Commentary

Not Just OTT Ad Dollars, TV Stations Want Higher FCC-Regulated Carriage Fees

Gray Television, a major TV station group, wants new OTT streaming platforms that carry local TV stations -- and will in the future -- to pay the same rate that cable, satellite, telco, and virtual pay TV providers do.

It has filed a document with the FCC asking it to consider OTT platforms as traditional MVPDs. That means they have to negotiate "retransmission consent" with individual stations. This includes Hulu, YouTube TV, Roku, Amazon Fire TV, among others.

And you know what this really hints at: Larger carriage fees -- the ones TV stations are desperately need to show big-time financial growth.

In an FCC document, a former FCC commissioner, now Gray lawyer, said ABC, CBS, Fox and NBC negotiates current OTT agreements and then offers them to stations at rates "far lower than the stations receive for traditional MVPD retransmission consent,” according to report in Broadcasting & Cable.

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Right now, Roku, Amazon Fire TV, Samsung TV Plus and others aren’t FCC regulated. So guess what? They can essentially pay what they like — or not.

This goes hand-in-hand with TV stations that complain Facebook isn’t paying much to TV stations for linking news content to TV station websites. By making these new streaming/OTT MVPD regulated, TV stations can be assured of big revenues to come.

The backdrop: Traditional pay TV providers keep losing ground in the traditional MVPD world. Cord-cutting subscriber declines now regularly hit 7% per year. That means less money to TV stations.

At present, things aren’t down. But they aren’t spiking, either. S&P Global says retransmission fees inched up 2% to $12.17 billion in 2020 from $11.89 billion.

We know local TV stations are continuing to pursue other businesses -- OTT ad sales platforms selling locally/regionally based streamers, direct digital media ad revenue, and possibly, digital media competitive businesses, coming from the new ATSC 3.0 standard.

High-profile TV business news content is all about streaming -- not an area TV stations want to miss. With OTT ad sales platform units, TV station see ways to leverage their linear, local TV viewing with new streaming viewers, virtually all younger than traditional TV viewers, who are around 60.

Of course, the longer-term question is: Should TV stations get what they want, will those younger viewers find content on TV stations they want, via those streaming app platforms? And if it isn't local TV news content, what then?

1 comment about "Not Just OTT Ad Dollars, TV Stations Want Higher FCC-Regulated Carriage Fees".
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  1. Ed Papazian from Media Dynamics Inc, June 2, 2021 at 1:47 p.m.

    Again, a very interesting subject Wayne. While it is anticipated that the much shrunken ---and still shrinking----cable systems and satellite distributors will soon have to reduce their re-transmission payments to the stations---which are then "shared" with their network program providors at about a 50/50 split, it's clear that the OTT/streaming services that provide the same shows to their subscribers by letting them access the stations will have to pay their fair share----whatever that happens to be. But is the FCC empowered to regulate the streaming services on this score-----I don't think so-------or is it somehow up to each station to cut it's own deal---LOL? I think the answer will come when the TV networks take up the issue in a more organized manner---acting, in behalf of the stations---but in their own interests as they would capture many of the streaming re-transmission dollars that are essential to juicing up their bottom lines.

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About the Author

Wayne Friedman is West Coast Editor of MediaPost. You can reach Wayne at wayne@mediapost.com.