I don't remember if this topic has come up here before, or if it was on other boards. But anytime it has come up, someone claims WTVH's contract with CBS specifies that WTVH has reign over the Utica market, and CBS will not grant affiliation rights to any other station in Utica. There could very well be a similar deal in place between NBC and WSTM regarding Watertown. After all, both WTVH and WSTM stand to lose a little chunk of revenue if they were to lose either secondary market... and I'm surprised if WBNG isn't upset over the WENY deal.
Even if the talk of the CBS/WTVH deal for Utica isn't true, I'm sure any requirement to staff a local news operation helped keep would-be startup affiliates away from the market as well. Both Utica and Watertown have proven that a second news station cannot compete, let alone a third. No owner in their right mind would spend the amount of cash it would take to try to compete with WKTV or WWNY. A coup is not impossible, but it would cost way more than you could ever hope to make back in small-market revenue. In Elmira, I've heard that WETM cleans the floor with WENY, but at least WENY is still there, making the effort. And at least WENY can supply local news to the CBS station by simply simulcasting what it's already doing, rather than building an entire news operation from scratch.
The requirement to have a local news department may be gone from affiliate contracts, but I still think it's much better for a station to have one. Once you get rid of news, you look just as cheap and shoddy as most Fox, myTV or CW stations that just relay the network feed and fill their local holes with reruns or infomercials. If I were living in Utica, I would much rather see WTVH continue to be piped in (as mediocre as their new product is) than a Utica-based CBS station with no local news. Even though WUTR's news was never perceived as a threat to WKTV, they looked a lot better when they were actually trying, than they look today.
Still, the fact that digital TV does make it very easy (and inexpensive) for an existing station to add a second network, will probably eventually give way to more of these deals in smaller markets where, before, there weren't enough stations to accommodate all the networks.