A recent contract dispute between Verizon Fios and four local television stations based in Syracuse exemplifies how rapidly the media business is changing. There have never been more ways for consumers to view content, and this availability is morphing the broadcast industry in such a way that the traditional business models that dominated the industry are becoming problematic.

The dispute took place between Bristlecone Broadcasting, a local station owner, and Verizon Fios, a giant in the cable industry, over the channels WNYS My43, WSYT Fox 68, WSYT ZUUS Country 465 and WNYS GetTV 480. It began when Verizon Fios accused Bristlecone of demanding an unreasonable increase in fees that caused negotiations to fall through, according to Syracuse.com. But Brian Brady, president and CEO of Bristlecone Broadcasting, claimed that Verizon unexpectedly walked away from the table on the deal and is now using its customers as pawns against Bristlecone.

The relationship between local station owners and cable providers has been strained. Since the cost of providing cable has gone up, the cost for customers to pay for cable has increased. Both sides — cable providers and station owners alike — are changing their strategies dramatically to adjust to new market conditions.  We will continue to see more disputes going forward as the competitors within the industry change strategies, and it will be some time before there is a new standard established.

“This is a high stakes chess game between large broadcasting groups and large cable providers,” said Ed Hersh, an industry consultant and adjunct professor of television, radio and film in Syracuse University’s S.I. Newhouse School of Public Communications.

Both parties have a lot to lose in this dispute, but they are willing to take these risks because their businesses are under siege from industry change.

The situation is being compounded by frequent consolidation on both sides. Local station owners are consolidating to cut costs and gain more leverage over cable providers. These types of mergers often go unnoticed. On the other hand, the large cable providers have seen several mega-mergers over the last decade, the most recent being Charter Communications’ acquisition of Bright House Networks and Time Warner Cable.

“This dispute is simply a microcosm of what is going on across the country between local station owners and large network providers.” said Hersh.

Every industry experiences change at one point or another, and the television industry is in the middle of a major transition with the millennial generation as a major driver of this change. Millennials prefer their services to be à la carte and personalized, which translates to them not wanting to pay for channels they don’t use.

There are some that speculate online streaming services will eventually outpace traditional cable. In that case, the disputes between station owners and providers will take a whole new form. But regardless of how it changes, the pace of change in the media industry — and its impact on consumers — seems as if it will only accelerate.

Daniel Strauss is a sophomore entrepreneurship and finance double major. His column appears weekly. He can be reached at dstrauss@syr.edu.

Published on January 26, 2017 at 12:20 am