How Americans Watch TV, and Who Gets Paid Along the Way

An explainer on the distribution side of the U.S. television business

Start with a simple question: when you watch "TV" tonight, what are you actually using?

Twenty years ago the answer was easy. You had a cable box or an antenna, and the channels came to you on a schedule. Today the word "TV" covers at least six different pipelines, each with its own players, its own business model and its own rules. The programs can look the same on your screen, but the money behind them moves in very different ways. This article walks through those pipelines one by one, then steps back to look at how the whole system is changing.

Pipeline 1: Over the air (broadcast)

The oldest route is still free. Plug an antenna into a TV set and you can pick up your local stations: the ABC, CBS, NBC and FOX affiliates, plus PBS and a few independents. This is broadcast television, and the signals travel "over the air" on public airwaves.

Two layers matter here. The network (ABC, CBS, NBC, FOX) is a national company that supplies programming: primetime dramas, late night, the NFL. The station is the local business that actually puts the signal in the air in Boston or Dallas. Some stations are owned by the network itself. These are called O&Os, owned and operated, like NBC10 Boston. Most are affiliates: independently owned stations that carry a network's shows under contract, like WCVB Channel 5, which is the ABC affiliate in Boston but is owned by Hearst. A few are independents with no major network at all. And many stations belong not to families or networks but to big broadcast groups. Nexstar and Gray each own more than 200 stations, Sinclair 177.

Because broadcast uses public spectrum, it is the most tightly regulated form of TV. The Federal Communications Commission (FCC) licenses stations, enforces content standards (this is why you don't hear certain words on network TV before 10 pm), and caps foreign ownership of a broadcast license at 25 percent. The FCC also requires broadcasters and distributors to negotiate carriage "in good faith," which we'll get to below.

Pipeline 2: Pay TV through a cable, satellite or telecom company

For most of the past forty years, the main way Americans watched was by paying a monthly bill to a distributor. In industry language these companies are MVPDs: multichannel video programming distributors. Comcast Xfinity and Charter Spectrum are cable MVPDs. DirecTV and Dish are satellite MVPDs. Verizon Fios is a fiber MVPD.

Here is the distinction that trips up newcomers. A cable network (ESPN, CNN, HGTV, TNT, AMC) makes the programming. A cable system (Comcast, Charter) delivers it into your house. They are different companies with different jobs, and the relationship between them is where the money flows.

It works like this. You pay the MVPD a subscription fee. The MVPD uses that money to pay content owners for the right to carry their channels. Payments to cable networks are called carriage fees or affiliate fees, charged per subscriber per month. ESPN is the famous example: it collects roughly nine to ten dollars per subscriber per month from every household that has it in a package, whether or not that household watches sports. Payments to broadcasters for carrying local stations are called retransmission consent fees. The station keeps part of that fee and sends the rest up to its network, which is called network compensation or reverse compensation. Analysts estimate MVPDs will pay 15 billion dollars or more in these fees in 2026.

All of this is negotiated in carriage agreements, and those negotiations can get ugly. When a deal expires and the two sides can't agree, the content owner pulls its channels and viewers get a blackout. Disney pulled ESPN and ABC from YouTube TV for 15 days in 2025. In 2023, 19 Disney channels went dark for 14.7 million Spectrum customers in the middle of a U.S. Open match. Blackouts tend to end right before a big event like the Super Bowl or Monday Night Football, because that is when the pressure peaks. The FCC's good faith rule exists to stop companies from stonewalling. Sinclair was fined 9 million dollars for refusing to negotiate with DirecTV.

The problem for everyone in this pipeline is that it is shrinking. In 2010, 91 percent of American TV households paid for TV this way. By mid-2025 it was 36 percent. The phrase for canceling is cord-cutting, and it is why big media companies have started spinning off or selling their cable channels. The MVPDs' answer has been bundling: packaging internet, phone, cable and even streaming apps into one discounted bill so you have a reason to stay.

Pipeline 3: Internet cable (vMVPDs)

If you want live channels but not a cable box, you can subscribe to a virtual MVPD: YouTube TV, Hulu + Live TV, fubo, Sling, Philo. These are streaming apps, but underneath they work exactly like cable. They pay the same carriage and retransmission fees, sign the same carriage agreements and suffer the same blackouts. The 2025 Disney blackout was on YouTube TV, not on a cable system. Think of a vMVPD as the cable bundle delivered over broadband.

Pipeline 4: Subscription streaming (SVOD)

Netflix, Disney+, HBO Max, Prime Video, Apple TV, Paramount+ and Peacock are what most people mean when they say "streaming." The industry has a pile of acronyms for them. OTT (over the top) describes how the content reaches you: over the internet, on top of whatever broadband connection you already have. DTC (direct to consumer) describes the business model: the content company sells to you directly instead of through an MVPD. CTV (connected TV) describes the device: the smart TV, Roku or game console you watch on. SVOD means subscription video on demand.

Two things make this pipeline different. First, the FCC does not regulate online content at all, which is why Netflix can show things ABC never could. Second, there is no contract. You can cancel any month with two clicks, and that creates the central problem of the streaming business: churn.

Churn is the rate at which subscribers cancel. American premium streamers lose about 4.6 percent of their subscribers every month. Some are "show-chasers" who sign up for one series and leave when it ends. Some are "serial churners" who hop from app to app. Streamers fight churn with a toolkit that looks suspiciously like old-fashioned television: live sports (streamers will spend an estimated 14 billion dollars on sports rights in 2026), live events, weekly episode releases instead of full-season drops, cheaper ad-supported tiers (AVOD), and bundles with each other. Disney+, Hulu and HBO Max are now sold together, something that would have been unthinkable during the "streaming wars" of 2020. Bundle subscribers churn the least, and that is the whole point.

Pipeline 5: Free streaming with ads (FAST)

Pluto TV (owned by Paramount), Tubi (Fox), Xumo (Comcast) and The Roku Channel are free ad-supported streaming television, or FAST. They offer both on-demand libraries and linear channels that you join in progress, just like flipping to a cable channel. There are more than 1,900 FAST channels worldwide. This is where a lot of older shows end up after they leave a premium streamer, because the licensing fees and residual payments are lower. Seventy percent of U.S. TV viewers now watch AVOD or FAST content, and two thirds say they would rather sit through short ad breaks than pay more for ad-free.

Pipeline 6: YouTube and creator video

YouTube is now the single most-watched video platform on American TV sets, and it fits none of the categories above. It is free, endless, personalized by algorithm, pre-installed on every smart TV, and built on content from independent creators rather than studios. The industry is taking it seriously: Netflix and Amazon are signing YouTube stars to make shows, YouTube is paying its top creators to stay, and YouTube now pitches advertisers at the Upfronts alongside the networks. One analyst put it this way: the creator is becoming the studio, and the platforms are becoming the buyers.

Where the money comes from: two streams

Step back and every pipeline above is funded by some mix of two things: subscription fees and advertising.

Subscription fees are what you pay, passed along to whoever owns the content through the carriage system described above. Streamers collect them directly.

Advertising is the other half, and it runs on measurement. A rating is the percentage of all potential viewers in a demographic group who are watching a show. A share is the percentage of people actually watching TV at that moment who are watching your show. Shares are always higher, but advertisers buy on ratings. For decades one company, Nielsen, measured this with a panel of around 42,000 households. It now combines that panel with data from millions of set-top boxes and smart TVs, and it faces competitors, which means the same show can get different ratings from different services.

Advertisers care most about specific demographics: adults 25 to 54 in daytime, adults 18 to 49 and 18 to 34 in primetime. The price of an ad is expressed as a CPM, the cost per thousand impressions. A primetime broadcast ad runs 35 to 60 dollars per thousand viewers. A streaming ad runs 35 to 65. AVOD and FAST ads run 15 to 40. A 30-second primetime network spot can cost anywhere from 50,000 to 500,000 dollars, and over a million for the biggest NFL games.

Most of that ad inventory is sold in advance. Every May, networks and now streamers hold the Upfronts in New York, where they show off their fall lineups and try to sell 70 to 80 percent of their ad time before the season starts. Whatever doesn't sell goes to the scatter market later in the year, where prices rise for hits and fall for flops. Advertising on streaming has also spread beyond the 30-second spot: pause ads, frame ads around the picture, virtual product placement added in post-production, and shoppable carousels on Amazon.

Streaming companies have one more wrinkle. They used to report subscriber counts and average revenue per user (ARPU). Most have stopped, partly because growth has slowed and partly because tiers, add-ons and bundles make ARPU meaningless. The words they use now are engagement (total minutes watched divided by running time), profitability, customer acquisition cost (what it costs to win a subscriber) and lifetime value (what that subscriber is worth over time).

The big picture: everything is converging and consolidating

Three trends tie all of this together.

First, streaming is turning into television. Live sports, live events, ad tiers, weekly releases, bundles, even the Upfronts. Streamers have figured out that what worked for broadcast and cable for sixty years works for them too, while keeping the two things traditional TV can't offer: personalized recommendations and watching whatever you want whenever you want.

Second, the industry is consolidating. Companies integrate vertically, owning the studio, the network and the streamer at once, so Disney makes a show at ABC Studios, airs it on ABC and streams it on Hulu. They also integrate horizontally, buying competitors to gain scale and IP. Paramount Skydance's 110.9 billion dollar purchase of Warner Bros. Discovery is the largest media deal in history, and it comes with foreign sovereign wealth funds owning 38.5 percent, 77 billion dollars of debt, and an estimated 6,000 jobs lost to "synergies."

Third, content itself is shifting from original ideas to existing IP. The era of Peak TV, when more than 500 original scripted series aired in a year, is over. The industry now calls it Peak IP: reboots, revivals, prequels, spinoffs and adaptations, because a known brand with a built-in fan base is a safer bet in a business where a third of new streaming subscribers come for familiar franchises.

If you remember one thing: "TV" is no longer a technology. It is a set of business models fighting over the same screen. Knowing which pipeline a show travels through tells you who pays for it, who regulates it, and why it looks the way it does.