Streaming Giants Have a Local TV News Problem

Alex Weprin
·6 min read

On Feb. 28, hundreds of local broadcast station executives gathered at Nationals Park in Washington D.C. On the agenda for the NAB-sponsored conference were panels and fireside chats with Sen. Ted Cruz and FCC commissioner Nathan Simington, among others.

But on the sidelines of the conference, according to an attendee, executives also commiserated over a long-simmering fight between the owners of the local TV stations, and their network partners, a fight that burst into the public eye that same month.

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While the writers and actors are battling the studios over how streaming cash should be divvied up, the owners of local TV stations affiliated with networks like ABC, CBS, Fox and NBC are in a similar dispute: Who exactly should be negotiating with the owners of streaming multichannel video services? The networks whose name brands (ABC, CBS, NBC, Fox) consumers know, or the owners of local affiliates that serve individual markets?

Now, a new organization, comprised of owners of more than 600 local stations, is going public with a push that it thinks will resonate in local communities, and maybe, hopefully, galvanize changes to how streaming deals for local TV are negotiated, a push built around the local news coverage that stations provide their markets.

The group is the Coalition for Local News, and it is arguing that taking away the right of station owners to negotiate streaming deals will ultimately harm the news their communities rely on.

“The affiliate boards got to a point that this is a really important issue for us,” says Michael O’Brien, senior VP for the E.W. Scripps Company, a member of the Coalition with some 61 TV stations. “The time is now as fast as everything is evolving. And we have to have this one voice protecting our most important assets, which is covering our local communities with our news departments.”

The Coalition has launched just a few months after the quarrel burst into the public eye, as Fubo and Hulu saw local stations vanish for some customers.

In February, the virtual multichannel video provider Fubo notified customers that it would be dropping their local CBS stations (at least in markets without a CBS owned station). Instead, Fubo would stream a national feed of CBS, devoid of local news and syndicated fare.

In the weeks that followed, Hulu’s live TV service lost stations owned by both Sinclair and Nexstar in a similar dispute.

And in late 2021 ABC (and all Disney-owned channels) went dark on YouTube TV as carriage talks between YouTube and Disney stalled. This angered many ABC affiliates, a source tells The Hollywood Reporter, as their stations were going dark on YouTube TV even though they were the FCC licensees and were it a traditional cable provider could have cut their own deals.

All of the streaming services have since come to terms on new deals, ending those blackouts. But the regulations underpinning the dispute remain.

Under current FCC rules, cable and satellite TV providers have to negotiate for carriage of local stations directly with the owners of those stations, but there is what’s called a “streaming loophole”: vMVPDs, despite being streaming versions of traditional pay-TV bundles, can instead negotiate with the network owners, who then give their affiliates a take it or leave it deal.

Some executives on the local TV side of the equation believe that the network owners like Disney or NBCUniversal or Paramount are leveraging the local stations to try and secure better deals for their other channels or properties, and are using the ability to negotiate for all their stations as a tool to secure better economic terms for themselves, even if it comes at the expense of the interests of local stations.

“No broadcaster can own 100 percent of the country, they can own 39 percent [under FCC rules] and yet this ecosystem allows the network and its parent to control 100 percent negotiation and distribution and setting the economic terms,” one source notes.

“I think you’ll see affiliates continue to press the point that we should negotiate our own agreements and that no one else should be negotiating on behalf of our content,” Nexstar CEO Perry Sook told analysts on his company’s Feb. 28 earnings call.

While the economic interests of local TV station owners are varied (they may want higher retransmission fees than the network owner is securing, or they may want carriage for their affiliated digital networks), the Coalition is specifically focused on the local news programming stations provide: Content that is simply not available through national feeds.

“When people think news they’re just picturing, you know, two anchors on a desk, but that’s not the ecosystem local broadcasters are living in anymore,” O’Brien says. “What’s so important, it’s not only serving our communities and keeping people safe — like when I was in my basement last night with the tornado sirens — It’s holding business leaders and public leaders accountable.”

Ultimately, to change the rules will require either a change in policy by the FCC, or Congressional action. Sen. Maria Cantwell last month sent a letter to the FCC urging them to take action on the matter.

It’s a change that would shake up the only piece of the pay-TV business that’s growing (YouTube TV and Hulu with Live TV continue to add subscribers, even as traditional cable and satellite providers shed them), and the streaming strategies of many network owners.

For vMVPDs, the local broadcast stations are among the most important pieces of the puzzle, a source not only of entertainment programming, but also live sports (including the NFL), national and local news, and syndicated shows that aren’t available to stream.

“We talk to people at Roku, at Fubo, at other virtual MVPDs, and we ask them, what are they watching? And they say, the locals,” Sook told analysts. “And so not unlike traditional cable, where we are the most watched channels in the bundle, why would that be different in a virtual universe? And so we know we have value. And I think individually and collectively, we will recognize that value and are not willing it to sell at a discount or to sell on an à la carte basis.”

“Every individual broadcast group has their own mission and their own strategy,” O’Brien says. “As these virtual platforms are crossing through 20, soon to be 30, 50 percent of the viewers not too far off in the horizon … when we don’t have a say in those conversations, it’s hard for us to execute on our strategy to serve our communities.”

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