Update: After this article was published on Monday, Verizon announced it reached a new agreement with TEGNA that keeps the affected stations on Fios TV for a while long. The deal also includes a fifth station in Connecticut. An updated story is available to view by clicking or tapping here. The original story follows below:
Verizon has sent a notice to some customers of its Fios TV service with a warning that one of their local television channels may be removed on Tuesday.
The notice affects Fios TV customers in four cities, and was mailed and e-mailed to subscribers last week as the clock ticks closer to a potential carriage dispute between Verizon and the local TV broadcaster TEGNA.
Verizon’s contract with TEGNA expires on November 12. If both sides cannot reach an agreement before then, the following stations will be dropped from Fios TV:
- WGRZ (Channel 2, NBC) in Buffalo, New York
- WPMT (Channel 43, Fox) in Harrisburg, Pennsylvania
- WUSA (Channel 9, CBS) in Washington, D.C.
- WVEC (Channel 13, ABC) in Norfolk, Virginia
As is typical in disputes like these, the issue centers around fees that distributors like Verizon are forced to pay broadcasters like TEGNA for the rights to redistribute their channels to subscribers. TEGNA earned $356.2 million in distribution-related fees during its most-recent financial quarter, and company executives affirmed earlier this year that the company will continue seeking higher fees from cable and satellite customers for their channels; those fees are ultimately passed on to customers in their bills.
Related: TEGNA says it will keep seeking higher fees from cable companies
The reason is clear: Distribution fees continue to be a bigger part of TEGNA’s business, and helps the company overcome an ongoing downturn in the local and national advertising market. TEGNA earned just $312.9 million from advertising and marketing during its latest financial quarter; almost one-third of that income was from political advertising, which will be less of a consideration in future financial quarters because the 2024 election cycle is now over.
TEGNA is not alone in seeking higher fees from cable and satellite companies: Some of TEGNA’s peers have taken the same approach, including Nexstar and Sinclair. But TEGNA has suffered for its choice to pull channels from pay TV platforms in the past: One month before executives committed to extracting higher fees from pay TV companies, TEGNA admitted that its dispute with satellite broadcaster DirecTV caused it to lose money.
The broadcaster’s past behavior, coupled with its affirmation in March, seems to indicate that a dispute is likely. Officially, TEGNA says they’re still working things out with Verizon, and expressed surprise that the company started notifying customers about a potential dispute.
“We have been working with Verizon for months to reach a fair, market-based agreement,” a TEGNA spokesperson told a TV trade publication. “So, we are surprised that they have begun telling their customers that they may lose access to our stations, when our contract does not expire until November 12.” (Federal regulations require cable companies to notify customers about a potential programming dispute; Fios TV is regulated as a cable TV company.)
The dispute may ultimately be a small nuisance for Verizon: The company offers Fios TV across a relatively small footprint — mostly in the northeastern part of the country — and counted just 2.74 million TV subscribers as of its most-recent financial quarter. Verizon continues to push its existing Fios Internet and 5G Home Internet customers toward YouTube TV as an alternative; YouTube TV carries TEGNA-owned broadcast stations under various contracts, none of which are affected by the Verizon dispute.
Verizon Fios customers also have a number of other alternatives to watch TEGNA-owned stations: They can purchase an antenna, or switch to another pay TV provider like DirecTV Stream, Fubo and Hulu with Live TV.
