Recently hundreds of local TV stations formed a coalition to ask the FCC to change the rules that allow live TV streaming services to sign big national deals with local TV stations. Currently, for example, YouTube TV, Hulu, Fubo, and more can strike a deal with Paramount for all CBS stations. In short local TV station owners like Nexstar want YouTube TV, Fubo, and more to all be treated like cable TV companies.
To do this, 600 local TV stations are forming the Coalition for Local News to work together.
This change 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. No longer would Fubo, Hulu, and others be able to reach deals directly with Paramount for all CBS stations, for example. Now 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 on live TV services. A few years ago, 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.
At the time the FCC made these rules that allowed special negotiations for streaming services, they were small, with just 200,000 subscribers. Now they have grown to millions of subscribers.
Now Nexstar Media Group, Sinclair, E.W. Scripps, and Gray Television have announced that they want to cut out the middle man and negotiate directly to bring their locals to streaming services. They hope to get better deals than what the parent companies have agreed to.
Nexstar’s President Tom Carter, during his earnings call earlier this year, 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 this 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 cutting?
This will likely lead to more blackouts as locals have argued the deals they got with live TV streaming services were too low.
So this puts services like Hulu, YouTube TV, FuboTV, and more in a tough spot. First, agree to the demands of locals for more money and raise their prices or drop locals.
We have already seen services like YouTube TV make it clear they won’t be raising their price.
Look for the battles with locals to become more common. Like we are seeing with DIRECTV. Over the next few years, many contracts with services like DIRECTV STREAM, YouTube TV, Hulu, and more are coming up for renewal. With local owners demanding a seat at the table now, these services have to negotiate with a long list of owners instead of just one company.
This is just one of the many legal battles happening around cord cutting as traditional media companies struggle to address the rapid growth of cord cutting.