The network shows an American viewer watches arrive through a local station that is usually owned by someone else. The arrangement between them is contractual, and its terms have moved considerably.
Affiliation is an exchange of airtime
A network supplies programming to a local station, which broadcasts it across a defined market under a multi-year agreement.
The station clears specified hours for network content and retains other hours for local news, syndicated shows and its own advertising.
Within network programs, some advertising slots belong to the network and others are reserved for the station to sell locally.
The network gains reliable national coverage without owning transmitters everywhere, and the station gains programming it could never produce at that scale.
The money used to flow the other way
Networks historically paid stations compensation for carrying programming, because reaching a national audience required local affiliates.
As the value of the programs rose relative to distribution, that flow reversed, and stations now commonly pay the network for the affiliation.
Those payments are a major expense for station groups and a significant revenue line for networks, particularly where sports rights have driven programming costs upward.
Renewal negotiations turn on how much of a station's own revenue the network can claim, and a failed negotiation can move an affiliation to a rival station in the same market.
Retransmission consent funds the stations
Cable and satellite providers must obtain consent to carry a local broadcast signal, and stations charge for it.
Those fees became the growth engine for local television as advertising flattened, and a share is passed through to the network.
Disputes that black out a station on a pay television service are negotiations over these fees playing out in public.
Ownership rules shape the map
Regulations limit how many stations one company may own nationally and within a single market, using measures of audience reach.
Consolidation into large station groups increased bargaining power against both networks and distributors.
Because the rules are periodically reviewed, the structure of station ownership shifts with regulatory decisions as much as with market conditions.
Local news is the differentiator
Network programming is identical across markets, so a station's distinct value is the local news it produces and the audience that habit builds.
News is expensive, and some groups share production resources across stations to spread the cost.
As viewing moves to streaming, stations are extending those newscasts to digital platforms, which raises fresh questions about what an affiliation covers.