Nexstar Media Group, the parent company of The CW, estimates it will take the network two years to break even.
Speaking at the UBS Annual Global TMT Conference, Nexstar CEO Perry Sook said The CW is on course to become profitable by 2025, reiterating a prior estimate. Part of the company’s plan to rebound from a merger depends on an active 2024 presidential campaign season, which could yield lucrative political ads.
“We still think we will be at break-even… probably towards the end of 2025,” said Sook, according to The Hollywood Reporter. “We’re obviously on the look for acquisitions that would complement what we built, which would be in the content space.”
The projection highlights the challenges facing Nexstar, which acquired The CW in late 2022. Since then, the network has struggled to turn a profit, with existing problems spurred on by the recent dual Hollywood strikes pausing productions and the rise in audiences fleeing to streaming services. Nexstar plans to expand the network’s primetime offerings to attract more general audiences, moving away from the network’s old reputation for teen dramas and DC superhero shows.
To do that, Nexstar is investing approximately $2 billion a year on programming, increasing ad revenue, and driving up viewership.
Sook noted that while Nexstar is searching for more merger and acquisition deals, the company hasn’t found anything at a compelling price. He gives a nod to the recent Walt Disney Co. and Charter Communications agreement, which could set a new industry standard to increase revenue and suppress churn, as beneficial for future content deals among other entertainment companies.
In October 2022, Nexstar reached the maximum number of local cable TV stations allowed by the FCC. Instead, it bought a 75% majority stake in The CW, with former 50-50 partners Paramount and Warner Bros. Discovery retaining a 12.5% holding each. Nexstar assumed The CW’s $100 million debt and began slashing operational costs.