The meltdown between DirecTV and Tribune Broadcasting that led to the blackout of 23 stations on the satcaster early Sunday is likely to be the last big battle in the Great Retrans Wars of 2010-12.
Hostilities between broadcasters and multichannel video providers have been heightened in the past few years as station owners became more aggressive in seeking cash compensation for their signals. But the vast majority of major-market station owners have concluded long-term deals with the larger cable and satellite operators. The Tribune-DirecTV tension caught the biz by surprise last week because the end of the previous contract came so late in the industrywide retrans-renewal cycle.
Tribune said Saturday night it had no choice but to tell DirecTV to pull its signals in 19 markets, as well as cabler WGN America, as federal law requires a contract to be in place for a multichannel video provider to retransmit local stations. DirecTV asserted that it was Tribune’s call to go dark — as broadcasters often do in protracted retrans negotiations.
“This situation is extremely unfortunate,” said Tribune Broadcasting president Nils Larsen. “We don’t want anyone to lose the valuable programming we provide, but we simply cannot get fair compensation from DirecTV and we cannot allow DirecTV to continue taking advantage of us.”
A DirecTV spokesman said of the shutdown: “It’s the last thing we want to do but we have no choice.” He said DirecTV is committed to continuing to work toward an agreement to avoid as much disruption as possible.
Sources said the sides had some communication on Sunday but no negotiations per se.
The conflict, of course, boils down to money, or the per-subscriber fee that Tribune seeks for its stations. DirecTV had not previously paid Tribune cash for retrans rights. According to sources, the sides had closed much of the price gap on the per-subscriber fee DirecTV would pay for the stations, but a big sticking point was Tribune’s push for fees for its WGN America cabler. WGN America had been historically been covered under Tribune’s station contracts. Tribune has beefed up the channel’s programming and branding in the past two years and is now seeking higher carriage fees from operators.
The shutdown will likely put a dent in the national ratings for the CW, as Tribune is the net’s home in New York (WPIX), L.A. (KTLA), Chicago (WGN), Philadelphia (WPHL) and other top markets. DirecTV is the nation’s second-largest MVPD, behind Comcast, with nearly 19 million subscribers.
The sparring between the sides of retransmission consent fees became heightened Saturday as the sides disputed whether a “handshake” deal had been reached on Thursday, as DirecTV claimed. Among the stations affected are also Fox affils in Indianapolis, Seattle, San Diego and four other markets, as well Tribune’s ABC affil in New Orleans.
DirecTV had not previously paid Tribune cash for retrans rights. With CW affils in the largest markets, Tribune does not bring as much leverage to the table as stations affiliated with the Big Four nets.
Tribune went public with the possibility of a shutdown last Monday, when it began urging viewers on-air to contact DirecTV in protest. Tribune said the satcaster refused to offer what it deemed a “fair” price for its stations.
After days of talks aimed at beating the Saturday midnight contract expiration, DirecTV said early Saturday that it had reached a handshake deal for the stations, though not WGN America. That brought a quick denial from Tribune. DirecTV then responded with a sharply worded statement accusing Tribune of negotiating in “bad faith.” It also asserted that Tribune was more concerned with satisfying creditors as part of its long-running bankruptcy proceedings than it was in protecting viewers’ access to its stations.
DirecTV’s claim of “bad faith” may have been designed to get the attention of the Federal Communications Commission. Such a claim can be a basis for filing a complaint against a company with the FCC in relation to a retrans impasse. The FCC took a look at the nearly 20-year-old retrans law last year, after lobbying from cablers that broadcasters were using blackouts as leverage to demand high fees. The FCC ultimately decided it didn’t have much authority to change the law, and thus it has stayed mostly on the sidelines of the retrans wars.
The DirecTV-Tribune shutdown marks the highest-profile major-market service disruption related to retrans since Fox’s New York stations went dark on Cablevision’s system for more than two weeks in October 2010.
DirecTV said it would put a message slate about the dispute in the slots where Tribune stations and WGN America are located.
Tribune has emphasized that the shutdown will hit viewers in New York, Chi and Philadelphia, who will lose access to local baseball coverage just as the season begins this week.
The public nature of the dispute puts Tribune Co. CEO Eddy Hartenstein in the awkward position of criticizing his alma mater. Hartenstein was founding CEO of DirecTV from 1990 to 2003.