Nexstar Media Group, which has long been known for its enviable balance sheet and knack for finding ways to economize, plans to fund its investment in The CW with proceeds from its sale of a Chicago property to a casino developer.
While the company’s drive to wring profits out of The CW and also its pending sale of the Freedom Center have both been publicly disclosed, the dots were connected by CFO Lee Ann Gliha today at a conference hosted by investment firm Stephens. Nexstar President and COO Tom Carter also took part in the conference session.
Nexstar closed its acquisition of 75% of The CW last month, paying nothing up front but agreeing to take on the network’s debt and absorb its losses. Previous 50-50 partners Paramount Global and Warner Bros Discovery retained 12.5% stakes apiece. The money-losing network is expected to undergo a dramatic overhaul as Nexstar seeks to make it profitable by 2025.
“From a funding perspective, we’re in the process of selling one of the remaining properties we had in Chicago for $155 million of net cash,” Gliha noted. “That goes a long way to funding the investment that we’re going to have in the CW.”
The 30-acre site along the Chicago River near the city’s signature downtown Loop is due to become a $1.74 billion casino built by Bally’s, the gaming company confirmed earlier this month. It had mainly functioned as a printing and distribution facility for the Chicago Tribune and other print publications. The parcel was in the real estate portfolio that Texas-based Nexstar acquired in its $4.1 billion purchase of Tribune Media in 2019.
Nick Zangler, a research analyst for Stephens who moderated the discussion, said he lives near the Freedom Center. “We’ll see what happens to the neighborhood there,” he joked. “Maybe it will be fun.”
Gliha described the CW deal as a “no-brainer” for Nexstar given that the company is the largest single owner of CW affiliates in the country. She also highlighted the national advertising opportunity. On the company’s earnings call last week, Nexstar said the network is projected to bring in $70 million in revenue during the current quarter and book $70 million in adjusted EBITDA losses.
“Most of those losses are going to be in Q4 of this year and the first three quarters of next year because that’s the 2022-23 broadcast season and that’s the programming that’s generating the losses,” Gliha explained. “In the fourth quarter of 2024 and into 2025 we’ll be able to run our playbook and put our content on and that should hopefully be the beginnings of some light at the end of the tunnel where profitability will ultimately be achieved.”
Nexstar execs have already laid out plans for a leaner, more multi-dimensional operation with more unscripted programming as well as potential news and sports offerings. Media industry and venture capital veteran Dennis Miller was tapped to lead the CW charge, and former Pop TV chief Brad Schwartz has been installed as programming chief. The former ownership regime’s programming strategy emphasized amply budgeted scripted titles like The Flash, Riverdale and Gossip Girl, most of them designed to make money for the parent companies via rich streaming and ancillary deals rather than live tune-in.
“Right now we’ve got some content on the network that is geared toward the 18-to-34-year-old audience, and we know that the average age of the linear network viewer is 58 years old,” Gliha said. “Hopefully, we’ll be able to align that a bit … and improve the ratings. Right now, the ratings are very low. We think there’s quite a bit of upside that can be beneficial.”
That head-scratching age stat for the linear network is not matched on the CW app, which has been downloaded more than 90 million times, according to Nexstar.
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