vMVPDs

Major TV station owners are seeking new federal rules that they say will bridge the gap between old video providers and new online services streamed on phones, tablets and connected TVs. Pushing for the new rules are the independent network affiliates of the ABC, CBS, NBC and Fox networks, a group that consists of about 600 TV stations that want the FCC to put at the top of its agenda the equal-treatment policies that have been stalled for about a decade.

Dueling coalitions — the affiliate-led Coalition for Local News and O&O-led Preserve Viewer Choice Coalition — have raised the temperature on a long-simmering argument over who should be able to negotiate retransmission rights with vMVPDs. The growing size of the vMVPD revenue pot in an awful year for spot TV may have a lot to do with the timing.

Two House Republicans are urging the FCC to resist the urge to apply “1990s-era laws and regulations” to virtual multichannel video programming distributors (vMVPDs). They argue, in part, that those Internet-delivered pay-TV services bring critical competition to the pay-TV sector and that Congress, not the FCC, has the authority to alter those rules, anyway. That warning arrived in an Aug. 9 letter to FCC Chair Jessica Rosenworcel from House Energy & Commerce Committee Chair Cathy McMorris Rodgers (R-Wash.) and Communications Subcommittee Chair Bob Latta (R-Ohio).

The newly formed Coalition for Local News wants to convince the FCC that broadcasters must negotiate directly with vMVPDs to ensure their long-term fiscal viability. They’re smartly drawing a direct line between local TV news and democracy’s health to make their case.

Paramount Global is using its latest Fubo TV negotiation to offer an untenable deal to affiliates and reset the entire retransmission consent landscape. The FCC’s response should be obvious: Make everyone play by the same rules.

Paramount Global will provide FuboTV with a CBS network feed — stripped of local programming — to stream in markets where CBS affiliates turned down a distribution fee deal negotiated by the network. According to a confidential memo sent to affiliates by the CBS affiliate board, CBS set a 5 p.m. Friday (Jan. 27) deadline for stations to opt in or out of the deal. In markets where stations opt out, their programming will be replaced with the network feed on Fubo effective today at 5 p.m. The national feed, including sports and primetime shows, with use content from the CBS News Streaming Network to replace a station’s local programming including local newscasts, CBS said. The new deal would run until after CBS airs the Super Bowl in 2024.

Paramount told CBS affiliates that they had until 5 p.m. today to agree to a retransmission consent deal that it had struck with Fubo or they would replace them on the vMVPD with a CBS “network feed” without the affiliates’ local programming, according to a CBS affiliate board email sent Friday afternoon to its members.

The first quarter of 2022 was not — to say the least — rosy for the linear video industry. In fact, the industry collectively lost an estimated 2.1 million subscribers across cable, satellite, telco and almost all virtual MVPDs, according to a new report from MoffettNathanson. Total net losses for the linear video industry marked “the worst quarter since the COVID sports (and jobs) blackout in Q1 2020,” wrote analyst Craig Moffett, with the industry shrinking 5.1% year over year.

Affiliated TV stations said they are suffering a double retransmission-consent hit from their networks driven by the move to streaming video. The chairs of the Big 4 network affiliate associations have been pressing the FCC to start applying retransmission consent rules to virtual multichannel video programming distributors (vMVPDs) so non-network owned stations can negotiate directly with streamers for payment.

Virtual Multichannel Video Programming Distributors (vMVPDs) operate in the loophole of the internet, free from having to honor network exclusivity agreements and able to negotiate directly with ABC, NBC, CBS and Fox, thus cutting local affiliates off at the knees. Their regulation needs to be at the top of the FCC’s agenda or quality local news is in peril.

It’s no secret that cable operators and telcos of all sizes have adopted a “broadband-first” stance that emphasizes high-margin, high-speed Internet service and effectively relegates pay-TV to the back seat. But streaming video services, a market that’s now teeming with dozens of virtual multichannel video programming distributors (vMVPDs) and subscription VoD services, remain a key reason why many consumers are connecting to speedy broadband offerings in the first place. At the same time, though, the sheer volume of OTT video service options on the market makes it a challenge for consumers to figure out which ones best suit their entertainment needs as well as the size of their pocketbooks.

Several video tech and service vendors are sizing up potential partnerships and solutions for cable operators and telcos that could find themselves grasping for alternatives in the wake of MobiTV’s voluntary bankruptcy filing. While at least two suppliers have entertained thoughts about acquiring MobiTV’s assets if they could be had for cents on the dollar, many others are exploring opportunities to create and integrate an alternative in tandem with tech partners and, possibly, with cable operators that are using MobiTV today, according to a group of execs with suppliers.

The video platform’s virtual pay TV service, YouTube TV, has surpassed the 3 million paid subscriber mark. This revelation comes just seven months after Google announced the passing of the 2 million mark for the vMVPD service. That’s an indicator of accelerated growth, as that February 2 million announcement came a full two years after the platform launched.

Broadcasters would welcome reformation of the outdated newspaper-TV crossownership rule, but the Supreme Court’s decision to hear an appeal of the Third Circuit decision doesn’t solve all the industry’s COVID-induced woes. The FCC still needs to eliminate the Top 4 rule and online video distributors need to be classified as MVPDs.

Virtual MVPD fuboTV posted a net loss of $99.8 million during the second quarter as its subscriber count held mostly steady. The company’s 2Q revenues totaled $44.2 million, up 53% year over year on a pro forma basis. The company attributed the growth an increase in subscription Average Revenue Per User (ARPU), which rose 8% to $54.79, and growth of advertising sales. Subscription revenue rose 51% to $39.5 million and advertising revenue rose 71% to $4.3 million.

Virtual MVPD fuboTV has sold just over 2.16 million in stock shares to Credit Suisse Capital LLC in a deal valued at $20 million. The virtual pay TV operator has now raised $46 million in funding this year.

Local broadcasters could use some regulatory help from the FCC by declaring that vMVPDs or “skinny bundles” must be treated like regular MVPDs and thus subject to retransmission consent obligations. Doing so would put the affiliates in a much stronger position to hang on to vMVPD fees than they are now.

New virtual pay TV providers continue to see rising prices — generally higher than a year and a half ago. And that is slowing down the growth of the business. Monthly packages now cost anywhere from $45 to $50 per month — an increase of about 50% from the $30- to $35-per-month levels, according to MoffettNathanson Research.