The CW is heading into its 10th anniversary next year. But before the network can start planning a fall 2016 celebration, it has to close three deals key to the network’s livelihood for the next decade. Coming up later this year is the CW’s pact with Netflix, followed next year by the agreements with Tribune and Hulu. Because the current Netflix deal covers this coming broadcast season, work on the two streaming output deals — and possibly the crucial part of the Tribune renewal — is not expected to start in earnest until January, exactly 10 years after CBS and Warner Bros. surprised the industry with their January 2006 announcement that they were discontinuing the WB and UPN and launching a new network with Tribune and CBS TV Stations as core station groups.
After talks between the CW and Tribune had stalled earlier this year (some sources had described the situation as a standoff), I hear the two sides have resumed conversations at the highest level. There are no signs of concern at the moment but sources indicate that there also isn’t “a sense of urgency,” so observers expect that negotiations may stretch into 2016. (Tribune’s affiliate deal does not expire until fall 2016.) There is a desire on both sides to keep the partnership going, though I hear both companies also have contingency plans in the works in case a new deal does not work out.
The CW is unique as it is the only broadcast network with dual ownership (CBS and Warner Bros.) that does not own its stations in the top three markets — New York, Los Angeles and Chicago — which all are owned by Tribune, the largest CW affiliate group by reach, 28%. While Tribune had a stake in the CW predecessor the WB, the company has no ownership in the CW, thus making the companies’ relationship a standard affiliate agreement.
The key locations of its stations gives Tribune leverage — “the network can’t move forward without us,” Tribune Media CEO Peter Liguori said in his famous May 2014 remarks. The CW found some leverage of its own last month when the network re-upped its affiliation deal with Sinclair in conjunction with sibling CBS also renewing its agreements with the station group. Sinclair is the largest CW affiliate group in number of stations, 23, and second in coverage, 17%, behind Tribune and ahead of No. 3 CBS Stations. The Sinclair deal, combined with last December’s new long-term affiliation agreement with Media General in 16 markets and having CBS station group as a sibling gives the CW room to maneuver. I hear a number of small affiliate deals have either been renewed or are on the verge of being renewed, and some pacts are not set to expire until a couple of years from now. Observers estimate that soon the CW will have affiliate stations locked for years in virtually all markets except those controlled by Tribune.
While the desire and intention is to work out a new affiliate agreement with Tribune, I hear the CW has alternative options in the Tribune markets. CBS has duopoly stations in а number of them, including Los Angeles. There are other potential scenarios (I hear that MyNetwork TV may be relying on year-to-year renewals, which could put a number of stations, including in the top three markets, in play potentially).
For Tribune, it would be a financial decision as the company has to pay a fee to carry CW programming. The company, which has been going through earnings up and downs as it is trying to rebuild the TV operation following the split from publishing, also is eyeing alternatives market-by-market. It had been looking to have more programming from its own Tribune Studios on its stations (as well as on cable channel WGN America). Since 2011, talker The Bill Cunningham Show, co-produced by Tribune, has been airing on the CW during daytime.
The CW and Tribune have had a rocky relationship, with top executives of the Chicago-based company publicly criticizing the CW over the years for skewing too young, thus bringing fewer eyeballs to the stations’ primetime and making the network’s programming a not-so-suitable lead-in for the station’s newscasts.
In his May 2014 remarks on the day of the CW’s upfront presentation, Liguori said he was “not pleased with where the CW is,” adding that it “should not program to [young] people who don’t watch television.” Liguori added that it may be time for him to “get a seat at the table” for programming, adding “maybe I can put some of my content on there.” He asked for a larger role in the CW’s management, calling the network “a sideshow for its owners.”
There was some more rhetoric earlier this year but overall, Tribune seems to have softened its stance since the harsh 2014 remarks. I hear Liguori gets to read the CW pilot scripts and screen the completed pilots before the upfronts, which is not unusual for a big affiliate body of a broadcast network. Liguori, who held top positions at FX and Fox, is said to be providing input though it’s the CW’s brass that make the pickup decisions with the approval of the network board, led by CBS Corp CEO Leslie Moonves and Warner Bros. Entertainment CEO Kevin Tsujihara.
The CW is in a better position now than it was a couple of years ago. Under president Mark Pedowitz, the network has broadened its programming to increase viewership and add more male and older viewers. It increased its median age from 32 to 40, which fits better local stations’ focus on adults 25-54, and shifted its gender skew from 70% female-30% male to 60-40. It moved away from shows about high-school girls to more adult, contemporary fare and has launched popular, tentpole series like Arrow and The Flash. While talks between the CW and Tribune continue, Tribune stations are doing their part in promoting the network’s fall lineup, including a push for the new Monday comedy block of Jane The Virgin and Crazy Ex-Girlfriend.
The October 2011 four-year streaming deal between the CW and Netflix, estimated to be worth as much as $1 billion, was considered a major lifeline for the then-fledgling broadcast network that had been plagued by rumors of an imminent demise or move to cable. The Netflix deal, which covers prior seasons of CW shows, was followed immediately by a four-year deal with Hulu for the current seasons of the CW series. The Netflix pact was made by the CW sister studios Warner Bros. TV and CBS TV Studios, which produce all of the network’s shows and are the ones getting the revenue from the pact. The Hulu deal was made by and directly benefits the CW.
I hear Netflix is interested in extending the streaming agreement though it is way too early to speculate on the outcome. Things are very different for both companies four years after their first pact.
When the original streaming agreements were made, the CW’s top offerings were The Vampire Diaries, Gossip Girl, One Tree Hill, Supernatural and Nikita. Since then, the network has added several comic book-based dramas, Arrow, The Flash and the upcoming Legends Of Tomorrow. That is a genre that does well digitally, as evidenced by the big four-series deal Netflix inked with Marvel.
As the CW has moved into a stronger position with bigger assets, the digital marketplace has grown too, with more buyers vying for content. Additionally, there are over-the-top service options. I hear there are no current plans for the CW shows to be part of the recently launched CBS OTT service or a stand-alone CW OTT service but all options will likely be on the table when the time comes. One scenario that does not appear likely is merging the two streaming deals, with one digital platform offering both current and former seasons of the CW shows, as I hear the package is now considered too rich for one buyer.
For Netflix’s part, the service, a content aggregator back in 2011 when the CW deal was made, has evolved into a major original series player that has been moving away from output deals to bet on its own exclusive TV and feature content.