A group of independent broadcasters representing more than 600 local ABC, CBS, Fox and NBC television stations have formed a new advocacy group as they seek to benefit from consumer shifts away from traditional cable and satellite toward streaming.
On Tuesday, the broadcasters announced a new group called the "Coalition for Local News," which leverages the production of local news programming on hundreds of television stations as part of a broader call to reform retransmission consent rules, so they apply equally to traditional and upstart pay television systems.
Currently, federal rules allow broadcasters the option to seek fees from cable and satellite companies in exchange for the right to redistribute their channels to customers. Broadcasters and traditional pay TV platforms are required to negotiate in "good faith" over various terms, including fees, in exchange for carriage.
Those rules don't apply to streaming upstarts like Google-backed YouTube TV, Disney's Hulu with Live TV and Fubo, which have traditionally negotiated carriage of local broadcast stations with the networks themselves.
For years, the affiliate boards comprising local ABC, CBS, Fox and NBC stations allowed the networks to carriage via streaming services on their behalf, while major broadcasters focused on carriage deals with cable and satellite platforms. As streaming services gain in popularity, broadcasters have started to feel those negotiations mainly benefit the networks in a way that cuts them out — and, now, they want control for themselves.
"Local broadcast stations can thrive in a fair marketplace — we have demonstrated as much over the past 30 years of successful competition in the cable and satellite era," Mike Meara, the former chair of the ABC Television Affiliate Association, wrote in a statement on Tuesday. "But no business can succeed when the rules don't apply fairly and reflect today's reality. The market has evolved dramatically, and it's time for lawmakers and regulators to act to protect local broadcast news."
Several major broadcasters are participating in the Coalition for Local News, including Nexstar Media Group, the E.W. Scripps Company, Gray Television, Allen Media Group, Cox Media and Sinclair, Inc. A website launched by the organization on Tuesday does not specifically name any of the companies as members of the group, but both Nexstar and TEGNA voiced their support for the coalition on social media shortly after it was announced.
There is already some indication of where things could be headed if federal regulators impose retransmission consent rules on streaming services. Earlier this year, the CBS affiliate board rejected an offer from the network's owner, Paramount Global, to negotiate continued distribution of their stations on sports-centric streamer Fubo. The matter resulted in Paramount distributing a network feed of CBS programming, sans syndicated and local news broadcasts, to some Fubo subscribers for about two months.
On a conference call with investors in February, officials at Nexstar — which participates on the CBS affiliate board — said its dispute with Fubo was part of a desire to "control our own destiny" with respect to carriage on streaming services, and affirmed its belief that competitors across the industry needed to rally behind the same cause.
"Given the lack of regulation in the digital world, it’s important that we remain united as an industry," Tom Carter, Nexstar's chief operating officer, said during the call.
And there are indications that broadcasters are not waiting for the FCC to apply retransmission consent rules to streamers before leveraging their products and market position to seek better terms. On Tuesday, a senior official at DirecTV said it was forced to black out CW Network programming on more than 20 local television stations owned or operated by Sinclair that are carried on its DirecTV Stream streaming service. The issue was disclosed in a letter sent to the Federal Communications Commission (FCC) by DirecTV; Nexstar acquired a majority stake in the CW Network late last year.
The matter comes about two weeks after DirecTV was forced to pull more than 160 local stations owned by Nexstar from its satellite and streaming services, leaving many parts of the country without access to ABC, CBS, Fox or NBC programming. Including the Sinclair-operated CW Network affiliates, DirecTV says around 73% of U.S. television households are now without some or all network programming from one or more major affiliates. Earlier this year, DirecTV filed a federal antitrust lawsuit against Nexstar, accusing the broadcaster of leveraging its market position and shared services agreements with third parties to sidestep federal ownership rules and drive up retransmission fees. Nexstar rejected the allegations, saying it operates its business in compliance with all laws.
On Tuesday, a spokesperson for Nexstar urged followers of its Twitter account to join the Coalition for Local News and "tell your representatives that we need the rules to reflect today's reality."
The Coalition says at least one federal lawmaker has gotten behind its initiative. Last month, Senator Maria Cantwell urged the FCC to examine whether linear streaming services should fall under the same definition of a multichannel video programming distributor as traditional cable and satellite.
In the letter, Cantwell wrote that broadcasters "estimate that they receive 10-20% less for their content when it is distributed by linear television streaming services," though it wasn't clear from the letter where this information came from.
"We must ensure that new technological trends do not further endanger our local broadcasters, and so it is critical that the FCC consider whether the current retransmission consent model is sustainable and continues to benefit our local communities," Cantwell asserted.
While the Coalition for Local News rallies support for its goals by leveraging local news broadcasts, some of the group's participants have reduced their investment in local journalism over the last few months. In April, Sinclair laid off dozens of employees and shut down several newsrooms, replacing local broadcasts with its syndicated news program called "The National Desk." That same month, Scripps laid off around 300 workers as part of a broader restructuring that impacted local newsrooms and journalists at its Scripps News channel.
Michael O'Brien, a senior executive in charge of distribution at Scripps, said imposing the same requirements on streaming services as cable and satellite television will help broadcasters "compete and thrive on a level playing field."
"This 'streaming loophole' takes direct investments away from local broadcasters and allows national media conglomerates to control the right to local broadcasters' signals, ultimately deciding the fate of local news," O'Brien said.