentially to cross over to SVOD.”

The demographic focus of the CW will also change over time, Carter said. Historically, shows like Riverdale, All American, Arrow and Supernatural have focused on viewers in their teens through their 30s. The reality, though, is that the average CW viewer is 58 years old, and Carter said the new era will reflect that.

He forecast “lower unscripted costs” and the addition of more syndicated fare.

Citing Kagan research, he said the CW spends “almost twice” what its broadcast network peers do on programming, a disparity that Nexstar plans to eliminate.

Carter didn’t offer any numbers in terms of efficiencies or cost savings, but he said areas like “corporate overhead, digital infrastructure, advertising sales and content and programming acquisition” would have potential for meaningful expense reductions.

Shares in Nexstar pulled back 1% early in the session, trading at around $201. The stock recently established an all-time high of $204.62.