The CW (US) could soon be under new ownership, potentially bringing an end to the broadcast network's long-time focus on programming aimed at teens and young adults.

Sources familiar with the matter recently told The Wall Street Journal that Nexstar Media Group Inc. is moving closer to acquiring 75% of The CW. Current owners Paramount Global and Warner Bros. Discovery Inc. would reportedly each retain a 12.5% stake in the network and contribute some programming. The transaction could be finalized within weeks, according to the June 30 report, with the nation's largest operator of TV stations looking to shift the programming more toward fare appealing to older viewers who watch Nexstar's news coverage.

Deal details were scant, but reports indicate that Nexstar is not expected to pay cash, but rather would assume a significant portion of The CW's current losses, which may be north of $100 million. The deal could also potentially include Nexstar's 31% stake in Food Network (US), as Warner Bros. Discovery owns the balance in the cable channel. Speaking at an investor conference last month, Nexstar President and COO Thomas Carter noted there are plenty of assets inside of Warner Bros. Discovery that could be of interest to the company.

Nexstar, The CW, Paramount Global and Warner Bros. Discovery all declined to comment.

For their part, analysts are pondering the wisdom of such a transaction.

Nexstar is a well-run company with strong management that always has an eye on accretive opportunities, said Craig Huber, managing partner and equity research analyst at Huber Research Partners, an independent equity research and advisory firm specializing in media, internet and information services companies.

In this case, though, Huber questions why Nexstar would want to assume the risk of trying to right The CW, which he estimates has been losing $50 million to $100 million annually. He said it might take some years for a deal to pay off, if at all.

Through its $7.13 billion acquisition of Tribune Media Co. in 2019, Nexstar is the holder of the most CW affiliate stations. As the majority owner of the network, it would look to derive higher fees from the other affiliates.

There are synergies with The CW affiliates Nexstar owns and reverse retransmission consent fees they could collect from other station owners, said Justin Nielson, a senior analyst at Kagan, a media research group within S&P Global Market Intelligence. Nielson, though, does not believe the synergies would amount to "a lot."

Moreover, Nexstar would have to invest in new content for The CW, and that could result in "a wash or very little in terms of cash flow upside," he said.

To secure higher fees from other stations, Huber also said it would likely require more investment in entertainment programming, something Nexstar veered from with WGN America. Acquired as part of the Tribune deal, Nexstar converted the cable network into national news service NewsNation (US) in March 2021, a move Huber called "decently successful."

Since completing the Tribune deal, Nexstar has been paying down debt, reporting total debt of $7.55 billion at the end of the March 2022 quarter, down from $8.77 billion at the end of the September 2019 quarter.

Going forward, Nexstar will likely seek to balance free cash flow and shareholder returns with a focus on content creation "seen to have terminal value," said Wells Fargo analyst Steven Cahall.

Rather than spending money on The CW and content for the network, Huber believes Nexstar would be much better served by using its free cash flow to buy back shares. Nexstar could more than double its current stock price by year-end 2024, he said, if the company devoted add of its free cash flow, excluding dividend payments, to share repurchases.

Should Nexstar ultimately acquire a controlling stake in the broadcast network, it would seem unlikely that any major programming changes would occur until the 2023-24 TV season. The CW on July 5 announced the premiere dates for its fall schedule, most of which will bow between Sunday Oct. 2 and Friday Oct. 14 and has completed its upfront ad sales.

During the upfront, content providers look to linear and digital schedules to media agencies and their clients ahead of the upcoming TV season.

During a conference call with reporters ahead of its May 19 upfront presentation, The CW Chairman and CEO Mark Pedowitz was asked about a potential sale. "These things take time," he said.