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Nexstar Stock Slips After CW Network Deal Announcement

Story Highlights

With the CW Network deal, Nexstar aims to cement its position as the nation’s largest local broadcast television operator. Discovery and Paramount, the current owners of the CW, will continue to produce shows for the CW.

Nexstar Media Group (NXST) has struck a deal to acquire the majority stake in the youth-oriented broadcaster CW Network from its co-owners Warner Bros. Discovery (WBD) and Paramount Global (PARA). The transaction is expected to close in Q3 2022. Nexstar stock fell 1.3% yesterday.

Nexstar Bags a 75% Stake in the CW and Looks to Improve Profitability

Nexstar has agreed to acquire a 75% stake in the CW Network. Warner Bros Discovery and Paramount will retain the minority stake, with each owning 12.5% of the network. They will also continue to produce content for the network.

Nexstar is the largest owner of local television networks in the U.S. It is also the largest CW affiliate group, with the network relying on it for 32% of its national reach.

The company believes that the CW acquisition will bolster its shareholders’ value. It plans to improve the network’s ratings, revenue, and profitability. As part of that plan, Nexstar looks to increase the network’s exposure to the national advertising market.

Is Nexstar a Buy?

The stock has risen about 32% year-to-date and gained more than 120% over the past three years. According to TipRanks’ analyst rating consensus, the Nexstar stock is a Moderate Buy based on one Buy and one Hold ratings. 

The average Nexstar stock price target of $240 implies 20.5% upside potential. The stock currently offers an above-sector average dividend yield of 1.58%. Nexstar has consistently increased its annual dividends over the past 10 years.

Bottom Line

If completed, the CW acquisition has the potential to increase Nexstar’s revenue opportunity in the lucrative advertising market. 

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