We already have something similar to this if you subscribe to cable except that it is driven by market forces and local TV stations.

Broadcast fees have become ridiculous in the age of cable trying to stay competitive with the streaming of virtual cable systems like YouTube TV.

One thing that I found out is that the networks are getting the money directly from the virtual cable systems bypassing the traditional model where the local TV station would typically get the local retransmission fees from the traditional cable operators and then pay the networks any fees in reverse compensation.

Here is a little backstory from my reading of trade publications on the history of how local network TV makes money.

The traditional model for broadcast Television was that networks paid local stations to become members of its network. The local TV stations would also get so many minutes per hour for local advertising or promotion.

Then in the 1980’s or 90’s a law was changed or added that TV stations could choose to either force a cable operator to carry your broadcast TV signal called Must Carry or a station could collect a negotiated retransmission fee from cable operators, called Retransmission Consent. Most TV stations chose the retransmission fee. This why every few years we get the same song and dance that ABC Cable is dropping WXYZ, and call ABC Cable to continue carrying WXYZ. It is also because most contracts are 3 year deals or when a station changes ownership which has been plentiful lately.

Once the networks realized how much was coming in via retransmission fees, they gradually lowered network compensation to carry network programming. Some networks even started charging TV stations to carry network programming as costs increased due to new sports contracts and increased entertainment costs. Also, network advertising income has diminished due to lower ratings and less people watch traditional TV.

Some stations put themselves in this position as stations traded affiliations like baseball cards and station ownership groups including network owned and operated station groups grew in size. This led some stations fearful of losing a strong network affiliation to offer the network to carry it for free or the station would offer to pay the network to carry it.

Another factor affecting TV is that audience size is diminishing fast. A few days ago, one trade publication said that broadcast TV had its lowest viewership night in TV history.

With streaming now, the only way for broadcasters to compete is with live sports content, but even that is available via streaming from the network or leagues undercutting the local TV station.

Also, as the Hollywood strikes continue leaving little scripted programming available to the networks, that only increases their reliance on sports, game shows, and reality programming.

Sorry for the length, I didn’t think I was writing a draft term paper this morning.

This post was edited on 8/4/23 at 6:31 am