	Overview

Market and technological changes are creating challenges to the long-standing business models employed by broadcast television networks and local television stations, but at the same time generating potential opportunities for those networks and stations. These changes generally are strengthening the position of parties that control popular program content in their negotiations with distributors of that programming. The changes also may be affecting the three pillars of U.S. government media policy—localism, diversity of voices, and competition—and damping the effectiveness of existing regulations intended to foster them. Other commenters claim that such consolidation would harm, rather than foster, diversity of voices, competition, and localism. The FCC is seeking comment on a petition for rulemaking, submitted by a coalition of multichannel video distributors (cable operators, satellite operators, and telephone companies) and consumer organizations, requesting that the commission amend its retransmission consent rules to include dispute resolution mechanisms and mandatory interim carriage while disputes are being resolved. Thus, they are both strengthened and weakened by recent market changes. Most notably, the successful entry of hundreds of cable networks and the proliferation of social networking and video Internet websites have fragmented audiences and provided advertisers with alternative avenues for reaching consumers. This presents a significant challenge to broadcast networks and stations, which traditionally have relied upon advertising for more than 90% of their revenues. For example, competition has developed among the companies that deliver multiple channels of video programming to subscribers—cable operators, satellite operators, and some telephone companies. If a multichannel video distributor fails to obtain the retransmission rights to national and local broadcast television programming, which many households consider "must-have" programming, it risks losing some of its subscribers to a competitor that does offer the programming. As a result, broadcast networks and stations are able to demand higher cash payments from these multichannel video distributors for the retransmission rights. This has created a second revenue stream for broadcasters that is projected by SNL Kagan, a media research firm, to grow from $762 million in 2009 to $1.09 billion in 2010, $1.36 billion in 2011, and more than $2.6 billion in 2016. A report prepared for the National Association of Broadcasters, based on an April 2010 survey of 53 television stations that originate local news programming, concludes:
As the Commission examines the Future of the Media and considers ways to bolster the provision of local news, it should adopt policies that allow (and to rescind, or at least not adopt, policies that hinder) local broadcasters to (1) pursue opportunities for non-advertising revenue, such as that derived from retransmission consent, and (2) benefit from economies of scale and allocate their news resources in the most efficient ways, such as through modifications to the Commission's structural ownership rules. But some broadcasters claim that cooperative activity and sharing does not provide the cost savings or generate the additional revenues attainable if they could combine with other newsgathering organizations. They have reduced the amount of "breaking news" coverage, increasingly leaving that to 24-hour cable news networks. That decline has been greatest recently. Sports Programming Is of High Value to Video Distributors Even if Not Profitable

Program networks and multichannel video providers have long utilized major sports programming to promote their own brand identities, and major sports entities have been able to take advantage of that to generate competitive bidding for the rights to their sports programming: 
In 1987, ESPN obtained rights to offer ESPN Sunday Night Football, on the condition that it simulcast the games on local broadcast stations in the participating markets. The fixed costs of production will be shared across more hours of programming. "Free" broadcasts.
Market and technological changes are creating challenges to the long-standing business models employed by broadcast television networks and local television stations, but at the same time generating potential opportunities. The changes also may be affecting the three pillars of U.S. government media policy—localism, diversity of voices, and competition—and damping the effectiveness of existing regulations intended to foster them. These changes generally are strengthening the position of parties that own or control popular content in their negotiations with distributors of video programming. Broadcast networks and stations, alike, both own content and distribute programming, so they have been strengthened and weakened by these changes.
The successful entry of hundreds of cable networks and the proliferation of social networking and video Internet websites have fragmented audiences and provided advertisers with alternative avenues for reaching consumers. This presents a significant challenge to broadcast networks and stations, which traditionally have relied on advertising for more than 90% of their revenues. As audiences have declined for both national and local news programming, networks and stations alike have reduced costs by sharing the fixed costs of newsgathering over multiple platforms and undertaking cooperative newsgathering with other outlets. Some broadcasters have sought to generate additional cost savings or revenue by combining with other newsgathering organizations, and urge modifications to the Federal Communications Commission's broadcast media ownership rules that restrict such combinations. Policymakers will have to weigh whether allowing such consolidation will, on net, benefit the public by improving the financial viability of newsgathering firms or harm the public by reducing diversity of voices and competition.
At the same time, competition has developed among the companies that deliver multiple channels of video programming to subscribers—cable operators, satellite operators, and some telephone companies. If a multichannel video distributor fails to obtain the retransmission rights to popular national and local broadcast television programs, it risks losing subscribers to a competitor that does offer the programming. As a result, broadcast networks and stations are able to demand higher payments from these multichannel video distributors for the retransmission rights. This has created a second revenue stream for broadcasters that is projected to reach $2.6 billion in 2016. It also occasionally results in subscribers losing access to broadcast programming when their video provider and the broadcaster reach an impasse in retransmission negotiations. A coalition of video distributors and consumer organizations has petitioned the FCC to modify its retransmission consent rules by adding dispute resolution mechanisms and mandatory interim carriage.
The amount of local broadcast news programming has been increasing despite declining audiences and does not appear to be threatened by stations' revenue declines. Many stations are broadcasting more news because local news programs can be cheaper to provide than purchased programming. In addition, local news provides a way for stations to develop strong brand identities as they compete for local advertising dollars.
The production and distribution of major sports programming is largely controlled by the sports entities that control the events. If it benefits them to distribute their programming through pay venues, such as cable networks that they own, rather than over-the-air broadcast, they will do so. This is likely to result in more events being televised, though many will only be available to subscribers to pay television services.