Don't know what you mean by "Is it that bad?"
Using Blu-Ray as a comparison, I'm not that big on movies, so have only sampled BD, but find that some of it is crap also. Was very disappointed in some of it.
Anyway, I mainly watch OTA - have been since 2006 as many others on this forum have and have seen the vast improvement since infancy and now it's very consistent and overall the PQ is very good - better than any other source. The best is outdoor sports and I think CBS has by far the best PQ and dolby for that, with Fox a close 2nd. ABC sucks here because of lack of Dolby - and because it's ABC.
Also have Dish and the PQ is much better overall than a couple of years ago, excellent on some channels and mediocre on others. The source content and the individual channels can vary greatly in quality, but that is true with all sources.
Some claim D* has better PQ than Dish, but my son has D* and I don't see the difference. In fact, my 4-yr old plasma still looks better than his new Sony LCD, so PQ is dependent on equipment also.
Satellite is far better and has more HD than cable, especially since the only provider here is Concast. In all honesty I haven't seen their HD lately, but it was lousy the last time I saw it and I have no inclination to even consider it.