D.C. Memo: Carr's Disney Letter Exposed Deep Split Inside TV Station Industry
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TV Stations: Media coverage of the Dec. 21 letter to Disney CEO Bob Iger from incoming FCC Chairman Brendan Carr largely focused on Carr’s commentary on the accuracy, trustworthiness, and fairness of ABC News, giving less attention to Carr’s concerns about the economic health of local TV stations. To Republican Carr, local TV stations affiliated with the Big Four networks are encountering profound financial trouble in part because of alleged lopsided terms and conditions demanded by the networks in new network-affiliate agreements – apparently including the one that the Disney-owned ABC Network is currently negotiating with some TV station groups. For example, Carr said he heard that the Big Four networks were trying to grab more than 100% of affiliates’ retransmission consent revenue, which for Nexstar, Sinclair and TEGNA is more than 50% of total revenue. (See chart below.) Except for promising FCC intervention if Disney squeezed the affiliates too hard, Carr in the letter was really highlighting a concern more than identifying a new one. That’s because his description of the network-affiliate relationship in its various dimensions closely dovetailed with a joint FCC filing by the ABC, CBS, NBC, Fox affiliates in July. [FWIW: Former Republican FCC Commissioner Rob McDowell represents the CBS affiliates.] In the filing, the affiliates complained about FCC ownership rules as hostile to consolidation when they needed to compete in the ad space with Big Tech, and about the FCC’s refusal to adopt rules that would force YouTube TV and Hulu + Live TV to negotiate carriage fees with local stations directly. “It is no exaggeration to say that if a local broadcaster wanted to negotiate directly with a vMVPD (i.e., in the manner of retransmission consent), the vMVPD would not even pick up the phone,” the filing said. But the Big Four affiliates saved their strongest language to blast their own networks, putting on paper for all to see the rawness of the rift within the TV station sector. Here are just a few of the affiliates’ spicier observations:
“Less than a decade ago, Big Four network affiliation afforded a local television station the right to act as the sole, exclusive distributor of the network’s programming within its market. Today, three of the four Big Four networks own or control DTC platforms that stream Network content, often simultaneously with its broadcast, and thereby compete with their own affiliates.”
“The affiliation fees that the Big Four networks charge affiliates continue to increase while the distribution exclusivity that was once the hallmark of those agreements continues to erode.”
“In a perverse anticompetitive twist, local affiliates are forced to pay the networks for the opportunity to compete for viewers and advertising revenue against platforms owned by the very same networks with which they are affiliated (on terms and conditions that are disadvantageous and anticompetitive, to boot.)”
“The media conglomerates that own the networks decide how much of the negotiated [vMVPD] fees they will keep for themselves and how much they’ll pass out to their affiliates.”
In his 2025 media predictions sourced to anonymous top media executives, CNBC reporter Alex Sherman last Monday said that one exec predicted that “several TV station groups will sell out of financial hardship,” pointing to E.W. Scripps, TEGNA and Sinclair Broadcast as top exit candidates. “This executive took the bolder step of saying the acquirers of the stations will be the broadcast networks themselves.” The three TV stations groups he named have 59 ABC stations combined.
