Sinclair Broadcast Group Inc., the largest owner of local TV stations in the U.S., just lost a bargaining chip in its negotiations with streaming service Hulu LLC.
Sinclair had refused to let Hulu offer live CBS programming in two dozen markets across the U.S. unless the online TV platform also agreed to carry another Sinclair property, the Tennis Channel. But Hulu instead reached a deal with CBS Corp. to offer a national feed of the network in the markets where Sinclair operates a local affiliate.
The workaround will let Hulu customers in cities such as Cincinnati and Salt Lake City watch CBS in time for the fall TV season, when the network airs new episodes of popular shows “The Big Bang Theory” and “Young Sheldon.” The national feed features 14 1/2 hours of programming that normally air on CBS, including prime-time entertainment, nightly news and daytime talk shows. CBS will fill what would normally be local-affiliate time -- 9 1/2 hours -- with CBSN, the company’s digital news network.
The skirmish reflects the tensions and complexities of an era where TV viewership is shifting online. Hulu created a live TV service to offer consumers a cheaper alternative to traditional cable or satellite packages, but it still needs the consent of local TV stations to carry their programming.
Blanketing Country
“The goal is to provide our network to 100 percent of the country,” Ray Hopkins, CBS’s head of distribution, said in an interview.
Hopkins said CBS has given Hulu and Sinclair a year and a half to work out their disagreement, and could wait no longer. The fall TV season begins in the coming weeks, and the college football season, which provides some of the most-watched events on CBS, started a couple weeks ago.
Sinclair can opt in to the live TV service at any time. The Hunt Valley, Maryland-based company declined to comment on the dispute.
Large media companies such as CBS, which also owns the Showtime premium cable network, have looked to online TV packages, known colloquially as skinny bundles, to offset the declining popularity of traditional cable TV. The number of people who pay for a cable or satellite package has declined for more than five years, according to research firm MoffettNathanson LLC. That number has fallen because of expensive packages that include channels many consumers don’t want.
Skinny Surge
Yet the number of people paying for a TV service of some kind increased last quarter for the first time in a couple years, thanks to these skinny bundles. Hulu’s live TV service has signed up more than 800,000 customers since its debut last May. AT&T’s DirecTV, Alphabet Inc.’s YouTube and Dish Network Corp. offer similar packages.
CBS has said it gets paid a higher monthly fee by online services than cable, and it has secured a position in almost all of the major skinny bundles. “No matter the size of the bundle, we continue to negotiate deals with the distributors at higher rates that better reflect the fair value of our content,” Les Moonves, CBS’s now-ousted chief executive officer, told analysts in August.