2:56pm PT by Eriq Gardner
Al Jazeera Says It Hasn't Gotten DirecTV License Fees Since March
On July 31, the old distribution agreement between Al Jazeera America and DirecTV expired. Under normal circumstances, this would mean that the ratings-challenged Qatari-backed cable news network would be taken off the satellite service. But with no news of an extension, what's going on?
The answer might come from court papers filed on Friday by Al Jazeera.
The cable news network reveals that it hasn't been paid license fees from the satcaster in months. Al Jazeera is now asserting that DirecTV is breaching contract and owes $6.8 million from March 16 through the end of last month. And yet, Al Jazeera tells a judge that it intends to continue to make its service available to DirecTV.
Although $6.8 million is a lot, that's nothing compared to the nearly $75 million that DirecTV believes is owed by Al Jazeera for allegedly breaching "most favored nation" obligations under the old contract.
This claim emanates from what happened in January 2013 when Al Gore sold the old Current TV to the Qataris. At the time, not everyone was gung ho about the plan to rebrand Current TV as Al Jazeera America. In fact, it's revealed in new court papers that DirecTV got $10 million from former members of Current to forgo the right to terminate the cable channel upon a change of ownership. At the same time, Time Warner Cable was able to extract a better licensing deal for itself.
That arrangement with TWC meant that under the old Current deals, Al Jazeera was obligated to offer the same licensing terms to other distributors.
In its amended lawsuit, DirecTV says it never got such an offer.
Not true, responds Al Jazeera.
"On October 12, 2013, AJAM made a timely and formal MFN offer to DIRECTV," states the new counterclaim. "In fact, AJAM also made timely MFN offers to its other eligible distributors... The other distributors accepted these offers, after customary negotiation... Notwithstanding AJAM's timely MFN offer, DIRECTV took no action to accept or reject that offer... Rather, DIRECTV remained entirely silent with respect to the offer from October 2013 through May 2015."
Al Jazeera believes its obligations were thus discharged.
On June 15, according to the court papers, DirecTV faxed a letter that it intended to "reduce the damages," the $75 million allegedly owed by Al Jazeera, by "withholding license fee payments through the Agreement's remaining Term."
Al Jazeera says it has not consented to this and that it's a breach of contract to not turn over due money.
But apparently, the Qataris aren't ready to order its service down from DirecTV. Asked about an extension, all a spokesperson for Al Jazeera would say is, "As a matter of policy, Al Jazeera America does not comment on discussions with our distributors."
A jury trial is scheduled for January. Al Jazeera might attempt to collect licensing money then. In the meantime, DirecTV is apparently taking an advance on the damages it expects to win. A spokesperson for DirecTV declined to comment.