Broadcast TV’s Greatest Obstacle To Streaming Is Itself

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This week at CES, Hulu is revealing details about its proposed live TV streaming service, and truthfully, it sounds impressive. While the reported price of $40 a month remains high, Hulu has a raft of impressive ideas, from a cloud-based DVR that automatically finds the best version of the show you’ve recorded to an interface that learns just what you like and recommends shows accordingly. But the real killer app is the ability to livestream broadcast networks over the service, which would put local news, weather, and other programming on Hulu. And thanks to the complicated politics of broadcast TV, that may not happen.

It seems a no-brainer for broadcast networks and local TV affiliates. After all, broadcast television is given away for free in the hopes of drawing enough viewers to sell ad time to sponsors. Having an app on your phone or your set-top box to do that would seem to be ideal, but it largely hasn’t happened yet. Instead, to livestream, say, ABC through its app, you have to have a cable subscription and you can only do it in a handful of markets. NBC and Fox are the same way, with Fox not offering any local livestream at all. And while CBS has no market restrictions, it restricts what you can watch live on your phone. The only broadcast network that doesn’t seem to care whether you’ve got a cable subscription or not is the CW, which simply puts the last five episodes for every show up on its app, and has no livestream function.

Why is it this way? There are two main issues: How broadcast networks make the majority of their money, and how they’ve built their affiliate networks. The former is the most glaring: Retransmission fees, or what cable networks pay to show broadcast TV, are a major source of money for local networks, so much so major markets can witness total blackouts when the two go to war over how much cable should pay for what the network gives away for free.

The latter is a bit more complicated. In the U.S., television networks are limited in how many stations they can own and operate, based on the percentage of the TV viewing market they reach. For the rest of America, that means privately owned stations broadcast their content, and fill in the hours in which they don’t have network shows with local news, syndicated programming, infomercials, and all the other stuff we associate with TV.

Thus there’s a complex web of rights and negotiations, since technically, these private companies own the local news broadcasts, but the network owns the prime time content, yet the private company sells local ads in both, and the syndication company may not want to livestream their content on an app. It’s easier for your local news channel to dump clips on YouTube and have a separate app for local news. Private companies can own multiple stations as well, making nationwide streaming even more complex.

If that weren’t enough, some networks have bad blood with their affiliates. As of January 1st, Boston’s former NBC affiliate, WHDH, has been replaced by a station owned and operated by Comcast, thanks in part to the long, sometimes ugly history between HDH’s billionaire owner Ed Ansin and NBC.

All of this makes a consolidated livestream a legally complicated mess, and this issue arrives just as networks are fighting for smaller and smaller pieces of the pie. Only the CW has an average viewer age under 45, and viewers 35 and under are watching less and less live and DVRed TV, preferring to stream TV instead. That puts networks and affiliates in an increasingly tighter bind, as shows like NCIS draw enormous raw viewership numbers, but almost nobody advertisers want to sell to.

This wouldn’t be an issue if people were jumping at the chance to shift their cable package to a livestream, but they aren’t. PlayStation Vue, Sony’s attempt, just celebrated racking up 100,000 subscribers. Sling TV appears to be growing only slowly, with 49,000 subscribers added back in July, and while the jury is still out on AT&T’s DirecTV Now service, it doesn’t appear to be reversing that trend. Netflix, by contrast, added over five million subscribers in the second quarter of 2016.

There’s a lot of reasons these services struggle, of course. Netflix is $10, has no ads, and is stuffed with content you can watch at any time, while livestreaming TV network packages are at least twice as much, with ads, and may not have as much stuff to watch depending on the service, with what you most want to watch likely not on at your convenience. Cable is even worse: The average cable bill is $103 and that’s unlikely to decline any time soon. That viewers pay more for what feels like less, and don’t even get local news and weather, likely doesn’t help.

And it leaves broadcasters and networks locked, effectively, in a cell of its own making. The network isn’t making shows younger viewers want to watch, and even if they did, they don’t have the ability to offer a truly convenient way to watch them at a price viewers are willing to pay. Hulu seems unlikely to resolve this problem, but unless networks and affiliates get to work, they soon might be broadcasting to no one at all.