Jul 27, 2023 - Economy

Counter-coalition formed to fight local broadcasters over distribution rules

Illustration: Brendan Lynch/Axios

Several of the country's biggest entertainment and streaming companies are teaming up to fight hundreds of local broadcasters over a years-old provision that would determine whether they are forced to negotiate directly with those local stations for distribution deals.

Why it matters: The last time the Federal Communications Commission took a hard look at the issue was nearly 10 years ago.

  • The local broadcasters are now ramping up their push for the FCC and Congress to revisit the rule and modernize it.
  • The programming companies and streamers want to keep the rule intact.

Details: The Preserve Viewer Choice Coalition, which launches on Thursday, is made up of major entertainment companies and their broadcast networks.

  • These include: Disney/ABC, Paramount/CBS, Fox Corp./FOX, NBCUniversal/NBC/Telemundo, Warner Bros. Discovery, Univision, FuboTV and Roku, a representative for the coalition confirmed to Axios.
  • The group is in touch with other streaming providers about joining the coalition and the number of members is expected to increase in coming weeks.

How it works: The regulatory provision being debated forces traditional live TV providers, like cable and satellite firms, to negotiate directly with local broadcasters for distribution. Because streamers are not defined the same way as traditional video distributors, they are not subject to that rule.

  • "I'm not sure where the threat is to local news stations across the country from the current streaming environment. They're available on every platform, both with entertainment content and on their own in different stations and apps," said Bryce Harlow, a coalition spokesperson and a consultant for Subject Matter, an advocacy agency that's running the communications and government relations functions for the coalition.
  • "So I'm just not clear where the crisis is that's in need of fixing. Why would you seek to apply all of these rules to a streaming environment that works well, and potentially change the dynamic for consumers and drive up prices?"

The other side: The Coalition for Local News, which launched last week, argues the FCC needs to revisit the rule because the media landscape has changed.

  • "There's no way for us to advance our own individual strategies as broadcasters when we don't have a say in the largest growing platform and revenue stream in our business," Michael O’Brien, senior vice president and chief distribution officer at the E.W. Scripps Company told Axios.
  • Scripps is part of the coalition that represents 600 local broadcast stations via their trade associations.

Zoom in: Local broadcast companies, like Scripps, Nexstar, Sinclair and others, pay broadcast networks to license their content, but produce their own local newscasts.

  • They argue local news would suffer without the ability to negotiate for distribution directly with online distributors. Typically, the broadcasters negotiate those deals on their behalf.

What's next: A few members of Congress have started to address the issue recently, most notably, Sen. Maria Cantwell (D-Wash.), who chairs the Senate Commerce Committee.

  • She wrote a letter to FCC Chair Jessica Rosenworcel urging the Commission to revisit the rule last month. Sen. Chuck Grassley (R-Iowa) has also urged the FCC to consider revisiting the record.
  • Rosenworcel has argued the FCC lacks the authority to make changes to those provisions on its own and needs the support of Congress.

Go deeper: Local TV stations form new coalition to urge streaming reform

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