Satcaster claims bankruptcy creditors overruled carriage deal
The slugfest between DirecTV and Tribune took another sharp turn Monday as the satcaster filed a complaint with the FCC, claiming Tribune has violated federal rules by ceding control of its 23 TV stations to creditors with stakes in its long-running bankruptcy proceeding.
The complaint asks the Federal Communications Commission to intervene in the retransmission consent wrangle that led to the blackout, early Sunday, of Tribune stations, most of them CW and Fox affiliates. The shutdown meant no “Gossip Girl” and other CW programming on Monday night for DirecTV subscribers in New York, Los Angeles, Chicago, Philadelphia, Dallas, while viewers in Seattle, Indianapolis and five other markets lost out on “Bones,” “House” and other Fox
Fox skeins — not to mention news and local fare produced by Tribune stations.
The heart of DirecTV’s beef stems from its claim that Tribune execs reneged on an agreement reached last Thursday night because that deal was rejected by reps from the banks and hedge funds that hold big chunks of Tribune’s debt, including Oaktree Partners, Angelo Gordon, JPMorgan Chase, Bank of America and Citibank.
Tribune vehemently denies that any such deal was reached.
The shutdown of stations in 19 markets affects about 5 million of DirecTV’s more than 19 million domestic subscribers. It also encompasses the WGN America cabler.
The heated nature of the public sallies between the companies on Monday raised hackles on both sides and made a quick end to the blackout seem unlikely. It’s understood that Tribune execs feel DirecTV’s repeated references to its bankruptcy proceedings represent a below-the-belt punch, while DirecTV execs are exasperated at what they see as two months wasted on negotiations with execs who didn’t have the final say on a deal.
Despite strenuous denials from Tribune, DirecTV said the situation was described that way to its execs by Tribune Broadcasting prexy Nils Larsen.
“We never reached agreement with DirecTV on all the terms of the contract — not in principle, not by handshake and not on paper,” Tribune said. The Chi-based newspaper and station owner scoffed at the notion that its licenses are in limbo because the bankruptcy proceedings.
“Any intimation that our broadcast licenses have been prematurely transferred is simply false and misleading,” Tribune said.
DirecTV contends that Tribune execs were negotiating in “bad faith” — which can be the basis for an FCC complaint in relation to retransmission consent negotiations — because its execs did not have the ultimate authority to make a deal. It also notes that allowing other entities control of its stations amounts to an improper delegation of its broadcast licenses as granted by the FCC.
The FCC declined to comment on DirecTV’s complaint, which seeks an expedited review given the disruption of service. The satcaster asks the FCC to compel Tribune to allow its stations to go back up on DirecTV and that Tribune appoint “fully authorized” representatives who can make a deal. And DirecTV urged the commission to investigate whether Tribune has violated the Communications Act.
In its statement Tribune stressed that its “management, with the full support of its board of directors, remains firmly committed to an expeditious negotiation with DirecTV for the carriage of our local stations and WGN America.”
The complaint spells out the timeline of negotiations during the past two weeks and includes exhibits of email correspondence among various execs. On March 19, Tribune CEO Eddy Hartenstein had dinner with DirecTV CEO Mike White to discuss the situation and Tribune’s concern that the March 31 contract expiration was approaching.
The sides last met face to face, at DirecTV’s offices in New York, on Thursday, when Larsen and Derek Chang, DirecTV’s exec veep of content strategy and development, went back and forth over proposals. According to DirecTV’s timeline, Hartenstein called White on Friday evening, telling him that the Thursday agreement in principle had been “rescinded.”
Chang told Variety that the big impediment to a deal was what he characterized as Tribune’s push for fees that were higher than what the broadcaster had accepted from other multichannel video providers for the same retransmission consent rights. He said DirecTV was waiting for the FCC to act or Tribune to make the next move in designating those with the authority to make a deal.
“We’re always open to negotiations, but we’d like to not be taken through another charade,” he said.
Tribune is expected to file a response to DirecTV’s complaint in the coming days.