eli5 Cable companies paying for local channels

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Every time I hear about a contract dispute between a cable/satellite company such as Comcast or Dish and a local ABC or FOX affiliate, I can’t help but wonder why there is even some large fee being paid to the station to essentially rebroadcast a signal that is being transmitted over the air and can be viewed for free. Why are the stations and their parent companies counting on cable companies to front their bills when in the past, there were no cable companies because over the air was the only option?

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3 Answers

Anonymous 0 Comments

A local TV broadcast is, after all, a business. They make money by selling advertisements. So do cable companies. As a convenience, and because many cable subscribers dont want to be bothered with switching inputs on their TV from cable to antenna, cable companies will often broadcast the local TV channels on their networks. But they have to pay the local TV companies for their content. What many people dont realize is that the cable company can insert their own advertisements during the local TV broadcast. That results in less revenue for the local TV broadcast company. So they are compensated with broadcast fees paid by the cable company.

Anonymous 0 Comments

Even if something is free to watch — like an over-the-air TV broadcast — that doesn’t give you the right to make a copy of it. The owner of the “copyright” gets to determine who is allowed to do that … and re-broadcasting an OTA signal is like making a copy of it. Since one reason people subscribe to cable is to get their favorite local channels without an antenna, this gives the big stations a degree of power over the cable station: they can demand a “carriage fee” … cable systems will often balk at the fee a station demands and remove their channel from the cable system for a time. But it is in both parties’ interests for the station to be available on the cable system so they always reach a deal eventually. For smaller local broadcasters they can waive a carriage fee and instead say they are “must carry” in which case the cable company has to rebroadcast the signal but doesn’t have to pay.

Anonymous 0 Comments

For most cable customers, access to local affiliates is a deal breaker. Can’t get local news and sports, can’t get prime time shows, people will jump to competitor who does offer access to those. People don’t want the complexity of installing an aerial, switching between inputs to jump between HGTV and NBC