Programs are paid for in a variety of ways. Cable service providers (e.g., Time Warner Cable or Cablevision) rely mostly on customer subscriptions to pay for distributing their channels, but they also have to pay the broadcast networks retransmission fees to carry network channels and programming. While broadcast networks do earn carriage fees from cable and DBS providers, they pay affiliate stations license fees to carry their programs. In return, the networks sell the bulk of advertising time to recoup their fees and their investments in these programs. In this arrangement, local stations receive national programs that attract large local audiences and are allotted some local ad time to sell during the programs to generate their own revenue.

A common misconception is that TV networks own their affiliated stations. This is not usually true. Although networks own stations in major markets like New York, Los Angeles, and Chicago, throughout most of the country networks sign short-term contracts to rent time on local stations. Years ago, the FCC placed restrictions on network-owned-and-operated stations (called O & Os). But the sweeping Telecommunications Act of 1996 abolished most ownership restrictions. Today, one owner is permitted to reach up to 39 percent of the nation’s 120 million-plus TV households.

Although a local affiliate typically carries a network’s entire lineup, a station may substitute a network’s program. According to clearance rules, established in the 1940s by the Justice Department and the FCC, all local affiliates are ultimately responsible for the content of their channels and must clear, or approve, all network programming. Over the years, some of the circumstances in which local affiliates have rejected the network’s programming have been controversial. For example, in 1956 Nat King Cole (singer Natalie Cole’s father) was one of the first African American performers to host a network variety program. As a result of pressure applied by several white southern organizations, though, the program had trouble attracting a national sponsor. When some affiliates, both southern and northern, refused to carry the program, NBC canceled it in 1957. More recently, affiliates may occasionally substitute other programming for network programs they think may offend their local audiences, especially if the programs contain excessive violence or explicit sexual content.