Disney recently taking full control of Hulu is another sign that live TV streaming services need to be regulated like cable companies. This comes as local TV owners want the FCC to reclassify streaming services like YouTube TV as cable TV companies. This fight started in 2023 and will likely be the largest fight for the future of cord cutting in 2024.
That’s according to the Coalition for Local News, an alliance of companies that own the local affiliates of ABC, CBS, FOX, and NBC stations. The group has spent months advocating for the Federal Communications Commission (FCC) to reclassify likes of YouTube TV, Fubo, Philo, and Hulu, which also offers a live TV option. The goal was to apply the more stringent cable-TV– style regulations on streaming services, which “are essentially the same offering, only delivered over the internet”.
The conversation resumed in September when Congress held its first hearing on the future of TV. During the proceedings, Curtis LeGeyt, the CEO of the National Association of Broadcasters, threw his support behind the owners of local TV stations. That led to a back and forth between the Coalition for Local News and the Preserve Viewer Choice Coalition, made up of the live TV streaming services fighting against any changes in regulation.
Disney’s announcement that it would buy Comcast’s stake in Hulu by December 1 marks the latest flashpoint. “This announcement has drastic implications for the marketplace. A tiny number of companies [are] now positioned to dominate the future of live streaming while rapidly taking market share from traditional cable and satellite. Against this backdrop of consolidation, it’s now more urgent than ever for the FCC to use their authority to refresh the record and examine how best to protect competition, promote localism and ensure access to the most valued content, including local news,” the Coalition for Local News said in a statement to Cord Cutters News.
So, why are locals doing this, and what do they hope to get from it?
First, what exactly is happening?
In July, local TV station owners formed the 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 will force YouTube TV, Hulu, Fubo, and other services to strike deals directly with the owners of local TV stations instead of the networks.
Last week the Coalition for Local News, which is made up of 600 local TV stations owned by groups like Nexstar, released a statement to demand changes in how the FCC regulates live TV streaming services.
How are streaming services like Fubo fighting back?
That same month, YouTube TV, Fubo, Vidgo, Roku, Paramount, Disney, NBCUniversal, and others formed the Preserve Viewer Choice Coalition to stop this move.
“Cable and satellite regulations were enacted decades ago, long before most Americans had even heard of the internet. It’s almost laughable that the same policies would be appropriate in an era with nearly unlimited viewing options,” the group said at the launch and reiterated several times.
This fight is putting local TV station owners, like Nexstar, at odds with network owners like ABC Disney NBCUniversal’s Comcast. Under the existing rules, ABC and NBC can sign contracts covering all their affiliates—even the ones they don’t own—with streaming services like YouTube TV. If local TV stations win, it would dramatically change how the FCC regulates live TV streaming services. Primarily, it would force the live streaming services to negotiate directly with the owners of local TV stations like Nexstar.
Fubo, Hulu, and other streaming services 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 must do, and it is what live TV streaming services will do if the rules are changed.
The group of local TV stations owners argue that this change is needed to protect local news.
YouTube TV and others are pushing back: “Local news thrives under the current system. It took mere months for streaming services to offer local news in every U.S. market, while it took decades for traditional providers to do the same under the old rules and regulations some large affiliates now want to apply to streaming services. Requiring streaming platforms to negotiate carriage individually in all 210 designated markets will lead to less local news available for streaming viewers.”
Would this cost cord cutters more money?
If local stations get their way, it could also mean you will pay more for services like YouTube TV, Fubo, and Hulu + Live TV. If the owners of local ABC, CBS, FOX, and NBC stations succeed, live TV streaming services would need to pay a $1.23 fee per subscriber every year to cover the FCC regulatory fee imposed on cable TV companies, according to Ted Hearn, a policy expert who had worked for ACA Connects, who posted the stat on X (formerly Twitter). Based on a Leichtman Research Group study that found 13.4 million subscribers to live TV streaming services, the fees would add up to $16.4 million.
Why is this happening?
They are pushing this to ensure local news will be offered on streaming services. But you can’t ignore the money side of this. Recently, multiple local station owners have been pushing for increases in carriage fees. Currently, they must accept what the parent networks agree to with streaming services. This rule change would allow them to decline offers they don’t like.
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 the local channels, which could lead to blackouts if agreements aren’t made. It could also result in higher costs for streaming services, and potentially higher costs for consumers if they’re passed down. The FCC hasn’t looked at the issue yet, but it’s one on a lot of peoples’ radar.
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. The live streaming services are likewise gearing up to maintain the status quo.
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