Talking TV: The Networks Strike Back On vMVPD Issue With Coalition Of Their Own

If you hear the sound of dueling banjos wafting over the broadcast landscape, that’s networks and affiliates warming up for a fight.

The first salvo came from the affiliates, who less than two weeks ago launched the Coalition for Local News to reassert themselves in the long-simmering debate over who should be allowed to negotiate retransmission consent rights with the vMVPDs.

Owning to longstanding FCC rules, broadcasters hold all the cards there, and the affiliates have let it be known that doesn’t hold water with them any longer. To make their case, they’ve drawn a direct line between that potential vMVPD revenue funneling mostly to the networks as potentially impairing to their ability to produce local news.

Now a second coalition representing the networks and at least one vMVPD, the Preserve Viewer Choice Coalition, has emerged. Its position is that things are perfectly fine as they are, and they’re drawing a line between affiliates getting those negotiation rights directly to impeding viewer choices on the streaming landscape.

Bryce Harlow is a veteran lobbyist from the broadcast industry tapped to speak for the networks’ coalition. In this Talking TV conversation, he lays out its rationale and speakers to the broader implications of a growing internecine conflict within broadcasting.

Episode transcript below, edited for clarity.

Michael Depp: Just last week on this podcast, we chatted with Tanya Vea, a station group executive at Bonneville International, and one of the spokespeople for the newly formed Coalition for Local News. The coalition, which represents over 600 local TV stations, is looking to raise awareness over their current inability to negotiate directly with vMVPDs for retransmission consent on streaming.

That ability to negotiate remains solely with the networks with which their affiliated and the affiliates do not feel like they’re getting a good deal, to put it mildly. So far, to the coalition’s chagrin, the FCC has shown little interest in revisiting the issue.

Well, almost immediately after the Coalition for Local News announced itself to the world, there’s an even newer coalition in town. This one is called the Preserve Viewer Choice Coalition, and it’s comprised of the big four networks — ABC, CBS, NBC and Fox — along with Univision, Telemundo, Warner Bros. Discovery and Roku. And do you want to take a guess on what side of the issue they fall on?

I’m Michael Depp, editor of TVNewsCheck, and this is Talking TV. Today, I’m talking with Bryce Harlow, a spokesperson for the Preserve Viewer Choice Coalition and a lobbyist with the organization Subject Matter. We’re going to talk about the new coalition’s position and its rationale and the impact this issue may have on network affiliate relations. We’ll be right back with that conversation.

Welcome, Bryce Harlow.

Bryce Harlow: Michael, thanks for having me.

Thanks for being here. Bryce. I want to read you something from Preserve Viewer Choice’s press release last week that very likely you wrote: “Large station groups are pushing for FCC rule changes that would force online video providers and streaming platforms to negotiate with them for content that they do not own. These groups would revive a long dormant FCC proceeding that provoked an overwhelmingly negative response during a comprehensive public consultation, where commenters pointed to the potential harm to viewers, content creators and local news providers. Their proposed rule changes would turn back the clock and force online video providers and streaming platforms to be regulated like the cable industry of decades past.” Well, Bryce, there’s some heavy language in there.

Can we start with the phrase “content that they do not own”? Now, many TV stations produce as much as seven to eight, even nine hours of content per day of local news. And many also have contracts with syndicated provider program providers to stream shows like Jeopardy and Wheel of Fortune in their markets. So, why are you calling this content that they do not own?

It’s a good question. So, I think the short answer to that is because right now they can negotiate. And actually, it’s a great time to be a streaming consumer, right? A streaming viewer. You can watch anything any time. There are million platforms, if anything. And sometimes you’re paralyzed by indecision because you have too many choices. And that includes local stations, right? There are hundreds of local station apps on Roku, on Fubo, name your online streaming provider, for people to consume that content. I think what’s at issue here is negotiating for carriage of that additional network content that they don’t own the rights to. Right, so again, today, from our perspective, you can go ahead and negotiate for carriage of your local news to your heart’s content. And they’re doing that to a significant degree, and it benefits viewers.

Another phrase, “long dormant FCC proceeding.” Retransmission consent fee law has been part of copyright law for decades. And while cable operators dislike paying stations to retransmit their programing, ABC, CBS, NBC and Fox have benefited since 2006 from fees that their affiliates pay them to provide them a share of that retransmission consent fee revenue that they collect. So, why should the networks not permit the stations to apply the same negotiating power that they have over cable and satellite providers with giants like Amazon video, Roku, Google Plus and other aggregators?

Well, I think a couple of things there, right. So, most streaming platforms probably just don’t have the bandwidth in the first place to negotiate individual deals with all of the separate broadcasters across the country. And the 210 DMAs, there’s a lot of individual stations. It’s not efficient. And honestly, I think if you were to apply that system, which we view as somewhat outdated to the streaming environment, you’re going to have a lot less carriage of local stations. Some of the bigger groups like that are really pushing this effort and seeking carriage of ancillary channels. They might do OK. But some of the smaller guys I think actually aren’t going to benefit from it at all. And the end result might actually end up being less online local content than we have today.

OK, well, I want to come back to the size of the groups in just a moment. But the networks get a lot of money on reverse comp from the affiliates, and the long-term outlook for their retrans revenue is negatively impacted by cord cutting. The consumer money that was being spent on cable and satellite is now being channeled into streaming services, including vMVPDs. The market is inexorably shifting in that direction, so why shouldn’t regulation reflect that?

That the answer to that question would be applying regulation… The FCC has had this proceeding pending since 2014, and I think they’ve pretty actively made the judgment. I know the other side characterizes it as a loophole. I don’t know that you can call something a loophole when you’ve actually had a conscious decision not to do something.

I think even Chairman Rosenworcel noted in her response to Sen. Grassley earlier this year that when they first opened this proceeding, there were significant concerns raised with the agency regulating streaming platforms. You do get into your question earlier, to questions of copyright. And if they have the ability to do that. And I think the answer clearly so far has been no. And then when you’re getting into dollars and cents, I know the Nexstar CEO has said previously that when you’re talking about an apples-to-apples basis, they’re actually getting the same amount of money roughly from the virtual MVPD deals that they’re able to opt into from the networks that they do from their linear deals on the traditional legacy side.

Well, you know, you mentioned 2014. I mean, I don’t know that in 2014 anybody could have anticipated the streaming landscape as it necessarily looks today. It’s evolved quite rapidly, perhaps, from prognostications back then of what it might be.

Now, the release also mentions “large station groups.” Four of the top 10 TV station groups are owned by ABC, CBS, NBC and Fox. So, are you saying the companies like Nexstar, Sinclair, Hearst and Tegna are bullying Disney, NBCU, Paramount and Fox Corp.?

I don’t know that anyone’s bullying anyone. I’m just suggesting that the larger broadcast affiliate groups obviously think that they can leverage carriage, I think, of additional channels in some cases. If they were to do these negotiations on their own, the local guys, the smaller local stations, I don’t think are in that same bucket. So, they’re interested. The bigger groups I think are slightly different from those of smaller broadcasters. I don’t know that anyone is bullying anybody.

The Coalition for Local News presents its own position by drawing a direct line between the station groups’ ability to negotiate directly with the vMVPDs and their capacity to produce quality local news. Your group seems to draw that line between only networks having that right and protecting viewer choice. Are you talking about viewer choice being threatened by the occasional blackout or a fight between station groups and potentially vMVPDs?

I think that we’re talking about viewer choice as it relates to the current streaming environment being one that everyone enjoys. So, if you were to take the old regulation — and it’s very thick and complicated — as you noted at the outset, and apply that to a streaming environment that also, as you noted, has grown exponentially over the last several years, 10 years or so. We don’t think that that’s a net good result for consumers. And so, yeah, I just think they’re all vested in the local broadcasting business in total. Right. We have a plan, a morass of old rules to streaming platforms that doesn’t serve viewers well.

Well, how do you reckon the station groups directly negotiating with vMVPDs is going to stem innovation and increase the cost to consumers? I mean, streaming costs to consumers are pretty consistently rising anyway. I know mine are, are they not?

Streaming costs are certainly significant. Look, a lot of the bigger groups suggest that they’re going to be able to get more money as a result of negotiating these on their own. I think I would quibble with that. And I think the Nexstar CEO, CFO, said that they would get exactly the same amount. But if you follow their logic that they’re going to extract more money out of the streaming platforms, that then translates immediately to viewers having to pay more as well.

Well, I mean, how would the prospect of affiliates negotiating directly with the vMVPDs put upward pressure on the consumer any more than if it’s the networks doing the negotiating? Aren’t both groups trying to do the same things, get as much money as they can out of the vMVPDs? Are the networks going to ask for less money than the station groups would from the vMVPDs?

I don’t know the answer to that question. I just know today you have a streaming environment that everyone enjoys and the way that content is distributed works for all parties. Again, viewers have ubiquitous choice as it relates to local content. It’s all over the place. And it’s not as though the larger affiliate groups and all affiliates aren’t getting compensated. Again, they’re getting compensated commensurate with what they get on the traditional side. So, I don’t know. I think that we’re generally in a good spot for the streaming environment. And changing that in any way is not going to be a net positive for viewers.

It just seems to me hard to conceive that the networks would fight for any less money than the station groups might in those same negotiations. When I was talking with Tanya Vega from the Coalition for Local News last week, she was quite clear that the group wouldn’t be hiring a lobbyist but was instead focusing on raising awareness of the issue. Now, you, on the other hand, are a veteran lobbyist. You were nearly 14 years at CBS Corp. Before that, you were director of government relations at the NAB. It sort of feels like the Coalition for Local News has brought a knife to a gunfight.

How much network revenue is at stake here? In other words, how much revenue is currently being collected by the networks from the streamers retransmitted in their programing and that of affiliates and then subset to that, how much of that currently goes to the affiliates?

I don’t know an answer to that question. I just know, generally speaking, look, it’s an important issue to viewers, to streamers, to content providers. And that’s why we’re engaging in the argument that Senator Cantwell spoke out at a hearing a couple of weeks ago and talked about her view on the topic. And we just want to make certain that people recognize that there’s an alternative view, right, of a streaming environment that is working fantastically for viewers. And we want to maintain that and not seek to turn back the clock by applying old regulations to that environment.

I don’t know that they’re working fantastically for viewers. The premise might be a little problematic given, again, that costs are rising across the streamers. I’m paying more for each of the services to which I subscribe than I did a couple of years ago. I’m not getting any more service than I did before.

I just don’t typically hear people complain about the streaming environment and I guess we could quibble, right? Look, occasionally I have a bill that I don’t like, and I look, and I grimace at it. But for the most part, everyone, everyone I talk to enjoys the options that they have streaming. Right? You can get anything all the time and it benefits everybody. So, I don’t know, I might disagree with that.

Well, it seems like in this in this particular conflict that that you may have the upper hand not just being a lobbyist, but it doesn’t seem like the FCC is going to need to be lobbied too hard on this issue to keep things as they are. I mean, they’ve taken no action since 2014 when they first solicited comment. So, is your coalition really just an insurance policy to keep the status quo or are you anticipating some more aggressive tactics from the other coalition that you’re going to need to counter?

I think we just know that we need to articulate the viewpoint that the current streaming environment works. Well, I think you’re correct. The FCC, every signal that they have given over the years and even more recently, is that they recognize that though there are some groups that are, quote unquote, looking to refresh the record, that that would kind of be a fool’s errand. They’ve been pretty clear, I think, that they lack the authority to move forward in a way that the other side would suggest. And if you actually wanted to do that, you would need direction from Congress. I think Chairman Rosenworcel said as much in an Energy and Commerce hearing last month as well.

Tension in the network affiliate relationship is at an all-time high, and affiliates feel that the networks have been heavily favoring their own streamers for the past few years, saving their premium content for those platforms and leaving linear TV and more of a forgotten stepchild position. Of course, the networks are losing money on those streamers, and they’re locked in a thermonuclear war with each other over subscribers. And now the networks are showing their teeth and claws as the affiliates start to kick more over this vMVPD issue. So, is it in the best overall interests of broadcast television ecosystem if mom and dad keep fighting like this?

I don’t know. That’s a big picture question that I’m not sure I know the answer to. I guess tensions are kind of high. I think they always are a little raised. That actually might be the function of a good, healthy relationship. I just know as it relates to the members of the preserve of the Preserve Viewer Coalition, that they all support the local broadcasting business in total. And then obviously we have members that own a lot of stations. So, we are really vested in that business as a group and want to see it succeed despite current tensions.

Well, isn’t it in the networks’ longer-term interests to enable their affiliates to do everything that they can to maximize revenue, to keep making those ever-rising reverse comp payments? I mean, otherwise it could be likened to a landlord hampering the tenants’ ability to pay the rent.

I mean, I guess we think that they have that ability today. Again, they license their content all over the place. And it’s fantastic for viewers, hundreds of different channels on different platforms. So, I guess that’s a system that we think already exists. And they’re able to do that in quite a good way today.

All right. Well, we will leave it there for now, but I’m certain we are going to be hearing a lot more about this issue ahead, if not necessarily from the stoic FCC on this. Bryce Harlow, thank you very much for speaking with me today about the Preserve Viewer Choice Coalition.

Thanks for having us, Michael. I appreciate it.

Thank you. And you can watch past episodes of Talking TV, including my conversation with the Coalition for Local News, at TVNewsCheck.com, and on our YouTube channel. We also have an audio version of this podcast available almost everywhere where you get your podcasts. We’re back most Fridays with a new episode. Thanks for watching this one. See you next time.

Editor’s note: In response to Bryce Harlow’s characterization of Nexstar statements about vMVPD versus MVPD rates in this interview, the company responded with the following statement:

“Unfortunately, Mr. Harlow has taken a statement made last year by Nexstar’s COO completely out of context. Mr. Harlow is comparing apples and oranges. It is inaccurate to say that Nexstar’s MVPD and vMVPD rates are similar — they are not even close. Nexstar’s COO was speaking about total net distribution revenue, not rates.”