The obstacles impeding Paramount’s $8 billion sale to Skydance keep piling up, and much of it involves CBS, the so-called Tiffany Network, and whether it has shed its rep for disseminating honest news.
Another major hurdle getting a lot less attention but could loom just as important is a nasty battle between CBS, Paramount’s news and entertainment subsidiary, and around 70 affiliates, the local broadcast stations that are independently owned, largely in Middle America, aka Trump Country, The Post has learned.
They are crying foul to the administration because CBS wants to jack up prices to carry its programming and they say the price hikes are making it difficult for them to survive. Their plight could give the President Trump-appointed broadcast regulators at the Federal Communications Commission yet another reason to nix the Skydance deal given the administration’s desire to protect local broadcast news.
Unless, of course, CBS backs off, something it has so far been loath to do given the pressures on its bottom line, sources said.
Most Americans don’t appreciate the complex business dealings that go into watching a football game or a sitcom on their local affiliate. Here’s a 30,000-foot explanation. Cable companies pay local broadcasters like Sinclair, Nexstar, Gray Media and Cox Media for their signal so they can run their lines into the homes of millions of Americans.
Yes, it’s a shrinking number of viewers and a demo that skews older but it’s still substantial. There’s money to be made reaching this audience in terms of fees and advertising. That’s why local broadcasters become “affiliates” of major news networks and pay for their programming.
The entire arrangement is under stress, however. Cord cutting has pulled viewers away from network programming and cable fees are under pressure because there are fewer viewers. Ad rates are falling. Networks are moving programming to their streaming services, most of which aren’t profitable.
Take it or leave it
The affiliates say they are caught in the crossfire, particularly when it comes to CBS as the network is seeking to squeeze every last dime out of a dying business model. CBS, they say, is negotiating dozens of contracts and — according to people repping some of the affiliates in the scuffle — demanding much higher fees on a take-it-or-leave it basis.
The fees are said to be so draconian that the affiliate business model is in existential danger at some point and maybe soon, according to people with knowledge of the matter.
A Paramount spokesman had no comment but people at the company directed me to a recent earnings call where its co-CEO, George Cheeks, addressed the affiliate issue and the cost pressures on the company.
“We’re investing heavily in must-have live sports and the most watched prime-time entertainment schedule. Now if this dynamic were to change, it would be difficult for us to continue to foot that bill. And in that case, the affiliates and local viewers, they would be harmed.”
Here’s where things could get interesting, and force CBS to back down. Just as CBS is moving forward with these price hikes, Shari Redstone, the media heiress who controls Paramount and its CBS subsidiary wants to sell the company to independent studio Skydance.
The sale is significant for her. She and her family will walk away with $2 billion if the deal is approved by the FCC. It’s a modicum of the wealth left to her by her late father, Sumner Redstone, who built Paramount into a colossus before its value was decimated with the rest of traditional broadcast. But it’s more than enough to live on.
Fairness issues
That’s only if the Trump FCC approves the deal, which it’s delaying as it investigates fairness issues at CBS News. As I have written, Redstone is so desperate to get the deal approved that she is willing to settle a separate $20 billion lawsuit with Trump himself, who sued CBS’s “60 Minutes” for the same reason the FCC is holding up the deal. Both involve claims that “60 Minutes” doctored an interview with Trump’s 2024 opponent Kamala Harris to make the Democrat sound more presidential during the height of the campaign.
Yeah, it’s a real mess. And it could get messier because the Trumpers actually like local broadcasters as opposed to the “fake news” big guys. They believe local news is largely devoid of left-wing agitprop found at the networks, and it’s still an important source of information for small-town America.
That’s why they want the affiliate model to survive since Middle America is ground zero of the MAGA base, and much of it watches stuff the old-fashioned way, on television supplied by the affiliates.
FCC Chair Brendan Carr, Trump’s point man on this, has his hands full regulating a changing media landscape and ensuring that broadcasters play by the rules, which under the law demands news-fairness guidelines for the privilege of using public airwaves as opposed to cable.
He has also made clear his support for local broadcasters, or in his words: “We don’t want local broadcasters to ultimately go the way of newspapers, and when you look at the current dynamic, I’m not sure it’s entirely healthy . . . We want local broadcasters to feel empowered to actually serve the interests of their local communities and not simply become a pass-through for nationwide content coming principally from Hollywood and New York.”
Looks like Shari has another reason to worry about the Skydance deal.
