Here’s the basic rundown of how it works.
OTA (Over the air) TV stations have a few options when it comes to cable/dish coverage.
In the old days any cable company was free to pick up any signal OTA they could and put it on their system.
Well this was problematic in a lot of areas. First of all TV is sold via markets which are established by Nielsen, not the FCC. (The FCC uses the Nielsen markets, because it’s convenient, but they have nothing to do with the FCC)
So let’s say I live in South Bend, Indiana and want to buy time of the local NBC affiliate. So I do. Well in the old days if a cable company could put up a big antenna and pick up WMAQ the NBC station from Chicago (which isn’t hard to do), I the advertiser might be paying for a commerical on the local South Bend NBC station when people are watching the NBC station from Chicago.
Clearly this is a problem, and it was just one of them.
Another problem is the TV stations said, they should be paid if cable / dish re-distributes their programming. The cable companies replied, accurately they were being paid, in the form of higher ad rates because with cable their signals went farther and reached more viewers
Another problem was the cable companies were free to carry only the stations they wanted. This meant that some weaker channels were left out. How could they get stronger if they weren’t allowed to compete on an equal footing? This makes sense as well.
So in the early 90s, the FCC put into place a thing called “Must Carry.”
This says that for every Nielsen market (Designated Market Area or DMA), every TV stations has a right to request that its signal be carried on every cable system throughout the market (There are a few very odd exceptions to this rule).
So this addressed on problem. The weaker TV stations could demand that their signal be carried. And since on cable all the pictures are equal, it puts them on equal footing.
But this didn’t solve the problem of TV stations saying they should be paid for their programming.
So the FCC did this. It said, if a TV station requests “Must carry” status, it doesn’t cost the cable system anything.
So this means weak stations (usually infomercial stations and relgious stations) now get on cable but the cable company doesn’t get charged to carry it)
So here is where the alternative comes in.
If a station doesn’t request “must carry,” they are free to negotiate ANY fee they want. Now the term “fee” is misleading, because it makes you think of money.
But that isn’t always the case. In Chicago, WPWR - Channel 50 was a popular station (this was before FOX bought it). So a cable company naturally wanted to carry it. But most cable companies wouldn’t pay WPWR to carry it. So WPWR thought, what can we do.
The negotiated to put WPWR which was on Channel 50 over the air, to be put on cable channel 8. Why channel 8? Because WLS (ABC) is on channel 7 and WGN (the biggest independent back then) was on channel 9. So when people clicked around they’d go between channels 7 and 9 and there would be WPWR and people might watch.
So in this case the “fee” was not money but channel placement.
Now sometimes another channel can be a fee. WGN-TV in Chicago, also has another channel called CLTV (Chicagoland TV News). Part of WGN’s fee is that if the cable company wants to carry WGN, they also have to carry CLTV.
This explains why cable companies carry a lot of awful networks. Even though they are low rated they are owned by CBS or FOX or Warner Brothers. To get one channel they have to take the lower rated channels too.
See how it works. You can negotiate your “Fee” as virtually anything. It can be money, channel placment, the requirement of adding other channels to a combination of that or anything.
Most cable companies get feeds fed directly to them and no longer pick up the signals over the air. This explains on 9-11 after the WTC fell the OTA viewers were cut off but cable viewers still go the TV stations. (WCBS had a backup transmitter on the Empire State so it stayed on).
Now the situation is getting even more complex.
In the USA most stations are affiliated not OWNED by the network.
For instance FOX owns TV stations in NYC, LA, Chicago, Philly but in the 5th largest market they don’t own that station KTVU, they simply affiliate with it. That is they provide programming.
Now the networks are saying that they should be getting a piece of the compensation as a price for affiliations.
I’ll make up some numbers here. So Fox is sayins if KTVU in Oakland/SF, get’s $1,000 from the cable company in compensation for carrying the signal, FOX the network should get a piece of that $1,000. (I just made those numbers up for an example)
It was revealed after the fact that WPGA in Macon dropped ABC when ABC started pushing for part of the cable money. WPGA maintained that ABC programming was too “racy” so it dropped the network but later it came out that that was only a minor part of the reason and the main reason was the demand by ABC for part of the cable money