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Nexstar Advancing Plan to Acquire Majority of CW Network

Story Highlights

Nexstar Media Group Inc. is nearing a deal to acquire a 75% majority control of The CW Network from its current co-owners Warner Bros. Discovery Inc.

Nexstar Media Group Inc. (NXST) is close to completing a deal to acquire majority control of well-known television network The CW Network from its current co-owners Warner Bros. Discovery Inc. (WBD) and Paramount Global (PARA), according to a report by The Wall Street Journal.

According to the company’s website, Nexstar is “America’s largest local television and media company with 200 broadcast stations (including partner stations) in 116 markets, addressing more than 68% of U.S. television households and a growing digital media operation.”

Details of the Impending Deal

The CW Television Network (The CW) is a broadcast network aimed mostly at teens and young adults and was formed as a joint venture between Warner Bros. Entertainment and ViacomCBS Inc. (Paramount Global).

Per the terms of the impending deal, Nexstar would acquire 75% ownership in The CW network, while both Paramount and Warner Bros. Discovery would each retain 12.5% ownership.

While Nexstar may not pay any cash consideration for the deal, it could potentially assume “a significant portion” of The CW’s current losses, which are projected to be higher than $100 million.

Upon completion, CBS will keep creating content for The CW. Further, Nexstar intends to acquire other shows as well.

Meanwhile, minority holders Paramount and Warner Bros. Discovery most likely will continue to keep hundreds of millions of dollars in content-licensing revenue from previous deals, including a deal with Netflix (NFLX), according to The WSJ.

While there is no certainty that the deal will come through, it most likely will finalize in the coming weeks.

Wall Street’s Take

Consensus among analysts is a Strong Buy based on three Buys and one Hold. The average Nexstar Media Group stock forecast of $210.25 implies 28.9% upside potential from current levels.

TipRanks’ Smart Score

NXST scores a ‘Perfect 10′ on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform the market.

Key Takeaway

Shares of Nexstar have gained 8.6% over the past year, massively outperforming the benchmark indices that are in the red.
Nexstar aims to go from strength to strength with a majority stake acquisition of The CW Network.

Nexstar is already currently the largest owner of affiliate stations for The CW Network. Taking over control of its operations will not only bolster Nexstar’s existing portfolio of content and broaden the target audience but also boost its revenues and profitability, which bodes well for the stock in the long run.

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