Broadcast TV Has Two Lifelines. One May Save It. The Other May Sink It.

Local broadcasters are facing two defining moments at the same time.

On one front, the FCC appears ready to loosen broadcast ownership rules, potentially unleashing a new wave of consolidation. On the other, the collapse of regional sports networks has created an opening for broadcasters to reclaim one of local television's most valuable assets: live sports.

In this episode of In the Vicinity, Tim Hanlon argues that these stories are more connected than they seem. While bigger station groups promise scale and efficiency, the real opportunity may lie in proving broadcasters' value through local sports, community engagement and original programming—not simply owning more stations.

Listen to the full In the Vicinity podcast above or get it on Apple Podcasts and Spotify.

Tim Hanlon: Let's get this show on the road. How are you, everybody? You are In the Vicinity, and my name is Tim Hanlon. I'm here to welcome you to the proceedings this week. It's our little weekly sojourn into all things local media. Oftentimes with guests. This week just solo today with a couple of pointed thoughts, which hopefully will be of help to get you through the week.

And for those who don't know, I am the founder and the CEO of the Vertere Group. Here in the Chicago metropolitan area, we advise and consult vigorously with lots of different companies in and around the media and technology spaces, some of them large, some of them small, some of them very much in between, and I think that's kind of the theme.

This week we find ourselves in between lots of different news events and struggling to find some through lines and hopefully maybe we'll provide a few of those for you this week as we double down on some of the bigger issues that we've been seeing literally in the last number of days and couple of weeks.

I think they fit into two real buckets, and I think the first one is probably the most obvious. As we recorded this a couple of days ago, a new marker has been set by the FCC Chairman Brendan Carr, in all his infinite wisdom. He has gone on record to say that there will be a vote among the three commissioners that are left there, two open seats by the way, two of them Republican, one of them Democrat, so we know how this is gonna go to a new proposed rule to officially repeal, as has been hinted at or strongly suggested, the 39% national television station ownership cap, and instead replace it with not an unlimited cap, which I think a lot of people, especially in the NAB, National Association of Broadcasters, and others would have liked, but instead replacing it with perhaps something just as odd and pliable to those who think consolidation is going to be the answer to broadcast television's ills, a case-by-case review process, which essentially means that the commission, tilted Republican until further notice, will literally take a situation-by-situation analysis as deals get proposed to say yay or nay to them with no real numerical formula or rationale or perhaps a rationale to come.

I don't know. Nobody seems to know what this means aside from the fact that it becomes a lot more relative and a lot more, shall we say, loose in terms of what the constrictures might be or might not be anymore when it comes to... Which I think is a green light, a signal of a green light or a pale green light. Not necessarily the brightest green light, right? It's not the complete abandonment of ownership caps and stricture. But it does send a very strong signal to those deals that have been officially proposed and others that might be in the waiting, that the FCC is open for business, shall we say, literally and pejoratively, figuratively.

And there's no bigger one than the Nexstar desire to acquire Tegna. And in a case-by-case basis, formulaic approach, who's to say that there would be any impediments to perhaps blessing that deal certainly with the fact that a 39% cap would no longer literally be on the table anymore.

Is that the right approach? Don't know. I don't think so. I think a lot of people out there don't think so either. It's a lot of the logic that Chairman Carr has spelled out on numerous occasions, the latest being in a strangely written and distributed opinion piece in the, quote-unquote, "news site" known as Breitbart that not surprisingly lays out a consolidation is good formula and is necessary to beat down the evils of the consolidation of the tech lords out there, the Googles and the Amazons and the Microsofts and the Netflixes of the world, and allowing consolidation and scale to occur to, if you will, equate or make more equal the fight with a surprising logic or illogic, if you ask me.

And you can find that in my column, by the way, in TVREV from last week the FCC chairman's localism paradox. Highly encourage you to read that because that speaks more eloquently than I'm fumbling my way through this. But the logic that Carr throws out there is that this scale will allow bigger owners of local media to theoretically put more resources and oomph behind commitments to local content, local journalism, and local programming.

And Chairman Carr is not wrong in saying that there's been somewhat of an abandonment, if you will, or a distraction to be more charitable, by local media outlets, in particular local television stations to their the reason why they have a license, and that is to serve local marketplaces with local community news content, programming, et cetera.

Lots of local TV stations carry an abundance of syndicated programming and network programming, and perhaps news fills in the gap for that stuff. But other than that, not much more, and news is certainly under duress. There's a lot of cutting of newsroom staff and consolidation and hubbing and all kinds of things that are economizing that process, and that's the antithesis, frankly, of devoting more resources.

It's actually taking away resources under the banner of efficiency. Journalism is a messy thing. It takes time to do the gumshoe work, to do the interviews, to get the people to talk on or off the record, to put the pieces together and stuff. And there's certain technologies that can make that process, those processes better, faster, cheaper, sure.

Of course. I don't think any working journalist wouldn't want those kinds of tools. But when it starts to get into hubbing a newsroom where you take, I don't know, Oklahoma City and Tulsa and basically hub them out of one office I, I've been to Oklahoma City and Tulsa. They feel different to me.

Aside from the fact that they're both in Oklahoma, they seem to have very vibrant and different community vibes going on. But, a certain broadcaster wants to do the weather forecast for both of those cities 80 miles apart from one office, right? And consolidate news.

Again that's just a nibble around where this goes as it gets more scaled, right? So that's my logic in that piece. It feels illogical to say, "Allow us to get bigger and own more stations and be more economically viable or more efficient, and you will magically see more resources and a more vibrant commitment to local specific content and journalism and programming."

The radio industry has imploded using that logic and a number of the consolidators going through more than one bankruptcy, and the newspaper industry before that essentially is hastening news deserts around the country as those formerly known as newspapers go away and/or are consolidated by private equity-backed entities like Alden Global.

There's a reason why private equity's interested in these media businesses and now particularly local broadcast television, either behind the scenes or in front of them. It's a stable or perhaps declining, slowly declining business. It's easy to harvest when you consolidate and squeeze out profits and cash flow until frankly and disinvest frankly until there's really not much left.

So look, I'm not trying to be a downer here, but these things are happening and I for one seriously question whether consolidation is going to translate into localism that Chairman Carr supposedly values so highly. And again, there's regulatory and political underpinnings to all of that which get in the way, frankly of logic and pure play economics.

But we'll see. And I'm just not particularly sanguine about it. But let's move on to one other area that is kinda dominating the local headlines over the last couple of weeks that maybe offers a few more glimmers of hope, and again, perhaps even instructive to Chairman Carr and all the consolidationists out there.

And that's what's going on with sports, local sports. Local TV stations and some of these local television station groups are truly riding to the rescue to help these NBA, NHL, and Major League Baseball franchises deal with the sudden collapse and wobbliness of what remains of a lot of the regional sports networks.

We've talked about this on numerous occasions, numerous columns, and that kind of stuff. But this week, we saw just a whole boatload of news that shows the instability and perhaps some shoots of green and solutions out there. And broadcasters are very much in the mix. For example Gray continues its march across the country with the, in this case, with the Atlanta Hawks of the NBA.

They stepped up to create a more expansive over-the-air TV deal last week that basically will put the team's games for the upcoming '26, '27 season on its flagship in Atlanta, channel 46, WANF there and across this bespoke Peachtree Sports Network across the state of Georgia and a couple of overlaps into some other states in those markets.

So we're talking like Macon, Georgia and Savannah and Columbus and Augusta and Albany inclusive of also Atlanta. Now, that said and again, Gray has been really good at this, they've created a lot of these sort of bespoke over-the-air regional sports networks, if you will, utilizing their main signals and in some cases or a lot of cases, their diginets to kinda create, call them gerrymanders if you will, but unique footprints across their stations or those that they choose to affiliate that are not owned by Gray to create a very flexible and very quick to turnkey broadcast sports network.

Now, that said as a replacement for Atlanta's regional sports network that was owned by Main Street Sports, I forget the specific RSN name. But that deal was probably, that regional sports network was basically getting the Hawks about 30 million bucks a year, right?

For those rights, those subscribers certainly add to the Hawks' ability to pay for higher salaries and that kind of stuff. The broadcast deal that they're doing with Gray probably is about a third of that, right? So maybe eight to 10 million, right? So that's a big haircut very quickly when one expects $30 million per year to go to the budget and now only seeing maybe a third of that coming in.

Number one, it's better than nothing. Number two, it brings with it a whole bunch of opportunistic scenarios with a broader reach. Certainly more people will see these games over the year than they would on RSN. Number two, it's free, so that helps goose up the numbers. And frankly, that could probably make it more attractive to a larger swath of truly local by market and regional across the state of Georgia, advertisers who may not have given the Hawks a look because of the relative small subscriber base of the RSN that was carrying them, as well as the limited purview in and around the state.

We see more and more of this coming. We saw a couple of days before that, the Milwaukee Bucks with Rincon Broadcasting Group, a smaller group with its flagship station there in Milwaukee. That's Channel 24. It's the MyTV affiliate there. That they're going to do the same thing.

They're gonna broadcast. And this is a reuniting. I think Channel 24 for years had Bucks games over the air. Now it's coming back home, so to speak, and will have its own set of affiliates across the state and probably maybe nibbling around northern Illinois and eastern Minnesota and perhaps the Upper Peninsula of Michigan as well, and creating kind of a regional Wisconsin-based kind a network, if you will, for the Milwaukee Bucks.

We see more and more of these broadcast groups, small and big stepping up to fill in that gap. Now, that said, these deals are relatively short-term and they are really stopgaps until each of these leagues, specifically Major League Baseball, the NBA, and NHL follow through on what they've long been trying to figure out, a centralized local rights approach.

And we see a couple of movements in and around there as well over the last two weeks or so. The NBA in particular Commissioner Adam Silver has come out and said that he expects the NBA's aggregated streaming hub for local broadcasts to launch in time for the '27, '28 season, right? So that means at least another season of cacophony, if you will.

And apparently YouTube TV, and/or YouTube, I'm not quite sure which unit, probably both is in the lead, if you will, for perhaps being that distribution partner. Now that can't happen sooner for a lot of these teams to stabilize their revenue issue. Major League Baseball has said that they're hiring somebody to be their local point person for these things.

I think the NBA is as well. And the NHL, which has been kinda sitting on the sidelines, kinda letting sort of the dust settle on its own, I think is also starting now to take more urgency in doing perhaps the same thing. It's pretty clear that there will be these local czars that will be in charge of coordinating and putting together the blueprints for each of these leagues' local broadcasts and strategy.

What are the templates, the tent poles, the go-to-markets, the production, the distribution rules, that kind of stuff, and to enable and make easier the process of generating revenues on a local basis for each of these teams as they look to compete against each other as franchises in a more equitable and projectable way.

And I think that's the big issue right now is there's so much uncertainty. We saw our friends at Victory+ this week going through some choppiness. You may remember Victory+ being one of the handful of major direct-to-consumer streaming platforms folks like ViewLift and a few others out there.

Victory+ famously has been supportive of a model that is free to the consumer, where advertising and sponsorship is the revenue platform for bringing streaming to the consumer. They don't need to subscribe and pay for a specific stream like the ViewLift platform facilitates and some of these other RSNs have been trying to do to land their breaking RSN model via cable or satellite into a direct-to-consumer streaming app.

And the Dallas Stars have been pioneering that with Victory+, but we see last week the Anaheim Ducks have stepped out of their relationship, and I believe the Texas Rangers are also now stepping back from their relationship with Victory+. So we'll see how that model works. But regardless of all that, I think you put that all into the mixing bowl, and the big question that comes out of that is: Where will broadcasters fit in the next couple of years as all this shakes out?

So assume that MLB, the NBA, the NHL all create their own coordinated local strategy or hubs, if you will, for local broadcasts, local stream casts, if you will. From that, what then comes of the local stations that rode to the rescue for the short term? Can broadcasters, local broadcasters, be part of that mixture?

Can broadcasters be the streamers? Will a broadcaster or a consortium perhaps buy into or partner with a Victory+ or its own streaming solution, and maybe step up and be that? Or maybe they'll be the ones, the stations to do the production, and the leagues will figure out distribution, that kind of stuff.

There's no time like the present for local broadcasters and the groups to step up and make their value clear to these local teams and their local games coverage. Because if the leagues decide to put it all streaming only, there's a huge opportunity for them to bypass and cast to the side the value of local broadcasters in that mixture.

Arguably, and not so arguably, this is the opportunity for broadcasters to prove their mettle and their value in this process. And God forbid, get into more aggressive offerings in and around streaming, God forbid, being paid for it, too, as these leagues and teams look to recreate what has been a very profitable stream of revenue from these RSNs that are now collapsing by the wayside.

So that's something to keep in mind and keep looking at. There's no question in the short term broadcasters are stepping up, and you gotta give them credit. But it's by no means guaranteed that they're going to live on as being the solution or part of the solution going forward, unless there's a lot more urgency and more strategic thinking given what the landscape looks like in the next five to 10 years.

We will keep an eye on all of this stuff for you, of course, with some real actual people in the trenches to kinda give their expert opinions. And a few more of those will be approaching in the next couple of weeks, so stay tuned to your feeds. Got a great guest lined up next week. I can't wait for you to hear her opinions about what's going on in her local market.

And so much more to come. So I appreciate you tolerating my soliloquy this week. Hopefully it was somewhat helpful. We appreciate your listenership. Of course, our friends at TVREV. We can't do this show without Melissa Hourigan and Mike Gasbara, Jessika Walsten and Jason Damata. And of course, our friends over at Madhive for their sponsorship support of the show, and the great Jerry Payne for his audio excellence this week, of course, as we do every week.

So again, keep tuned to your feeds, and we'll see you soon here again In the Vicinity. Thanks for listening.