AT&T today announced it was donating $500,000 to the non-profit group behind Locast, the online streaming service offering free access to local TV stations in more than a dozen U.S. cities.

AT&T’s altruism is a thumb in the eye of high-cost retransmission consent agreements with the corporate owners of local free over the air television stations. AT&T added Locast’s app to U-verse and DirecTV receivers at the end of May, giving subscribers a quick and easy way to access over the air stations if one or more are “blacked out” over a contract renewal dispute. AT&T also continues to offer antennas to customers that integrate with both services’ electronic program guides so subscribers can quickly access their favorite channels.

The Sports Fan Coalition, the group behind Locast, will use the money to further expand its service into other cities. At present, Locast is available to almost one-third of American TV homes, amounting to more than 32 million potential viewers. But the service has a very long way to go to stream local stations from all 210 U.S. TV markets.

AT&T will likely use Locast as a leveraging tool when negotiations become heated, letting TV station owners know they can simply point customers to Locast to continue watching stations. AT&T cannot legally redistribute Locast TV streams to customers without running afoul of copyright law, but it can provide customers with access to the independent Locast app and the internet connectivity that allows that app to function. AT&T does not currently plan to drop local stations already on the lineup in favor of pointing customers to Locast. But it will let customers know that blacked out stations are still available to customers through the Locast app.

After years of increasing costs for video programming, the disadvantages of not being large enough to qualify for lucrative volume discounts, and a declining customer base, a Montana cooperative says it is calling it quits on cable television service later this year to focus on its broadband business.

3 Rivers Communications, a rural telecommunications cooperative based in Fairfield, Mont., this week announced it was discontinuing television service on Oct. 31, 2019, inviting its members to choose a streaming TV provider (DirecTV Now, YouTube TV, etc.) instead.

The co-op serves 15,000 customers across two significant service areas in Montana. Only 1,800 still subscribe to cable television service — a number that has dropped steadily since the introduction of streaming TV alternatives. Most cable networks and local stations charge a sliding scale fee to carry their programming, with substantial volume discounts offered exclusively to large providers like Comcast, Charter, AT&T, DirecTV and Dish Networks. Small, independent companies are at a disadvantage because they must charge substantially more to cover their higher wholesale costs. Many have attempted to mitigate these high fees by pooling resources and buying programming through a national cooperative, but even that arrangement cannot keep costs low enough to prevent subscribers from canceling service after each rate increase.

Local TV station rate inflation, along with sports programming price hikes, have made offering cable television untenable for a growing number of small cable operators. As an example, 3 Rivers customers in Big Sky pay $32.99 for a basic cable TV package of 23 channels, including C-SPAN, Local Access, three religious networks, three home shopping channels, and around a half-dozen digital multicast TV networks. A comprehensive digital cable TV package costs $104.99 a month, just for television.

The 3 Rivers Communications television lineup for Big Sky, Mont.

In the last ten years, 3 Rivers has been focused on expanding its fiber to the home network, now reaching 65% of its customers. But the costs to provide service in rural Montana remain high, and internet packages remain costly. A 10 Mbps unlimited internet account costs $74.95/mo, 20 Mbps costs $94.95/mo, and 30 Mbps costs $114.95 (add around $10/mo for voice service). Offering television service originally boosted the average revenue received from each subscriber, but now that costs have skyrocketed, 3 Rivers now feels it should focus its investments on better broadband service.

“With all the new streaming options available, [including] Netflix and Hulu and Amazon Prime, in addition to traditional satellite providers like Dish and DirecTV, we just can’t really compete anymore,” 3 Rivers marketing director Don Serido told KRTV News. “We’re getting out of the TV business and we’re really going to focus on providing the best broadband we can to all of our cooperative members. That’s really what people want and need.”

Serido also said the company’s lack of support for pay-per-view and on demand programming also hurt its TV business. As a convenience to members, 3 Rivers is waiving all early termination fees and will continue to honor its promotional agreements until service is ended on Oct. 31.

The biggest impact will likely be felt by Montana TV stations that will lose retransmission consent revenue from 3 Rivers. Only a handful of streaming providers offer TV stations from the Great Falls market, forcing many cord-cutters to depend on on-demand viewing from services like Hulu and over-the-air antennas to pick up local stations.

As a member-owned cooperative, 3 Rivers returns all of its profits to members through capital credits. At the end of each fiscal year, the cooperative allocates a percentage of the margins to each patron on a pro-rata basis according to the total amount paid or produced for services. These allocations to patrons are known as capital credits. Upon approval of the Board of Trustees, these allocations are refunded to cooperative patrons. As a result, 3 Rivers has no incentive to overcharge its customers. Instead, it often invests its funds in improving service for its customers. When the cooperative was formed in 1953, it was the only provider of telephone service in north-central Montana. It has offered internet service for the last 20 years, with television only becoming a part of its menu of offerings a decade ago.

3 Rivers Communications will get out of the cable television business this fall, reports KRTV News in Great Falls, Mont. (1:05)

Effective today, Hulu is now under the full control of the Walt Disney Company, ending a decade of a sometimes-uneasy partnership between rivals NBC-Universal, 21st Century Fox, Disney-ABC and Time Warner (Entertainment).

This morning, Disney and Comcast, the last two partners in the streaming venture, reached an agreement that will give full operational control of Hulu to Disney, in return for either company having the right to force Disney to buy out Comcast’s remaining 33% interest in the service beginning in 2024. In effect, with Comcast giving up its three seats on Hulu’s board and its veto power, the cable company now becomes a passive partner in the venture. At a Disney-guaranteed value of at least $27.5 billion five years from now, Comcast could eventually walk away from Hulu with at least $9 billion in compensation.

Today’s agreement means Disney will own and control multiple streaming services. Disney today announced it has big plans for Hulu, despite preparing to launch its own Disney+ streaming service and already operating its own streaming platform for ESPN. Disney CEO Robert Iger said Disney+ will now be focused on kids and family-friendly entertainment, while Hulu will be Disney’s platform for adult-focused movies and series. Disney’s recent acquisition of the 20th Century Fox content library and FX’s suite of cable channels gives it plenty of additional content to bring to both of its general entertainment streaming services.

To make sure of a smooth transition, both companies have agreed to a lucrative extension of Hulu’s license to stream NBC-Universal content and networks, as well as a retransmission consent agreement to allow Hulu Live to continue carrying NBC-Universal networks and TV channels until the end of 2024. That will deliver a significant revenue boost to Comcast, which can use the money to help build its own forthcoming streaming platform, launching in 2020.

“We are now able to completely integrate Hulu into our direct-to-consumer business and leverage the full power of The Walt Disney Company’s brands and creative engines to make the service even more compelling and a greater value for consumers,” said Iger in a statement.

NBC-Universal chief executive Steve Burke said in a statement that the deal is “a perfect outcome for us” because the “extension of the content-licensing agreement will generate significant cash flow for us, while giving us maximum flexibility to program and distribute to our own direct-to-consumer platform.”

For consumers, Iger is expected to consider offering a discounted bundled package to Hulu subscribers who also sign up for Disney+. With a combination of Hulu and Disney+, Netflix’s biggest U.S. rival is about to get considerably bigger.

Your cable or streaming TV bill will increase once again as Fox executives told cheering investors this morning it would hike prices for carrying Fox TV stations and its suite of cable networks, including Fox News Channel, Fox Business, Fox Sports 1 and 2, and the Big Ten Network.

“We plan to meaningfully accelerate growth of both direct retransmission and non-[owned and operated] revenue and we believe the broadcast economics we receive are quite underpriced relative to the quality of the content we are providing,” said Fox chief operating officer John Nallen, speaking at a Fox Investor Day event.

Fox’s contracts with most cable, satellite, and streaming providers are coming up for renewal over the next three years, and it should not surprise providers to see substantially higher renewal pricing than ever before to continue carrying Fox’s networks. Fox plans to leverage the increasing amount of live sports on its broadcast network and the relative popularity of Fox News Channel to demand higher compensation. Fox was already collecting 29% more in retransmission consent-related revenue during the third quarter, but that percentage is expected to grow dramatically as new contracts are signed.

Fox News is already the most costly cable news network, and as other broadcast TV networks demand ever greater compensation from cable and satellite providers, Fox executives feel they are not asking as much as they could for their channels. That is an important consideration for Fox, which slimmed down dramatically after a sale of most of its assets to Disney. The ‘new’ Fox is made up of the Fox television network, 28 owned and operated Fox affiliated TV stations, cable news and business, and three sports channels. Nallen sees no need to expand the network lineup further.

“We are no longer lending the potency of our marketing brands toward any other initiative, brand or channel development,” Nallen said. “The purity of this sustained value opportunity from our Fox brands is critical as we are not tethered to any properties that are just getting harder to defend. This frees us up to capture the full value of all our brands across broadcast and cable.”

Nallen knows some cable operators have grown increasingly disenchanted with selling television service, and acknowledged some cable companies may balk at Fox’s new asking price, especially as cord cutting continues to accelerate. He told investors he is technology agnostic about who he sells Fox networks to, so it would come as no surprise if a streaming TV service eventually breaks into the top four Fox channel distributors. At the same time, as prices continue to rise, some traditional cable operators could eventually stop selling television service altogether.

At least six million Charter Spectrum customers could lose access to Tribune Media-owned outlets at 12:01 am on Jan. 1 because the two companies have yet to reach agreement on a retransmission consent contract extension.

Almost three dozen over-the-air stations are impacted, including WGN Chicago, WPIX New York, and KTLA Los Angeles. If the stations are blacked out, customers will also lose access to the hockey matches, NFL playoffs and NCAA basketball games aired on those stations.

“The NFL playoffs begin Jan. 5 and we want football fans in our markets to be able to watch these games and root for their favorite teams—we want to reach an agreement with Spectrum,” said Gary Weitman, Tribune Media’s senior vice president for corporate relations. “We’ve offered Spectrum fair market rates for our top-rated local news, live sports and high-quality entertainment programming, and similarly fair rates for our cable network, WGN America. Spectrum has refused our offer.”

Tribune-owned TV stations

Charter Communications claims it is working hard to find a fair agreement with Tribune, which will likely include a significant rate hike with the broadcast station owner that will eventually be passed on to Spectrum subscribers as part of the Broadcast TV surcharge, now approaching $10 a month in many areas.