Networks Fray Rope Between Their Affiliates And Streamers

Networks are shortsightedly alienating their affiliate partners with their fixation on their streaming platforms. In so doing, they’re ignoring local brand value, which can carry them over the chasm between hit programs.

A prominent group head once said: “Networks and their affiliates are dancing; locked in a deadly embrace. If either lets go, both die.” That is the challenge facing the networks today as they walk a tightrope between their affiliates and their new streaming platforms. Unfortunately, they are fraying the rope.

So infatuated with streaming are the traditional networks that they seem to have forgotten what their affiliate partners bring to the table: A massive distribution system, powerful brand value and reportedly $2 billion dollars per year to each network in the form of program payments. Though it seems to have slipped their minds, the networks also know their success is directly tied to the brand strength of their affiliate bodies.

When Rupert Murdoch launched Fox back in 1986, the network struggled for survival. It wasn’t until Murdoch bought a prominent group of highly rated CBS affiliates that the network took off. These many years later, CBS in most of those markets continues to underperform because the network is now on lesser stations. More recently, powerhouse WRAL in Raleigh, N.C., switched from CBS to NBC, causing NBC for the first time in market history to contend for first place.

Why then are the networks risking their relationships with affiliates by pouring most of their attention and cash into streaming platforms while ignoring the needs of their long-time local partners? The answer is that Wall Street is obsessed with streaming. It is the latest bright, shiny object.

The problem for the traditional networks — and it is a big one — is that streamers such as Paramount+ and Peacock offer no unique brand value outside their programming. They are simply delivery systems dependent on turning out hit shows. By definition, if you are not in the brand business, you are in the commodity one.

Netflix, which had been Wall Street’s darling for years, recently made the mistake of believing it had brand value beyond its programming, thinking it could continue to raise prices even without a list of current hits. That’s one reason Netflix lost 200,000 subscribers last quarter and its stock dropped like a rock.


Disney+ is another example. Disney has a clear brand: Kids. So long as Disney+ catered to kids, it saw huge growth and was loved by Wall Street, but once that market was saturated, it stalled. “Make original programming,” chorused the stock analysts, which is another way of saying “Jump into the commodity wars.”

Then there is Prime Video. Amazon has stand-alone music and reading services, but video is bundled with free shipping. Amazon obviously believes its video streamer cannot stand on its own. Otherwise, Prime Video would have a separate monthly fee.

Clearly, streamers are only as successful as their latest releases. This need for a constant flow of actual hits, something no network or streamer can achieve, has created a desperate race to pour money into program development, because no matter how good the script, how prominent the actors, no one really knows what will grab the public’s attention. Seeing where this is leading, Discovery chief David Zaslav recently vowed to not overspend, saying his organization would be “careful and judicious,” but those words seem lost on the traditional networks. Driven by the fear of being left behind, they are in with both feet.

When you consider that the real goal is stock price, these moves are understandable. What does not make sense is why the networks seem to be going out of their way to alienate their affiliate partners. For instance, at least one network has chosen to not invite affiliates to this year’s up-front presentations, one of many signals that the networks have devalued their station relationships. It’s as if the networks are now playing a short-term stock price game rather than looking to the future.

The irony is that the networks did not have to choose between affiliates and streaming. The partnership that has worked so well for decades makes just as much sense in the streaming world because affiliates bring the one thing every streamer desperately needs: brand value, a reason to subscribe that goes beyond just the latest hit program.

The case for a partnership can be made on many levels. Station relationships run deep into their communities; their marketing engines are second to none and of course they also bring the power of local news. None of those things can be duplicated by a national service. Strong station brands also create sampling and, as we know from history, can accelerate the launch of hits.

It’s time for the networks to take the smarter course. Their affiliates are powerful potential allies. They would distinguish the network streaming services from all the other commodity offerings while adding the leverage of massive local marketing platforms. If the goal is to please Wall Street, then partnering with affiliates and their powerful local brands seems like an obvious move.

Hank Price is a media consultant. His second book, Leading Local Television, has become a standard text for television general managers. In a 30-year general management career, Price led TV stations for Hearst, CBS and Gannett, including WBBM Chicago, KARE Minneapolis, WVTM Birmingham, Ala., and both WXII and WFMY in Greensboro/Winston Salem, N.C. Earlier, he was a consultant with Frank N. Magid Associates. Price also spent 15 years as senior director of Northwestern University’s Media Management Center. He is currently director of leadership development for the School of Journalism and New Media at Ole Miss.



Comments (4)

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Preston Padden says:

May 9, 2022 at 9:55 am

As someone who spent a long time at both local stations and networks, I share many of Price’s concerns about Network streaming. But, this relationship has long been characterized by tension. Recall that at one point all the Networks left NAB.
I kept ABC as the last network in NAB after the others left. Then the TOC (the same group that fired Eddie Fritts and hired Howdy Doody) made NAB file comments at the FCC stating that the local news departments at affiliate stations were superior to the local news departments at network owned stations. That was the breaking point for me and ABC finally left. Then we were the first network back in NAB after Howdy Doody crashed and burned.

Jim Long says:

May 9, 2022 at 12:14 pm

Great points by Mr. Price and the historical facts, as noted in Mr. Padden’s comments, are just a few of many. The funny things is, Major Networks and their O&Os can ‘have their cake and eat it too’ since Local TV is the original ‘Free Ad-Supported TV’ that can add impressions based digital ads via a legal virtual-OTA platform (e.g., LocalBTV) just like FAST channel apps, plus add a premium re-trans-like fee for the 5 or so major channels. Of course this area is a gold mine for Station Groups too, who need to collaborate on modernizing the broadcast bundle now as an on-ramp to ATSC-3.0. Collaborate/’Coopetition’, like we do in silicon valley to grow markets and raise all boats, is imperative and being already being done by major MVPDs Comcast & Charter collaborating on aggregating all content. We at Didja think there are now over 55 million US households not paying re-trans, and possibly over half of them are not watching local TV since they will not pay $50-150 a month for V/MVPDs and can not use an antenna. It is time to change that or lose eyeballs forever. Not to mention the critical importance Local Broadcast TV is to our local communities and the nation. I suspect, Howdy Doody, slightly before my time, would agree too! 🙂

AIMTV says:

May 10, 2022 at 12:16 am

Gee, when did following “Wall Street” wisdom ever hurt anyone? What I’ve witnessed on the business side OTT / Streaming efforts are (mostly) money-losing scams resulting in utter wasting of time and money. It’s crypto-esque. All buzz, no substance. It’s largely speculative and a “throw garbage against the wall and maybe something will stick” mentality… Zero curation… Zero talent. Zero Vison. Zero respect for Intellectual Property. At least broadcast TV is STILL a real business. Broadcasters should focus on growing what they have which is free, OTA programming that most people have no idea even exists (thanks to re-transmission single-minded mania and completely giving up on young audiences for two-plus decades). Stop listening to wall street talking about shiny toys that do nothing but cost money and distract resources. Put out a good product OTA and tell some stories, try something that’s never been tried, write a song that’s never been sung, bla, bla, bla.. but do something, anything beyond following the same crowd off the same cliff time and again. What the world does NOT need is yet another expensive, money-losing streaming/OTT service that nobody actually watches.

Dan Straub says:

May 10, 2022 at 8:49 am

Gotta know, who is Howdy Doody?