CBS-FuboTV Flap Adds to Strains With Affiliates, Analyst Says
‘Logical to wonder’ if Paramount was willing to take lower retrans to improve cable-network terms, says Steven Cahall of Wells Fargo
The blackout of CBS affiliates on FuboTV reflects the increasing tension between broadcast networks and their affiliates as TV pivots to streaming.
“Having worked around public and private TV broadcasters these last few years, we think dynamics between national networks and station operators are increasingly strained,” Wells Fargo media analyst Steven Cahall said.
Affiliates have also been concerned about media companies shifting their best content to their streaming services, making watching that programming live and over the air less urgent. They also note that through reverse compensation, or programming fees, stations are paying for sports, primetime and other network fare.
The latest situation came as FuboTV looked to renew its deal to carry CBS and its affiliates on its streaming service. With streaming virtual multichannel video programming distributors (vMVPDs), the networks have been handling retransmission-consent negotiations for their owned-and-operated stations and the rest of the affiliate body.
Last week, the CBS Affiliate Board told its members the deal CBS owner Paramount Global struck with Fubo was unacceptable.
Nearly all of the major station groups — Nexstar Media Group, Sinclair Broadcast Group, Gray Television, Tegna, E.W. Scripps and Cox Media Group — all took the board's recommendation, turned down the CBS offer and pulled their stations from Fubo. (CBS is providing Fubo with a national feed with programming from the CBS News Streaming Network to fill in for local content.)
The affiliate board noted that CBS parent Paramount Global has a conflict, negotiating retransmission-consent deals for CBS-owned stations and affiliates and also license fee for its cable networks as well. (MTV, Nickelodeon, Paramount Network, Comedy Central were part of Viacom before CBS merged with Viacom to form what is now Paramount Global.)
“While we’re not privy to this deal’s details, it seems logical to wonder if Paramount was willing to take lower CBS station retrans step-ups, but achieved improved terms on other networks,“ Cahall said. “This could drive a wedge between CBS and its affiliates, and it will be interesting to see whether this implicates upcoming CBS reverse comp deals.”
Cahall noted that in 2023, Gray will be renewing its CBS affiliations. Gray also will be renewing its NBC affiliations in Q4.
“The real risk [to station owners] in our view is this agreement will create a network bundle without CBS local-station content,“ Cahall said. “Stations have argued their content is valuable/critical and undervalued, and now that theory will be tested. If fuboTV does not see a material churn impact from the lack of local content it could embolden other vMVPDs and maybe eventually MVPDs.”
At the same time, the conflict means that Paramount will face riled-up affiliates when renewal time rolls around.
“We've never seen an affiliate blackout, but it could mean that stations don't have the nat'l content to provide to their MVPD counterparts,” Cahall said. The Fubo situation could determine who has the upper hand in future reverse compensation negotiations.
“NAB 2023 should be interesting,” Cahall mused. ■
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Jon has been business editor of Broadcasting+Cable since 2010. He focuses on revenue-generating activities, including advertising and distribution, as well as executive intrigue and merger and acquisition activity. Just about any story is fair game, if a dollar sign can make its way into the article. Before B+C, Jon covered the industry for TVWeek, Cable World, Electronic Media, Advertising Age and The New York Post. A native New Yorker, Jon is hiding in plain sight in the suburbs of Chicago.