Twentieth Century Fox’s potential move for Tribune Media, in partnership with private equity firm Blackstone, may seem like an odd play for the future of TV. After all, Fox would be acquiring some of the most old-school assets in entertainment in Tribune’s 42 local broadcast stations (and cable network WGN America). But the deal could also give Fox a leg up as it prepares for the growth of internet-based streaming TV services — where an increasing number of cost-conscious Americans are watching NFL playoff games and “Empire.”
Tribune Media’s portfolio includes several Fox-flagged broadcast stations in sizable markets including San Diego, Indianapolis, Milwaukee and Cleveland, Ohio. Fox owning and operating those stations could enable streaming services that already have a deal with the network to offer those channels without the added complication — and expense — of a third-party station owner.
As younger viewers increasingly cut the cord in favor of streaming services like Netflix and Dish Network’s Sling TV, broadcast TV is experiencing somewhat of a resurgence in importance. Most of the country’s highest rated shows, including NFL games and awards shows, air on the Big Four, and they can be enjoyed for free in full HD in perpetuity with the one-time purchase of a digital antenna. Dish Network even introduced a set-top box at this year’s Consumer Electronics Show, the AirTV Player, that connects to an antenna and integrates local broadcast channels and Sling TV in a unified interface.
However, the AirTV Player exists because currently available streaming services by themselves leave consumers in many markets with a significant hole in their programming. The Big Four’s patchwork ownership makes getting them on streaming services nationwide a significant challenge — and paying their third-party owners adds another layer of costs as internet TV providers work to offer affordable skinny bundles.
For example, a Los Angeles-based subscriber to Sling’s Blue package can watch Fox and NBC live on the streaming service (and ABC with an additional Broadcast Extra package). But 300 miles up the road in Las Vegas, someone wanting to opt for Sling Blue instead of Big Cable can only watch Fox and NBC on demand without relying on an antenna.
That’s because L.A.’s local affiliates are owned and operated by the national networks, while Sin City’s aren’t. Angelenos watch “Empire” on KTTV, which has been owned by 20th Century Fox since 1986, while Vegas residents tune into “The Simpsons” on KVVU, which is property of the Meredith Corporation, publisher of magazines including “Better Homes and Gardens” and owner of 15 broadcast stations.
And as networks like Fox look toward a future where internet TV is a bigger piece of the consumption pie, owning and operating more broadcast stations could put it in better position to cut deals that would make Fox’s flagship channel available in more markets, so cord-cutters in places like Las Vegas won’t feel out of the loop.
Google’s YouTube TV, another internet-based live TV streaming service, launched earlier this year with a channel lineup focused on the major broadcast networks and their affiliated cable channels, but it’s only available in five markets: New York, Los Angeles, San Francisco Bay Area, Chicago and Philadelphia — all of which have Big Four broadcast stations owned and operated by their parent companies.
As people outside of those mega-markets increasingly check out options besides traditional cable and satellite packages, they aren’t going to want to sacrifice their local broadcast channels. A Fox that includes Tribune’s stations can cut deals with streaming services that make its flagship network available in more markets, and as a byproduct, making those internet TV packages more appetizing. By choosing skinny bundles, consumers are making owned-and-operated stations that much more valuable. Fox has apparently taken note.