Local TV station owners have formed a new Coalition for Local News to push the FCC to force cord cutting services to be treated like cable TV companies. If the FCC agrees to change the rules it would force YouTube TV, Hulu, Fubo, and more to strike deals directly with the owners of local TV stations owners instead of the big networks.
The Coalition, made up of 600 local TV stations owned by groups like Nexstar, on Wednesday put out a new statement to back their push to change the FCC rule.
“The problem is that right now streamers secure the right to carry local stations not from the stations themselves, but rather through deals cut directly with the national networks—which in some instances are outrageously owned by the same entity,” the group said in a statement on their website. “As a result, the networks decide both how much streamers pay for local stations and how much of that value actually makes it to local stations. This system only exists because streamers are not yet subject to the same regulations that require traditional pay-TV providers like cable and satellite companies to negotiate directly with local stations.”
If local TV stations win, it would dramatically change how the FCC regulates live TV streaming services. It would also force them to negotiate directly with the owners of local TV stations like Nexstar. If that change happens, Fubo, Hulu, and others wouldn’t be able to strike deals directly with Paramount for all CBS stations, for example. Instead, they will need to go to each individual owner of each local TV station. This is what cable TV companies have to do, and it is what live TV streaming services may have to do soon.
Back when live TV streaming was new, they needed to go to each local TV station and strike a deal to stream their local ABC, CBS, FOX, and NBC. This was slow and meant many locals would be missing live TV services. When cord cutting was new, locals agreed with the parent companies behind ABC, CBS, FOX, and NBC to let them negotiate on their behalf to make one deal that covered all locals.
Now Nexstar Media Group, Sinclair, E.W. Scripps, and Gray Television have announced that they want to cut out the big networks and negotiate directly to bring their locals to streaming services. They hope to get better deals than what the parent companies have agreed to. They argue that the current situation is unfair to local station owners.
“So yes, viewers may see some local stations on streaming services. But these stations are being carried on the basis of unfair agreements, which cut local broadcasters out of the negotiating process and leave stations with less resources to produce local news.” The Coalition For Local News said.
Earlier this year Nexstar’s President Tom Carter, during his earnings call, said, “we firmly believe we should control our own destiny with regard to the virtual MVPDs instead of allowing the network to negotiate on our behalf.”
“Congress and the FCC have always modernized federal rules in other contexts to keep them in line with advancements in communications technologies and changes in the marketplace. All we ask is that we modernize these regulations to reflect the current marketplace so local broadcasters are able to compete and thrive on a level playing field,” says Michael O’Brien, SVP at The E.W. Scripps Company, and member of the Coalition. “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.”
To fight back, major media companies and streaming services like Fubo have created their own coalition to lobby the FCC not to change the rules.
So what does this mean for cord cutters?
Local channels have argued the deals they got with live TV streaming services were too low. A change would mean a new round of negotiations for all of the local channels, which could lead to blackouts if agreements aren’t made.
If the FCC changes the rules, this puts services like Hulu, YouTube TV, FuboTV, and more in a tough spot. First, they would have agree to the demands of locals for more money and raise their prices or drop those channels. Something is likely to result in blackouts like what we are seeing with DIRECTV right now.
For now, it looks like local station owners are ready for a long fight to get what they believe will be a better deal for them.