The end of free TV as Americans have known it since the 1940s could be on its way, says Associated Press business writer Andrew Vanacore.
“The business model is unraveling at ABC, CBS, NBC and Fox and the local stations that carry the networks’ programming,” he writes. “Cable TV and the Web have fractured the audience for free TV and siphoned its ad dollars. The recession has squeezed advertising further, forcing broadcasters to accelerate their push for new revenue to pay for programming.”
While broadcast networks have relied on advertising for revenue, cable channels have charged fees to carriers — cable companies and the like — and sold advertising. Networks have begun charging carriers, too, and could make even more money without their affiliates.
“Pay-TV providers are paying the networks only for the stations the networks own. That amounts to a little less than a third of the TV audience, which means local affiliates recoup two-thirds of the fees. If a network operated purely as a cable channel and cut the affiliates out, the network could get the fees for the entire pay-TV audience.”
Affiliates that manage to stay in business would be independent stations, filling the broadcast day on their own with local news and programming, and syndicated material
Because of complicated affiliate contracts, any shift would take years, he says.