That would be a gamble for both sides. What many on here seem to forget is customers WANT the locals. If Dish wanted to "call the bluff", they'd take the chance of losing subscribers. I still say while MVPDs do help reach some viewers that couldn't otherwise get the signal, the majority can pick up locals with an antenna. OTA was around LONG before DBS. Something tells me they'd find a way to survive.
Now maybe because of the ability to integrate OTA via antenna with the Hopper and record it, the gamble is just as much by the local stations that are asking for the increased fees.
Also as more and more people get used to having OOT services that don't include the local stations it becomes less of a gamble for the satellite providers to say NO to the increased fees. When locals via satellite first started is was a huge selling point, maybe not so much now. I actually expect for locals to become an opt-in option instead of automatic.
And No, I do not expect the local stations to disappear, what I expect is after 6 months or more of no retransmission fees the MVPDs might just see their way to being a bit more reasonable about the increases they are looking for. Don't forget that if they are off Dish and DTV they have fewer viewers and few of those advertisers might just want lower rates or rebates because of fewer eyeballs.