NEW YORK — In an effort to level the playing field with its cable rivals, DirecTV has engineered a deal with Fox that will allow the satcaster to add all 22 Fox O&O stations to its channel lineup in exchange for offering prime carriage deals to a complement of existing and future Fox-owned cable channels.
The pact is contingent, however, on the government enacting legislation that would clear the way for satcasters to offer local-into-local retransmission of broadcast TV stations into their respective markets.
For example, DirecTV subscribers in L.A. would find Fox’s KTTV on their channel menu, while the company’s subs in Gotham would receive WNYW.
At present, DirecTV subs have to switch from the sat TV hook-up to pick up local broadcast signals over the air, a cumbersome process that has been a major hurdle in selling consumers on the pizza-sized satellite dishes.
The legislation, passed by the House and Senate, is now before a joint committee that’s trying to hammer out the differences between the two separate bills. Legislators are optimistic that a bill will be on President Clinton’s desk to sign before the year is out.
Neither DirecTV, the larger of the two major U.S. satcasters with more than 7.5 million subscribers, nor Fox would comment on the financial terms. But sources said DirecTV won’t pay cash for permission to carry the Fox stations. Instead, DirecTV will move the Fox News Channel onto a more widely circulated tier that will add 800,000 satellite dish owners to the channel’s circulation base.
DirecTV also has agreed to carry any new channels that Fox launches over the next few years. A company spokesman said the distributor has worked closely with Fox since the early ’90s, agreeing to buy such obscure, limited-circulation networks as FXM: Movies from Fox and a channel that focuses on international sports like soccer and rugby called Fox Sports World.
DirecTV’s sat TV rival, EchoStar’s Dish Network, has access to the Fox O&O signals, pending passage of the legislation, through its $1 bil buyout of News Corp.’s sat TV assets earlier this year. This deal left News Corp. with a 37% stake in Colorado-based EchoStar.
Sources said DirecTV has begun negotiating similar retransmission pacts with the Big Three O&O groups and such major-market players as Tribune Broadcasting and Hearst-Argyle Television.
For broadcast groups that don’t have cable channels to bargain with, sources reported that DirecTV floated the idea of offering advertising commitments from its parent company, General Motors, as an incentive to striking a deal. The automaker already is among the nation’s top-spending buyers of TV ads.
Other sources confirmed that DirecTV has offered to pay monthly per-subscriber license fees — as cable operators do under the must-carry regulatory doctrine — for the right to retransmit local station signals.
Deals with the Big Three O&O groups likely would involve cable network carriage. For example, in exchange for allowing DirecTV to carry ABC-owned TV stations, ABC could get clearance on the sat distrib for its new soap opera channel, which will rebroadcast ABC-owned daytime dramas the same night in primetime, starting early next year.
(Christopher Stern in Washington contributed to this report.)