DirecTV Alleges Bad Faith Tribune Dispute
Tribune’s executives were overruled by the hedge funds that are poised to take over the long-bankrupt broadcaster, forcing the station group to renege on a tacit retransmission-consent agreement that would have kept Tribune’s TV stations on DirecTV’s service this weekend, DirecTV said in a complaint filed with the FCC Monday. Tribune has separately asked the commission for permission to transfer its licenses to a group of creditors, but “it nonetheless appears that Tribune may have already granted these entities control of at least its retransmission consent-negotiations,” the complaint said.
Sign up for a free preview to unlock the rest of this article
If your job depends on informed compliance, you need International Trade Today. Delivered every business day and available any time online, only International Trade Today helps you stay current on the increasingly complex international trade regulatory environment.
DirecTV’s description of events would help explain the odd series of press releases it issued over the weekend. Saturday, DirecTV told reporters it had accepted Tribune’s asking rate for carrying 23 stations, and would work out terms for its WGN America station separately. Hours later, DirecTV issued this statement: “We're extremely perplexed as Tribune management and DIRECTV had a handshake deal on Thursday with an agreed upon rate for their channels. Their actions are the true definition of ‘bad faith’ in every sense of the term."
For its part, Tribune disputed that version of events. “We never reached agreement with DirecTV on all the terms of the contract -- not in principle, not by handshake and not on paper. We didn’t have an agreement on Thursday, March 29 and we do not have an agreement now,” the company said. DirecTV’s claims of “bad faith” are little more than negotiating tactics designed to give the satellite distributor an advantage in the dispute, Tribune said. Tribune said it’s seeking a deal that’s similar to those DirecTV already has in place with other content providers.
Though the dispute is higher-profile than some other recent retransmission-consent dustups, it’s not clear whether it will cause the government to intercede. “It’s all in the FCC’s court to do something and they certainly don’t seem willing to do it,” said an attorney who works on retransmission consent deals. “The logical fix is a legislative one, but what’s the likelihood of that happening in an election year?”
Advocates for changing the retransmission-consent rules piled on, calling the dispute further evidence of a broken system and highlighting the Major League Baseball games carried by some of the Tribune stations involved in the deal. The American TV Alliance and American Cable Association both pointed to the dispute as another exhibit in their case to change the retransmission-consent rules.
But even high-profile disputes tend to get resolved, Sanford Bernstein analyst Craig Moffett wrote in a note to investors Monday. “The issues here are precisely the same as they always are; a demand for retrans cash that will be ultimately settled by the brutal calculus of who can cause who the most pain,” he wrote. Unfortunately, for the distributors, consumers can turn to their competitors for a replacement, but distributors can’t replace broadcast programming, he said. “In this environment, the broadcaster wins, and the issue is only a matter of degree; broadcasters win small against big distributors and big against small ones,” he said.