In a recent analysis for clients of their Madison and Wall advisory firm, media economist Brian Wieser and analyst Luke Stillman introduced a concept that should alarm local broadcasters — “pay TV singularity.” Their thesis: The U.S. pay TV market is nearing a tipping point where traditional cable and broadcast television can no longer deliver reliable mass reach for advertisers — a shift that could upend the economic foundation of local and national TV advertising alike. Wieser and Stillman define this moment as the point when “there are zero ways to get half the population via cable” — a structural collapse in the usefulness of linear television for mass-reach campaigns. While their analysis centers on national advertising and the broader television marketplace, the consequences for local broadcasters are even more troubling than the national conversation implies. The Point Of No Return? The singularity they suggest is already here. Pay TV penetration has plummeted from over 80% in 2011 to just 34.4% by the end of 2024, marking the ninth consecutive year of subscriber decline. This is not cyclical. This is structural. And for local broadcasters — the stations that depend on cable carriage agreements, retransmission fees and reach metrics tied to traditional TV households — the singularity poses an existential threat. Unlike national networks that can pivot to streaming or specialty content, local stations are tied to analog economics in a digital world, and the financial model that has sustained local news, sports and community programming is hollowing out in real time. Understanding this crisis requires examining a number of interconnected revenue pressures that are converging simultaneously on local broadcasters, each with its own implications — and none with obvious solutions. The Retransmission Fee Trap For the past 15 years, retransmission consent has been local broadcasting's financial oxygen. When cable and satellite operators agreed to pay broadcasters per-subscriber fees in exchange for the right to distribute their signals, it created a revenue stream that partially compensated for declining advertising. But this lifeline is strangling as the subscriber base evaporates. Pay TV households dropped from over 86 million in 2014 to approximately 56 million by 2025 — a 35% collapse. With vMVPD services continuing to hemorrhage subscribers (losing 1.04 million net in Q1 2025 alone), retransmission revenue has begun its inevitable decline. The math is brutal. Gray Media, the nation’s second-largest owner of broadcast stations, saw retransmission revenue drop 6% year-over-year in Q3 2025 while carrying $5.6 billion in long-term debt. Nexstar, despite its massive ad-friendly scale, derived 54% of its $5.4 billion annual revenue from retransmission fees — a dependency that inverts the entire business model. When that revenue stream shrinks, the leverage shifts entirely to the networks. Nexstar and other station groups are already reporting "network fee pressures" as networks like ABC, NBC and Fox demand higher reverse compensation (the share of retransmission fees networks take from their affiliates), essentially taxing the remaining subscriber base harder. |
