Now, both

AT&T Inc.’s

T 2.74%

WarnerMedia and ViacomCBS have their own content-hungry streaming platforms—HBO Max and Paramount+, respectively—making CW less of a priority for either company, the people said.

The Wall Street Journal reported Wednesday that CW’s joint owners are exploring a possible sale of a significant stake or all of the network.

In a memo to staff Thursday, CW Chief Executive Officer Mark Pedowitz acknowledged the discussions going on at the CW’s parent companies and cited a transformative period in the media landscape.

“Given that environment right now, ViacomCBS and Warner Bros. are exploring strategic opportunities to optimize the value of their joint venture in The CW Network,” Mr. Pedowitz said in the memo.

The most likely buyer is

Nexstar Media Group Inc.,

the Journal reported Wednesday. Nexstar, the nation’s largest owner of TV stations, is the biggest affiliate of the CW.

What form a deal could take is still being determined. The most-discussed scenario has Nexstar taking a significant stake in the CW, perhaps even becoming majority owner, the people close to the talks said. WarnerMedia and ViacomCBS would likely also receive commitments to provide programming.

People close to the talks cautioned no agreements have been reached and a deal isn’t a certainty.

Profits at the CW have been elusive, despite the network being home to many successful television shows appealing to hard-to-reach younger viewers over its 15-year existence—including “One Tree Hill” and “Jane The Virgin” and more recent cult hits “The Flash” and “Riverdale.”

People with knowledge of its operations say the CW has been losing more than $100 million annually in recent years. According to financial information sent to would-be suitors, the CW had $272 million in revenue in 2020, which was down from $366 million in 2019, largely because of the pandemic limiting the amount of fresh content available on the network. That figure doesn’t include $129 million of revenue in 2020 from its cut of fees Netflix pays to stream CW shows after they have aired on the network.

With ViacomCBS and WarnerMedia now giving priority to their own streaming services, the deal with Netflix wasn’t renewed in 2019. Warner Bros.-produced content will land on HBO Max going forward.

WarnerMedia parent AT&T is also in the process of merging WarnerMedia with

Discovery Inc.

and creating a new stand-alone company dubbed Warner Bros. Discovery.

In advance of that deal closing, AT&T has been scrutinizing WarnerMedia assets and unloading those whose long-term prospects aren’t bright or don’t fit strategically. AT&T sold the gossip and news platform TMZ to

Fox Corp.

last September.

ViacomCBS has also looked to exit some businesses to focus on streaming. It agreed to sell CNET Media Group to Red Ventures LLC, and is attempting to sell its publishing unit Simon & Schuster to Penguin Random House, a deal that the Justice Department has sued to block. The company has also recently sold or entered into agreements to sell some of its real estate holdings.

For Nexstar, moving deeper into the content business is part of its long-term strategy.

“I think you’ll see us do more content acquisitions and less technical acquisitions or the actual plumbing,” said

Thomas Carter,

Nexstar’s president and chief operating officer, during the company’s third-quarter earnings call with investors in November.

If a deal goes through, Nexstar may try to create a broader programming slate for the CW, a person familiar with the broadcaster’s thinking said. The network’s young-skewing shows aren’t a fit with the older audiences that watch local TV.

“Nexstar will really need to figure out how to develop and own more content that caters to its local markets to build audience loyalty,” said Jason Anderson, CEO of Quire, a boutique investment bank.

The CW averaged about 730,000 viewers in prime time in the fourth quarter of 2021, about flat with the same period in 2020, according to Nielsen. It made slight gains in the 18-49 demographic.

Despite consumers’ shift away from watching traditional TV in favor of streaming services, local broadcast TV continues to generate healthy profits, in part because of the lucrative retransmission fees received for being carried in cable packages. Local TV stations also receive significant political advertising dollars during big election years.

Nexstar has already gotten into the TV news business with its transformation and rebranding of cable channel WGN America, previously known for airing reruns like “Last Man Standing,” into the NewsNation network. Since launching in 2020, NewsNation programming has gone from only airing during prime time to 13 hours a day in the morning and evening, with aspirations of becoming a round-the-clock cable news network.

While NewsNation typically averages less than 50,000 prime-time viewers, Nexstar CEO

Perry Sook

said in the November earnings call with investors that the network is “seeing new rating highs every week,” and that it is profitable.

Last summer, Nexstar paid $130 million for The Hill, a political-news organization known for its inside-the-Beltway coverage. Mr. Sook said on the November call the company intends to grow its audience “by scaling The Hill’s content on News Nation and across our local stations.”

Wells Fargo analyst

Steven Cahall

in a Thursday note called a potential Nexstar acquisition of the CW a logical use of capital for the company as it looks to broaden its portfolio and gradually move away from its dependence on so-called retransmission fees.

Write to Joe Flint at joe.flint@wsj.com and Lillian Rizzo at Lillian.Rizzo@wsj.com