Nexstar to acquire 75% of the CW

Nexstar on Monday announced a deal to acquire a majority stake in the CW from ViacomCBS and Warner Bros. Discovery, after months of anticipation following leaks about an arrangement.

Why it matters: The deal gives ViacomCBS and Warner Bros. Discovery cash to invest in their own streaming services. It allows Nexstar, the largest local broadcast distributor in the U.S., an opportunity to invest more meaningfully in national content that it can sell advertising around.

• Nexstar already owns the largest collection of CW affiliates nationally, which gives it a reason to continue investing in CW's programming.
• It has been pushing to expand its national reach with acquisitions outside of local broadcast news.

Catch up quick: The CW is considered one of the country's "Big 5" broadcast networks, alongside NBC, ABC, CBS and FOX.

• Its name is derived from the first letter of the two big networks it was originally co-developed by in 2006: CBS and Warner Bros.
• Its content, both licensed and originally-produced, caters to younger audiences.
• Some of its most popular programming over the years includes shows like "Smallville," "One Tree Hill," "Gossip Girl," "Gilmore Girls" and "7th Heaven."

Details: Both selling companies will retain a 12.5% ownership stake in the CW and will continue to produce original, scripted content for the network, per a statement.

• The CW's chairman and CEO Mark Pedowitz will continue in his role and will be responsible for day-to-day operations at the network.

The big picture: Ratings for the CW have dwindled in recent years, as viewers have migrated over to streaming for entertainment content.

• The linear network has been costly to operate for ViacomCBS and Warner Bros. Discovery, both of which could use the cash to invest in their own streaming services, Paramount+, Discovery+ and HBO Max.
• “Our acquisition of The CW is strategically and operationally compelling, as it will enable us to leverage our operational experience to improve the Network’s performance through our management of this powerful national platform," said Perry Sook, Nexstar’s chairman and CEO.

• "We plan to apply the same strict financial standards to operating The CW as we apply to our other businesses.”

Between the lines: Nexstar has been looking to expand its national reach with investments and acquisitions outside of local broadcast news.

• The company acquired The Hill, a D.C.-based newspaper and digital property, for $130 million last year and launched a streaming channel for the outlet on Plex last week.
• It bought Tribune Media in 2019, and with it, acquired ownership of WGN America, a national entertainment cable network. Nexstar relaunched WGN in 2021 as a 24/7 news network called NewsNation.
• Axios reported last year the local broadcasting behemoth was eyeing more acquisitions of media companies that cover the three pillars of its content strategy: sports, news and weather.

What's next: The transaction is expected to close in the third quarter, Nexstar said.