CBS, Warner Bros. Said to Consider Online Version of CW Network

Media's Streaming Future: Over the Top to Consumers
  • Expiring deals with Tribune, Netflix, Hulu create new option
  • Looming Web service could provide leverage in negotiations

CBS Corp. and Time Warner Inc.’s Warner Bros. have discussed creating a paid streaming service for their jointly owned CW network to generate more income from the young fans who already watch shows like “Jane the Virgin’’ online, two people with knowledge of the matter said.

The owners are weighing the move as the expiration approaches for the CW’s current agreement with station owner Tribune Media Co., as well as deals with streaming partners Netflix Inc. and Hulu LLC, said the people, who asked not to be identified because the talks are preliminary.

The timing gives the broadcast network a chance to retool its strategy and make a direct play for the growing number of viewers who don’t pay for cable or satellite TV. The prospect of a competing online service could also serve as leverage for the CW to get paid more under new arrangements with local station owners like Tribune or online partners. The network’s prime-time audience is down about 13 percent in the current TV season, according to Nielsen data.

CBS and Time Warner already offer online services. CBS All Access, started in late 2014, provides a live feed of the namesake broadcast network and a library of on-demand shows. The company also sells subscriptions to an online version of the premium channel Showtime. Time Warner’s HBO Now was introduced last April.

Monthly Fee

The proposed CW service would include a live feed of popular shows like “The Flash’’ along with programs on-demand. Selling subscriptions to the CW over the Internet is inevitable, the people said, suggesting a price of $2 to $4 a month is being discussed. The timing depends on how the network’s owners settle their negotiations, as well as talks with other parties, such as the local TV stations that have rights to the programming.

The CW is in the process of negotiating a new affiliation agreement with Tribune Media, which owns stations that offer the network in 13 markets, including Los Angeles, New York and Chicago. The parties signed a 10-year distribution deal in 2006, when CBS and Warner Bros. formed the network.

A CW spokesman said he couldn’t immediately comment. A Tribune spokeswoman said the company’s current affiliation deal with CBS expires in August and that talks between the parties are continuing. A Netflix official said its accord with CW also runs out soon.

Hulu didn’t respond to a request for comment. Netflix offers past seasons of CW programs while Hulu, owned by 21st Century Fox Inc., Walt Disney Co. and Comcast Corp., has episodes of current seasons while they are on the air.

Compensation

Under the plan being weighed, owners of CW affiliated stations, like Tribune, would be compensated for allowing a Web-based version of the network’s programming to be offered in their markets, the people said.

Warner Bros. and CBS must decide whether they want to sacrifice the windfall from those licensing deals in order to build their own service and establish a direct relationship with CW fans. Warner Bros. has produced more of the network’s programming than CBS, and while it doesn’t own any other TV networks, its parent Time Warner is home to outlets including HBO, TNT and CNN.

The CW Television Network draws a fraction of the viewers who tune in to the four major broadcast networks, though it has nurtured a following among young viewers. The network on Sunday won its second Golden Globe Award in as many years, as Rachel Bloom was awarded best actress in a TV comedy for her performance in “Crazy Ex-Girlfriend.’’

Through early January, the CW was averaging 1.92 million viewers a night in prime time this TV season, down from 2.2 million a year earlier, according to Nielsen data. CBS, the most watched network, is averaging almost 11 million viewers a night.

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