PBS is exploring ways to help stations defray the potentially high costs of transmitting their live broadcast signals via YouTube TV, the first over-the-top livestreaming provider to partner with public television.

Stations in the biggest television markets, where YouTube TV is already equipped to stream local broadcasts, won’t pay anything to provide their live feeds. But others — it’s yet not clear which ones or how many — may need to pay either $250 or $1,500 each month, according to five public TV sources familiar with the deal. Sources requested anonymity because terms of the contract are confidential.

PBS and stations plan to launch the livestreaming service on YouTube TV in November. The multiyear agreement is PBS’ first with a virtual multichannel video programming distributor, or vMVPD, and secures carriage for all PBS stations and the PBS Kids network on the live television and on-demand subscription service owned by Google.

Under the agreement announced July 29, stations have three options for participating. The most popular, dubbed “option one,” allows them to provide feeds of their live broadcasts if they meet a threshold for delivering programs that have been cleared for local live streaming. Another option has limited localization: PBS will provide a feed of completely cleared programs and insert station IDs.

PBS unveiled the landmark agreement during the Television Critics Association Press Tour in Pasadena, Calif., and convened a webinar with station leaders the following week to share details.

The fine print on the contract lays out costs for stations that go with the local live feed. Some stations will pay a reduced monthly rate of $250. The $1,500 monthly fee, which may affect as many as 50 stations, is the market rate for a third-party provider to deliver local signals, according to a source familiar with provisions in the contract.

“This is where this deal got a little bit complicated in the 11th hour,” said Ira Rubenstein, PBS digital chief. PBS had hoped that YouTube TV would extend the lower fee to all stations outside of the top markets, he said, but it didn’t turn out that way in the final push to complete the agreement.

The monthly cost surprised station managers. “We are grappling with that today — the cost may be more than we had thought,” said David Gordon, GM of KEET in Eureka, Calif. “We’re just going to have to find the money to do it.”

It could get more complicated two years into the three-year contract, when all PBS stations will be required to shoulder the full costs of delivering their signals to YouTube, according to sources.

However, PBS expects that a planned expansion of its interconnection system will allow stations to upload their signals for PBS to provide to YouTube TV, a solution that eliminates the fee requirement.

A two-year horizon “is actually quite reasonable,” said PBS Chief Technology Officer Mario Vecchi. “We are working very closely with CPB,” which manages interconnection funds appropriated by Congress, he said.

Sorting out stations’ costs in providing local live feeds has added a new complication for an initiative that stakeholders across the public TV system have been planning for months. Until recently, efforts to secure livestreaming rights to signature programs have been the top priority.

Under option one, a station that provides a livestream of the linear broadcast schedule of its main channel has to clear rights to 90 percent of the programs.

Efforts to secure livestreaming rights took a collective push bytop program distributors, an advisory group of leaders from seven PBS members stations, and the Public Television Major Market Group, an affinity group of PBS members in the largest markets.

American Public Television has cleared about 92 percent of its programming that is in rights for station broadcasts as of Nov. 1, totaling 3,267 hours, according to CEO Cynthia Fenneman. APT is very close to having all new programs in its catalog cleared, she said.

Clearing live local streaming rights was complicated, Fenneman said. APT staff began reaching out to producers of 1,100 program titles last summer.

“The national feed is better than no PBS. But … for the viability of stations, their local signal needs to be on it.” Bill Sanford, Lakeland PBS

“Shows may have more than one producer, or sometimes a producer is in England, or Canada, or is repped by someone else,” she said. “… In the end, we spent more than 2,000 staff hours and tens of thousands in legal fees to get the proper clearances.”

One of APT’s most popular syndication packages — its Public Television Feature Film Package — was among the offerings that APT and station programmers were most concerned about. Four of the films scheduled for release during the coming fall season are not cleared for livestreaming, Fenneman said. But all but one of the 88 films in the new syndication package that releases in January are good to go.

British dramas syndicated by APT, including Doc Martin seasons 1–8, Midsomer Murders seasons 12–15 and The Bletchley Circle seasons 1–2 have been cleared, Fenneman said. Frankie Drake Mysteries, a new series from Canada, is also fully cleared.

The National Educational Telecommunications Association has cleared nearly all the titles in its catalog, said Gayle Loeber, VP of content. Of the 25 to 30 remaining programs, she expects all but six to be available for livestreaming in time for the YouTube TV launch in November. NETA is now requiring live local streaming rights for all new programs.

New hurdle

With rights largely secured, high-fives paused in midair when smaller stations learned that taking option one would require them to scramble for cash.

Sanford

“Honestly, in my opinion, delivery costs will be the biggest hurdle,” said Bill Sanford, CEO of Lakeland PBS in Bemidji, Minn., and a member of the station advisory group involved in planning. “I don’t think it’s sunk in yet to some of the stations,” he said.

When PBS canvassed stations for a preliminary read on which of the three streaming options they planned to deliver, three-quarters said they prefer to livestream their primary broadcast feed, according to Max Duke, senior director of PBS Station Products & Innovation. If a show is not cleared, YouTube TV will display a blacked-out screen with a message to viewers that the show isn’t available for streaming.

The most expensive and complicated option for providing a localized channel allows stations to create a dedicated, fully cleared feed and deliver it to YouTube TV themselves. Stations that choose this path would shoulder all costs of programming and delivering their new channel.

Stations that go with option three — picking up a national feed of fully cleared programs packaged by PBS — won’t pay anything. But viewers in their markets will see only local branding inserted as station IDs with no local programs or on-air fundraising.

Stations that choose the PBS feed have the option to switch to deliver their own live linear channel, Duke said, but can do so only once during the life of the contract.

“We don’t feel that’s the way to go,” said Gordon of KEET, which is in one of the nation’s smallest television markets. “We feel it has to be our feed, and that’s … important.”

“The national feed is better than no PBS,” said Sanford of Lakeland PBS. “But, that said, for the viability of stations, their local signal needs to be on it.”

PBS developed the national feed specifically for small stations that can’t afford to pay the livestreaming fees or aren’t convinced of the benefits of a providing a localized stream to OTT audiences.

“I appreciate that costs matter,” Rubenstein said. “We are always trying to minimize that.”

Investing in digital platforms is difficult for small stations, especially those that have barely enough money to cover the costs of their broadcast services, Rubenstein said. “But no one is forcing [them] to do it,” he said.

“It is not our intent to leave anybody high and dry,” said Jeremy Teres, head of business development for PBS Digital. “We continue to work through solutions. … The goal is to get the number of stations that would be [required to] pay the full price down to the minimum.”

PBS has learned that some stations have preexisting agreements with local providers that may help lower the costs of transmitting their local stream, Duke said.

In canvassing stations to gauge their preferences among the livestreaming options, PBS found that “some are already working with vendors in their markets to deliver signals and could leverage existing relationships,” Duke said. “We are finding a lot of scenarios where low-cost and no-cost options are available” to local pubcasters, he said.

‘We’re not driving this train’

PBS and stations both agree that the business model for providing anytime, anywhere access is a work in progress.

With the YouTube TV agreement, stations that don’t qualify for the free or subsidized rate have to weigh the cost of ensuring that the experience of OTT subscribers is localized to the greatest possible extent.

Meanwhile, cord-cutting continues to afflict traditional pay-TV providers. A report released this month by Leichtman Research Group tracked a collective net loss of about 1.4 million subscribers for the largest traditional pay-TV providers during the quarter that ended June 30. The group Leichtman tracked — the seven biggest cable operators, two major satellite services and top telephone providers — accounts for 82 million subscribers.

Sling TV, which launched in 2015, ended the first quarter of 2019 with over 2.4 million subscribers, according to parent Dish Network. AT&T TV Now, which is owned by AT&T and has been available since 2016, had about 1.5 million subscribers. The two services lost a combined 120,000 subscriptions in the last quarter, Leichtman calculated.

YouTube TV offers 70 live channels. It launched nationally only this year and doesn’t release subscriber numbers. Nor does another big player, Disney-owned Hulu + Live TV, which rolled out in 2017. Research firm MoffettNathanson recently estimated the two services ended the second quarter of 2019 with, respectively, 1.5 million and 2.4 million subscribers.

While public TV’s audience among OTT subscribers is still comparatively small, WNET’s Daniel Greenberg noted another important reason for jumping into the OTT stream now. As more subscribers move to vMVPD platforms, the breadth and allure of the programs they can find there will only improve — not to mention the marketing campaigns already at work to get them to sign up.

Greenberg, chief digital officer for the New York station, noted that YouTube TV sponsored broadcasts of the World Series and the NBA Finals. “I don’t know if someone wants me to come around with a barrel saying ‘The end of the world,’ but [having] the two biggest television moments of the year sponsored by YouTube TV — it’s a symbol,” he said.

The alternative to bringing PBS and local station streams on YouTube TV would mean sitting out the biggest play for the next generation of TV viewers. Young people who subscribe to YouTube TV wouldn’t see anything from PBS, he said.

“And in six years, someone who is now 15 will be 21 and will never have heard of it,” he said.