AT&T, ViacomCBS look to sell their stakes in the CW, home of ‘Riverdale’

AT&T and ViacomCBS are in talks to sell their stakes in the CW broadcast network amid changing television economics.

The two media giants, which each own 50% of the Burbank-based network, have been exploring possible transactions, including a sale of a majority stake of the CW to TV station behemoth Nexstar Media Group, according to people familiar with the talks who are not authorized to comment publicly.

Irving, Texas-based Nexstar, which acquired Tribune Media two years ago, owns the largest television stations that carry CW programming, including KTLA-TV (Channel 5) in Los Angeles.

The CW, which primarily reaches younger viewers, has steadily built its prime-time programming block over the years by mining the intellectual property of Warner Bros.’ D.C. Comics, with shows like “Superman & Lois,” as well as old CBS hits such as “Dynasty” and “Walker.”

CW Chairman and Chief Executive Mark Pedowitz confirmed the talks in an email Thursday morning to his staff.

“As many of you are aware, over the past year or so, this transformative time in our industry has led to a series of business activity across media and content companies,” Pedowitz wrote in the email, which was viewed by The Times. “Given that environment right now, ViacomCBS and Warner Bros. are exploring strategic opportunities to optimize the value of their joint venture in the CW network.”

For AT&T’s WarnerMedia and ViacomCBS, the network itself was never a money maker. Instead, the joint venture brought tremendous value in other ways by allowing Warner Bros. Television and CBS’ production studio to experiment with its intellectual property and create hit TV shows, such as “Jane the Virgin,” which could then be sold to streaming services like Netflix or through traditional syndication.

The CW also built an ad-supported streaming platform, the CW Seed, which extended its profile beyond the TV stations that air CW programming.

Because of its main benefit of providing an outlet for studio-produced shows, Warner Bros. and CBS would like to maintain a minority stake in the enterprise as well as a commitment from a new partner, such as Nexstar, to continue to buy their studio programming, according to the sources.

For example, more than a dozen of the CW’s shows originate from Warner Bros. Television, and about six come from CBS.

The economics of broadcast TV have deteriorated in recent years as viewers — particularly younger ones — gravitate to streaming platforms, including Netflix, YouTube and Hulu. Broadcast TV ratings have fallen, making it more difficult for even leaders like NBC, CBS and ABC to produce splashy big-budget dramas and comedies to compete with shows on Netflix, Apple TV+, Amazon Prime Video and Disney+.

Sources said the talks have been ongoing for several months, but that no deal was imminent.

“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 have always done,” Pedowitz wrote to his staff. “We have a lot of work ahead of us — with more original programming than ever, this season’s expansion to Saturday night, our growing digital and streaming platforms — and we thrive when we come together and build the CW together.”

The CW was created in 2006 through a merger of Warner Bros.’ WB network and CBS’ UPN. At the time, broadcast economics were challenging enough that the heads of Warner Bros. and CBS saw wisdom in teaming up rather than slugging it out as competitors. CBS then shuttered the UPN service.

Nexstar has ambitions to be a major TV programmer; last year it rebranded the WGN America channel as NewsNation and launched a block of news programming and a morning show. Last summer, Nexstar spent $130 million to buy the Hill, an independent Washington-based news outlet. A Nexstar spokesman declined to comment.

For the CW’s parents — AT&T and ViacomCBS — structural transformations have been underway, making the programming joint venture less of a priority. Dallas-based AT&T spun off its DirecTV satellite TV unit, and it is in the process of selling WarnerMedia to Discovery. The two Redstone family-controlled companies, Viacom and CBS, merged two years ago.

Since then, ViacomCBS has put several CBS properties on the auction block, including its storied studio complex in Studio City, its midtown Manhattan skyscraper Black Rock, and the Simon & Schuster book publishing house.

The CW talks were first reported by the Wall Street Journal.