Broadcast television station ownership group Gray Media has urged the FCC to prohibit the current way carriage rights of a “Big Four” affiliate are conducted with virtual MVPDs such as YouTube TV and Hulu + Live TV.
Why? Gray claims the nation’s TV networks are engaged in bargaining tactics that result in them retaining sole authority over the affiliates’ relationship with vMVPDs – either de facto
or de jure. As such, “they are a method of undue interference with a local broadcaster’s right to control distribution of its signal.”
In a 10-page filing, made in response to Media Bureau docket No. 25-322, which examines the dynamic between broadcast TV networks and affiliate station owners, Gray illustrates various changes in viewership habits which have made the local video advertising marketplace increasingly competitive “at the affiliates’ expense.”
Gray states that consumers have shifted away from traditional MVPDs to streaming services, which has also increased the number of local video advertising alternatives — including vMVPDs.
For Gray, “This dynamic has resulted in an outsized balance of power for the networks,” as they offer broadcasters to “opt-in” to a system “that allows the network to control negotiations with vMVPDs for distribution not only of the networks’ own programming and other assets, but also of their affiliates’ locally produced content.”
Yet, this network “offer,” in Gray’s view, “is not one that broadcasters can refuse without the network pulling the affiliation and ‘offering’ it to another broadcaster in the market, or undercutting its affiliate by providing the vMVPD with a ‘white feed’ of its network content.”
With ABC owner The Walt Disney Co. tangling with YouTube TV as recently as October 2025, resulting in a now-resolved impasse, and NBCUniversal and Fubo failing to reach a deal a few weeks ago, vMVPD “blackout” threats are impacting companies such as Gray and their peers. “The local stations and viewers suffered … as the networks used their affiliates as pawns to pursue other corporate interests,” Gray argues.
The network/affiliate power imbalance, therefore, has impacted both station ownership groups and consumers, Gray concludes.
A REJECTION OF REVERSE COMPS
For nearly 35 years, a commercial television station can pay a television network significant dollars in exchange for being permitted to affiliate with that network. In Miami, these “reverse compensation” fees put an end after 69 years of ABC Television Network affiliation for WPLG-10, the BH Media-owned station. Sunbeam Television, founded by the Ansin family, scooped it up to create “ABC Miami” as a sibling to its FOX-aligned WSVN-7.
With retransmission consent fees and advertising revenue presently the broadcast TV industry’s two primary revenue sources, Gray explains to the Commission that broadcasters use those funds to invest in their local communities through locally produced television programming and viewer engagement. However, they say, “broadcasters’ ability to continue their local service is threatened by exorbitant fees extracted from local communities by the networks.”
Instead of allowing additional investment by local broadcasters like Gray for producing and airing local news, sports, and weather programming, “the networks are syphoning funds from their affiliates to subsidize their direct-to-consumer products and newsgathering from New York City, Los Angeles, and Washington, D.C.,” publicly traded Gray argues. “This imbalance in the network-affiliate relationship is an issue ripe for the Commission to explore in a future rulemaking or adjudication.”
Indeed, some futurists have declared the television network all-but extinct come 2040, with Paramount+ replacing CBS, Peacock taking all NBC content, Disney+ serving as the hub for ABC, and FOX One taking the FOX broadcast network’s shows and programs. The result? All local broadcast TV stations would be just that — local.
If, or when, that viewer-driven transition occurs isn’t necessarily germane to Gray’s arguments. Rather, it wants a limit on reverse compensation fees, and it wants it now.
“Specifically, the Commission should limit the networks’ ability to extract fees from affiliates to fifty percent of a broadcaster’s revenue for distributing that network’s programming from traditional MVPDs, vMVPDs, and any other form of distribution now known or in the future devised,” Gray asks. “That limit would ensure that networks and affiliates revert to the time when they shared in the responsibility to provide high-quality national and local programming to the broadcasters’ local communities.”
In the words of Gray counsel Henry Wendel and Trina Kwon at Cooley LLP, “Failing to do so will almost certainly result in the demise of locally produced news, especially in small- and mid-sized markets that do not have the economic foundation to
support numerous local news operations.”
If that should happen, 2040 could see the ultimate demise of local TV, placing it in a position perhaps akin to AM radio today. Alternatively, should the Carr Commission acquiesce, it could reinvent itself as the over-the-air multimedia hub for true community-oriented video programming.
