I recall the situation with cable in the 1960s, 70s, and 80s, and very early 90s. The cable system could import a distant station. Generally, network programming that was telecast simultaneously by the local and the distant would be blacked out on the distant. However, network programming that was not telecast simultaneously and syndicated programming was allowed to pass.
Ahh, you're talking about cable importing a distant, which is different than anyone being allowed to retransmit.
Back then, a cable company usually carried the local stations and the stations from another market. There were no cable or satellite channels, so the selling point of cable was receive all the local stations with good reception and without an antenna, and then receive some other channels from out of the area.
I wonder why everyone was OK with that arrangement for decades.
I believe there were three different issues that caused this, and "everyone" wasn't pleased with the arrangement...
Content owners were sick of retransmitters making money off of the "arrangement". During the 1960's, United Artists sued cable company Fortnightly for performing a copyrighted work without permission. The case made it to the Supreme Court, where in an astounding turn of events, SCOTUS ruled that piping copyrighted television programming was NOT performing a copyrighted work, and therefore, was not a copyright violation. That was counter to ruling SCOTUS made over the past 45 years, where piping programming over anything other than an antenna was seen as a violation.
Somewhere along the way, the FCC was involved. With the ruling in hand, any cable company could retransmit any station from anywhere, and that was a recipe for anarchy. The FCC had to regulate network nonduplication and syndicated nonduplication.
Then in 1992, as cable companies were making their money off of both being a terrestrial rebroadcaster and a programming provider for non-terrestrial material, studies were completed that over half of the people in the US would expect their bill to be halved if cable did not provide the "networks" and terrestrial broadcasts, as cable in 1991 was much different than cable in 1968. Thus the Cable Act of 1992 was put into law, treating terrestrial broadcasters pretty much the same as their cable network brethren: it became pay for play.
The important issue to note here is that the cable executives stated they would never pay fees for terrestrial broadcasts. Therefore, a group such as Disney instead of demanding payment for ABC was able to launch ESPN2 in lieu of ABC-owned affiliate payments. Thus the tying of retransmission of cable and terrestrial properties began.
As an industry gets older, the end of "wild, wild west" economics end and a more predictible, sustainable economic model begins. That's why with the advent of the automobile there were actually thousands of manufacturers, but consolidation happens as the weaker die and the stronger become the only true players. By abut 1990, the networks hardly had an interest in any of the cable networks. By 2000, the networks had quite a bit of assets in cable networks.
And of course that was why the ruling for CATV in 1968, when cable was simply a terrestrial rebroadcaster, was much different than cable TV in 1991, when cable was retransmitting both terrestrial broadcasts and satellite-delivered cable networks. The business model for and offerings on wireline television were comparatively much different.