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The number of blackouts on cable and satellite in 2019 doubled from a few years ago, with more than 200 instances of viewers being unable to access local broadcast channels on their pay TV service. As of last week, AT&T dropped 14 CBS-owned stations off of the company’s satellite, internet, and cable TV services and is also in a standoff with Nexstar. Dish Network is fighting over carrying regional sports networks.
Although broadcast TV networks are available for free over the air with an antenna, selling the retransmission rights is big business. Broadcasters charged cable and satellite TV companies approximately $10.1 billion in 2018. Pay TV services pass this cost along to consumers as "broadcast TV" fees above and beyond the advertised price of service.
As local broadcasters struggle to adjust to the streaming ecosystem, they’re demanding a bigger cut of the “broadcast TV” profits. The valuable contracts make the industry twist itself about trying to come up with a better way to deliver broadcast TV than via the humble antenna. In response, pay TV providers refuse to pay higher fees and blame the broadcasters for skyrocketing prices. The refusal to cooperate causes negotiations to break down and the resulting broadcast channel blackouts.
As cutting the cord becomes more popular, it threatens the profit margins and subscriptions of the traditional TV bundle from pay TV carriers. The battles over retransmission rights and fees will only become more intense as the profits dwindle.
After negotiations grind to a halt, some viewers are bypassing the blackout using Locast as a no-cost workaround. Locast is an app that detects a viewer’s location and streams over-the-air television stations to Internet devices like computers, tablets, and phones. The startup claims it boosts the signal, so consumers get better local reception of over the air programming - a practice permitted under copyright laws. The broadcasters disagree, saying that Locast is a workaround that undermines their profits.
Locast has signed up tens of thousands of users since launching in 2018; mostly cordcutters looking for an easy way to access local stations. The app is available in thirteen markets across the U.S. Locast takes the position that it only boosts the local signals as a public service, and as a non-profit, it is simply the digital equivalent of an antenna. Because of the costs of equipment and operations, the company solicits donations.
Major broadcast networks banded together to sue Locast for providing free online access to local broadcast programming in certain markets. The broadcasters hope that the courts will deliver an injunction that would shut down Locast so that it can no longer threaten their billion-dollar retransmission contracts. They argue that retransmission of copyrighted broadcasts requires a license and that failure to pay for a license violates the law. The networks won a similar lawsuit in 2014 against a company called Aereo and succeeded in shutting it down.
Locast maintains that it isn’t operating for commercial benefit, citing its non-profit status. Broadcasters argue that donations from satellite TV industry leaders like AT&T creates economic ties and threatens Locast’s non-profit status. The 1976 Copyright Act sustains the economic viability of local broadcasting by blocking retransmission without a license, but it expressly allows non-profits with permission to boost signals for viewers whose over-the-air reception is obstructed. The key is that an organization must not gain a commercial advantage from retransmitting, or boosting, the signal.
Although Locast purports to operate as a non-profit entity, it stands to gain insight into consumer behavior. Just because the fledgling app doesn’t charge a monthly fee doesn’t mean it’s not getting something valuable in return. Consumers pay for the service by handing over their personal data, the value of which allows the companies to target advertising.
Facebook generated $55 billion in advertising revenue and Google collected $116 billion in ad revenue in 2018. Both companies built enormous and valuable services without charging consumers directly.
Data can be assigned a cost and utility, but the value isn’t recorded on the balance sheet. The broadcast networks are challenging this archaic valuation technique. They contend that the customer data gathered by Locast should be assigned a value, therefore negating the startup’s non-profit status.
The outcome of the lawsuit could influence the future of cord-cutting because archaic government regulations and political roadblocks aren’t evolving as quickly as the entertainment industry.
Broadcasters fear that it will be harder to charge retransmission fees if they lose the suit. They don’t want an Internet-based system to be eligible to pay for retransmission, but the other option is accepting that a non-profit can provide service without paying a fee. If broadcasters succeed in their argument that Locast's ties to AT&T and Dish undermine its nonprofit status, future services would still be allowed to provide the same service.
Based on a bipartisan bill filed in the House, the broadcast networks face additional threats to the multibillion-dollar retransmission contracts. Lawmakers want to end the current contract system and allow the free-market to dictate retransmission negotiations.
TV subscribers can deal with blackouts by using an HD antenna. The low cost and easy installation make antennas essential to every homeowner’s entertainment setup. Antennas deliver free over-the-air broadcasts from major networks and sub-channels. You can even keep your favorite pay TV service if you’re not ready to cut the cord.
Additional Reading: How to watch sports without Cable TV
The original broadcast signal from an antenna is the best high definition TV with 4K clarity that exists. No matter how much you pay for the TV signal to reach your home, you won’t get a better picture. You’ll get the best reception if you mount an indoor antenna high up in a second-story window or along a wall near the ceiling.
There are a lot of advantages to using an antenna, regardless of whether you cut the cord. The inexpensive solution delivers a powerful signal that can’t be matched. Consumers will receive programming from the major broadcast networks and a variety of other free channels without paying any monthly fees.
Megan Southard is a writer, mom, technology enthusiast, and movie junkie. She dreads the day her kids have to explain gadgets to her and is old enough to say, "I was the remote for our TV growing up."
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