Locked Out Of Local TV: The Streaming Bundle We Still Can’t Get

Proximity
Written By Tim Hanlon

In the age of streaming, viewers can get just about anything on demand — except, oddly enough, the seemingly simplest thing: a dedicated bundle of broadcast television stations. Despite a landscape flooded with streaming services, there is still no way for consumers to easily and affordably access just the major broadcast networks — ABC, NBC, CBS, Fox, PBS, Univision, Telemundo, The CW, etc. — along with all their local market stations and embedded diginets — without paying for a bloated package of additional channels they don’t want. Why is something so basic, that used to be free with an OTA antenna (and technically still is, with DIY installation persistence and topographical luck), so hard to get in a format that now constitutes the majority of consumer “TV” behavior?

The answer lies in a messy web of outdated regulations, fast-changing business models, and a television market driven more by profit than consumer choice. Broadcast stations, the heart and soul of American TV, are tied up in complex 90s-era retransmission consent agreements that dictate how premises-based cable, satellite and telco TV providers (aka MVPDs) — and now, their virtual versions (vMVPDs) — pay to carry these channels. These agreements, originally designed to ensure fair compensation for broadcasters, now result in a convoluted system where networks and station groups forcefully tie their local signals to a slew of other cable channel offerings, forcing consumers into larger and more expensive packages.

This issue came to a head earlier this year when DirecTV made an unprecedented move in its standoff with TEGNA, one of the largest station owners in the county. Frustrated by ongoing disputes over retrans fees, DirecTV proposed shifting TEGNA's stations into a separate "broadcast streaming bundle." This move was intended to create a standalone option for consumers who only wanted to pay for local broadcast channels without all the extra baggage. But the plan quickly fell apart, with TEGNA pushing back hard, calling the proposal illegal and a violation of existing retransmission agreements. Ultimately, the idea was squashed before it could take shape (DirecTV even tested delivering an NBC national network signal directly to subscribers, bypassing local affiliates in certain markets), once again leaving consumers without the option of a simple, affordable broadcast-only streaming package.

DirecTV's attempt, though unsuccessful, highlighted a fundamental flaw in the current media ecosystem: broadcasters and networks reluctant to untangle themselves from the traditionally lucrative bundle model. By bundling less popular cable channels with in-demand broadcast network-carrying stations, they force consumers to pay for inflated TV packages instead of just the programming they want. Even in live TV streaming vMVPD services like YouTube TV, Hulu + Live TV, or Fubo, customers end up paying north of $70 a month for channels they’d rather skip, just to get local news, sports, and their favorite broadcast primetime shows.

The irony is that the most broadly intended programming component of television has now become one of the hardest to access fully and independently via streaming. With so much industry focus on streaming innovation, it's baffling that no major player has successfully crafted or negotiated a straightforward, consumer-friendly broadcast-only streaming package — one that consumers would willingly pay for in exchange for a comprehensive roster of market-specific channels with dependable signal quality.

Moreover, both Congress and the Federal Communications Commission (FCC) are sitting on their hands. Both could step in to update the now-fraying retransmission consent rules to better reflect the modern media landscape. But instead, the status quo — aided and heavily abetted by a powerful, short-term-minded broadcast lobby focused more on incrementally squeezing profits from current regulations than ensuring the industry’s relevance in the future — prevails, benefiting networks and stations while frustrated consumers either pay more or simply abandon broadcast TV altogether.

DirecTV’s bold attempt to shake things up earlier this year should have been an existential wake-up call for the broadcast industry. If a major TV distribution player (11M+ subscribers across legacy DBS and U-verse, plus its Stream vMVPD) is willing to break the mold and try something new, why are broadcasters so resistant to at least consider the idea? Fear of losing revenue from bloated channel packages is an obvious reason. But this reluctance is short-sighted in an era where consumers are increasingly cutting pay TV cords entirely and turning to pure-play streaming alternatives — many of which come already pre-loaded into their smart TV operating systems. Instead of adapting, broadcasters are clinging to a decaying business model designed for the cable era of the past, not the streaming one of the future — if not already today.

It’s time to ask why viewers can’t simply pay for what many want: a bundle comprised of just OTA broadcast TV networks and local stations/diginets — reasonably priced and easy to access via streaming. American consumers deserve a straightforward, affordable option for broadcast television in today’s now-pervasive streaming infrastructure. The ball is in the court of broadcasters and policymakers: Will they finally listen to what consumers want, or will they continue to let greed and outdated regulations define (and limit) the market? The answer is both clear — and existential — for the survival of broadcast television.

Tim Hanlon

Tim Hanlon is the Founder & CEO of the Chicago-based Vertere Group, LLC – a boutique strategic consulting and advisory firm focused on helping today’s most forward-leaning media companies, brands, entrepreneurs, and investors benefit from rapidly changing technological advances in marketing, media and consumer communications.

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