Local owners of ABC, CBS, FOX and NBC want the FCC to reclassify YouTube TV, Fubo, DIRECTV STREAM, etc.

Recently, hundreds of local TV stations formed a coalition to demand the FCC change the rules that allow live streaming services to sign big nationwide deals with local TV stations. Currently, for example, YouTube TV, Hulu, Fubo and many others can make a deal with Paramount for all CBS stations. In short, owners of local TV channels like Nexstar want YouTube TV, Fubo and many others to be treated like cable TV companies.

To do this, 600 local television stations form the Coalition for Local News to work together.

This change would dramatically change how the FCC regulates live TV streaming services. It would also force them to negotiate directly with the owners of local television stations. Fubo, Hulu and others could no longer make deals directly with Paramount for all CBS stations, for example. Now they will have to go to each individual owner of each local television station. That’s what cable TV companies need to do, and that’s what live TV streaming services may have to do soon.

Back when live TV broadcasting was new, they had to go to every local TV station and make a deal to broadcast their local ABC, CBS, FOX and NBC. It was slow and meant many locals would miss live TV services. A few years ago, locals agreed with the parent companies behind ABC, CBS, FOX and NBC to let them negotiate on their behalf to reach an agreement covering all locals.

When the FCC established these rules that allowed special negotiations for streaming services, they were small, with just 200,000 subscribers. Now they have reached millions of subscribers.

Now, Nexstar Media Group, Sinclair, EW Scripps and Gray Television have announced that they want to cut out the middleman and negotiate directly to bring their people to streaming services. They hope to get better offers than those agreed by the parent companies.

Nexstar Chairman Tom Carter, on his earnings call earlier this year, said, “We strongly believe that we should control our own destiny when it comes to virtual MVPDs instead of allowing the network to negotiate in our name”.

“Congress and the FCC have always modernized federal rules in other contexts to keep them in step with advances in communications technology and changes in the marketplace. All we ask is that these regulations be modernized to reflect today’s market so that local broadcasters can compete and thrive on a level playing field,” said Michael O’Brien, Senior Vice President of The EW Scripps. Company and member of the Coalition. “This ‘streaming loophole’ takes direct investment away from local broadcasters and allows national media conglomerates to control local broadcasters’ right to signals, ultimately deciding the fate of local news.”

To combat this, major media companies and streaming services like Fubo have created their own coalition to pressure the FCC into not changing the rules.

So what does this mean for cord cutting?

This will likely lead to more blackouts as locals have argued that the deals they have made with live TV streaming services are too low.

This therefore puts services like Hulu, YouTube TV, FuboTV and many others in a difficult situation. First, accept the demands of the locals for more money and raise their prices or drop the locals.

We’ve already seen services like YouTube TV make it clear that they won’t raise their price.

Look for battles with locals to become more common. As we see with DIRECTV. Over the next few years, many contracts with services such as DIRECTV STREAM, YouTube TV, Hulu, etc. will be renewed. With local owners now demanding a seat at the table, these services must negotiate with a long list of owners instead of a single company.

This is just one of many legal battles unfolding over cord cutting as traditional media companies struggle to cope with the rapid growth of cord cutting.

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