America’s local television broadcasters are closing out what could be the richest midterm political advertising cycle ever. AdImpact projects $11.6 billion in spending for the 2026 cycle, including $5.6 billion on broadcast TV — a welcome windfall amid shrinking audiences, rising programming costs and intensifying digital competition.
But those dollars largely disappear in 2027, exposing the industry's underlying financial pressures. S&P Global Market Intelligence/Kagan forecasts a roughly 6% decline in U.S. broadcast television industry revenue, with net retransmission and virtual-MVPD subscriber-fee revenue — long a buffer against advertising volatility — remaining essentially flat.
That post-election reckoning coincides with growing tensions between broadcasters and their network partners. Networks increasingly compete with affiliates for audiences, advertising and distribution revenue, even as stations pay heavily for programming whose exclusivity continues to erode. Their mutual dependence remains, but the economics underpinning the relationship look increasingly fragile.
A Super Bowl, Divided
Consider the controversy surrounding Disney's plans to distribute February's Super Bowl across ABC, ESPN, Disney+ and other platforms. For Disney, the strategy extends the reach and value of its NFL rights across its broader streaming ecosystem. For ABC affiliates, it threatens a lucrative advertising opportunity.
As CNBC's Alex Sherman reported, one station-group executive estimates that fragmented viewing could reduce local Super Bowl advertising revenue by as much as 35% compared with last year's game. The stakes are considerable: for some affiliates, a single Super Bowl can generate roughly 3% of annual advertising revenue.
Unlike previous Super Bowl streams on Peacock, Paramount+ and Tubi, which offered geographically targeted advertising opportunities, Disney+ currently has no comparable arrangement in place for ABC affiliates. Stations risk losing both viewers and the ability to monetize them.
The dispute, now before ABC's affiliate board, exposes a widening economic divide: Disney can profit from audiences wherever they watch, while affiliates depend on viewers and advertising inventory they can monetize locally. That tension is especially acute given the substantial reverse-compensation fees stations already pay for network programming.
Yet neither side can easily walk away. Just days before the controversy emerged, Disney and Tegna renewed ABC affiliations in 13 markets, underscoring the enduring value of network programming even as the two sides increasingly disagree over who captures its value.
Local News, Shared Economics
Station owners, meanwhile, are restructuring their own operations to protect profitability.
In Louisville, Gray Media this week debuted its combined WDRB-TV/WAVE-TV newsroom, uniting more than 100 journalists to produce over 80 hours of weekly news, weather and sports across its Fox and NBC affiliates and streaming platforms.
Gray touts expanded reporting resources and stronger local coverage, but the financial logic is equally compelling: shared personnel, production and infrastructure promise greater efficiency while preserving substantial local news output.
The contrast is telling: networks are expanding distribution to monetize national programming, while station groups are pooling resources to sustain the local programming that distinguishes them.
The pressure extends beyond Louisville. On Wednesday, E.W. Scripps raised its 2026 political advertising forecast to $275 million, 40% above 2022, while confirming roughly 850 job cuts this year — nearly one-fifth of its workforce — and targeting $100 million in annualized savings.
Even amid record political revenue, broadcasters are restructuring for leaner times. Both companies illustrate the same imperative: extracting greater efficiency from local operations while the election-year windfall temporarily masks deeper financial pressures.
For station groups, efficiency is becoming an economic necessity, not merely a strategic preference. The harder question is how much of those savings will be consumed by the cost of remaining a network affiliate.
Who Needs Whom More?
The network-affiliate bargain has already undergone a striking financial reversal. Networks once paid stations to carry their programming; today, affiliates pay substantial reverse-compensation fees, largely supported by retransmission revenue. But shrinking pay-TV audiences, flattening subscriber fees and expanding network streaming ambitions increasingly threaten that arrangement.
Some broadcasters are testing the limits of that dependence. Miami's WPLG-TV dropped ABC last year rather than accept new terms, while Gray relinquished its 31-year CBS affiliation in Atlanta even as it renewed agreements in 52 other markets. Neither signals a wholesale retreat from network affiliation. Both suggest its value is increasingly being calculated market by market.
The deeper question is whether stations can continue paying heavily for premium national programming as networks increasingly monetize that same content through distribution channels affiliates don't control.
Corporate restructuring could accelerate that reassessment. CBS now operates within the debt-laden Skydance enterprise alongside HBO, CNN and Warner Bros. Comcast's planned spin-off of NBCUniversal raises questions about its owned-station strategy, while Fox One extends Fox's streaming reach beyond traditional affiliates.
Spanish-language broadcasters face similar cross-platform pressures. TelevisaUnivision balances affiliate distribution against its ViX ambitions, while Telemundo combines extensive station ownership with Peacock distribution. Meanwhile, Entravision's Univision affiliation extension through March 2027, followed by quarterly renewals, illustrates the contractual flexibility emerging in the marketplace.
Regulatory changes add another variable. The FCC's move to repeal its national broadcast ownership cap, now facing legal challenges, could reshape negotiating leverage through further station-group consolidation or expanded network ownership. Meanwhile, its examination of network-affiliate relationships, including streaming distribution and contractual restrictions, adds uncertainty to an already strained economic bargain.
After The Windfall
Networks and affiliates still need one another. Live sports, local news and free over-the-air access retain considerable value. But their financial interests are increasingly difficult to reconcile.
Networks are expanding distribution to capture more revenue, while station groups consolidate operations to protect margins. With retransmission revenue flattening, the financial cushion that once helped sustain their partnership is wearing thin.
The next presidential election may deliver another windfall. But political spending cannot resolve an increasingly contentious division of programming costs, distribution control and advertising revenue.
The 2026 windfall may obscure those tensions for now. Come 2027, the money will fade — but the underlying conflict won't.
Local News To Peruse:
- Consolidation City - Eric Rynston-Lobel [Northwestern Medill Local News Initiative]
- Nexstar To Pay $80,500 To Settle FCC Probe Over Rules Violations - Matthew Keys [TheDesk]
- 3 Stations, One General Manager - Scott Jones [FTV Live]
- Always. Be. Streaming. - Kirk Varner [TVND]
- MacArthur, Knight Back $21M Investment Fund For Local News - Sara Fischer [Axios]
