When it comes to the “State of Competition in the Communications Marketplace,” the role of the “Big Four” television network has become murkier than ever in the streaming era. Can’t get access to an CBS or NBC affiliate? There’s Paramount+ or Peacock. That reality, along with retransmission consent fees that for vMVPDs are controlled by the networks, has increased friction between the “Big Four” and upward of 700 stations.
Just how much tension exists was presented in a 28-page ex parte filing with the Commission.
The filing, dated June 22, is tied to the FCC’s official proceeding for its biennial Communications Marketplace Report (GN Docket No. 26-78), which evaluates the state of competition in the communications industry.
In late May, the Motion Picture Association asked the FCC to refrain from “intervening” in the video marketplace “in light of increasing innovation, intermodal competition, and viewer choice.” Now, counsel for ABC, CBS, NBC and FOX broadcast network affiliates have submitted joint comments that shine a spotlight on a “destructive element of the network-affiliate relationship and its impact on local stations’ competitive standing.”
That would be the subject of distribution revenue, and the inability to negotiate compensation rates with the likes of YouTube TV.
Speaking for their clients, Julia Ambrose and Tim Nelson of Brooks Pierce (representing ABC and NBC affiliates) and Robert McDowell and Jason Rademacher at Cooley LLP (counsel to CBS and FOX), tell the Commission that affiliates “have little meaningful choice but to opt-in to these network-dictated agreements.”
This, the attorneys state, has placed “enormous pressure on local broadcasters’ primary revenue streams,” adding, “Both revenue streams have been negatively affected by the unfettered and unregulated practices of tech giants and the conglomerates that own the Big Four networks.”
Meanwhile, the affiliates assert that, although the quarterly earnings reports suggest otherwise, “distribution revenues are on the decline” as MVPD customers choose streaming platforms or virtual MVPDs, for which the networks control retransmission consent negotiations and not the affiliate owners. The big problem for the affiliates? “That decline is driven in part by the Big Four networks themselves through their vMVPD and direct-to-consumer platforms, which serve as substitutes for traditional MVPD video services.”
Furthermore, “Even if that subscriber leaves cable or satellite for a virtual MVPD provider, the broadcaster’s revenue suffers because of the below-market economics of the
vMVPD opt-in paradigm.”
One other big point the attorneys bring to the Commission’s attention is that, in the affiliates’ view, “asymmetric regulation remains a material barrier to local broadcasters’
competitive viability.” That would be the 39% national television ownership cap and the Local Television Ownership Rule.
“Local television broadcasters continue to serve audiences in America’s towns, cities, and
counties nationwide despite having to compete on an unlevel playing field in which they remain subject to legacy ownership restrictions (and regulatory obligations) that do not apply to the internet behemoths and media conglomerates that own the Big Four Networks with whom they compete for audiences, advertising dollars, and distribution revenues,” the attorneys write. “As the Affiliates Associations and others have explained repeatedly, these asymmetric rules … restrict broadcasters’ ability to achieve efficient scale, attract investment, and continue funding local journalism.”
‘DIRECT COMPETITION’ ADDING TO PRESSURE
In 2026, the broadcast TV network affiliates face what they consider to be “a fundamentally different and uniquely destabilizing form of competition” — direct competition from their own broadcast television Networks and from the Direct-to-Consumer streaming platforms operated by those networks’ parent companies, including
Paramount+, Peacock, Tubi, Fox ONE, ESPN Unlimited, Disney+, and Hulu.
“Networks now compete directly with their own affiliates for viewers and advertising revenue, and even the largest local broadcast groups are dwarfed by network parent companies in scale, capital, and negotiating leverage,” the lawyers note. “The consequence is a one-sided relationship that drains local stations of the resources needed to sustain local newsrooms and serve their communities.”
Meanwhile, network affiliation fee increases were assailed, with the affiliate groups saying these fees have escalated to “unsustainable levels.”
These fees refer to “reverse comps,” a subject Warren Buffett’s BH Media knows all to well about. Rather than pay ABC Owned Stations parent The Walt Disney Co. what it was seeking for the right to keep the ABC Television Network on WPLG-10 in Miami-Fort Lauderdale, BH Media became an unaffiliated station, dropping ABC programming after nearly 70 years.
The attorneys state, “The affiliation fees that the Big Four networks extract from local broadcast groups have escalated to levels that often represent the majority of a station’s revenue; in many instances, particularly in small and mid-sized markets, affiliation fees consume all of—or even in excess of—a station’s total retransmission consent revenue.”
The result? Many affiliates, the station groups claim, are “upside down,” paying more to their network than they earn from all MVPD and vMVPD distribution combined, “forcing them to subsidize payments to the Big Four networks with local advertising revenues, on
top of all of the station’s distribution revenues.”
Factor in the absence of station group negotiation over retransmission consent fees with vMVPDs and the rise of the network-aligned streaming app, and the struggle is real for the affiliate TV station owner.
“Corrective action to level the competitive playing field for local television broadcasters is necessary and appropriate,” the legal counsel for the affiliate groups conclude.
