April 03, 2012 9:57am PT by Eriq Gardner
Read DirecTV's FCC Complaint in Tribune Blackout Dispute
As 5 million DirecTV customers lose access to Tribune Broadcasting's 23 local stations in 19 cities, the satellite operator has filed a complaint to the FCC that alleges that Tribune has failed to negotiate in good faith. Questioning the control of Tribune's bankruptcy creditors, DirectTV demands the agency's immediate intervention.
According to DirecTV's complaint, on Thursday—two days before the expiration of the existing carriage agreement—the parties reached an agreement. On Friday, however, "Tribune reneged on that agreement. Tribune later confirmed that its management had been overruled by the hedge fund and investment bank creditors."
Tribune says that this is a fiction. On the company's website, the company says emphatically, "The truth is that we NEVER had a deal with DirecTV, handshake or otherwise, on Thursday, Mar. 29, or any other day. To say differently is inaccurate and misleading."
Now that the old carriage agreement has expired, the blackout is causing a war of words between the two companies.
DirecTV further alleges in its FCC complaint that the parties negotiated for months, and that it "only learn[ed] on the very eve of expiration that it had never been dealing with anyone who had the authority required under the rules. Indeed, DIRECTV still does not know with whom it should be speaking—Tribune’s CEO or its associated hedge funds and investment banks."
The satellite giant goes on to question whether Tribune has already handed over control of retransmission consent agreements to its creditors, including Oaktree Partners, Angelo Gordon, JP Morgan Chase, Bank of America, and Citibank, even before it has attained permission to do so.
"If so, this action violates the Communications Act, and thus also constitutes “outrageous conduct” in violation of the Commission’s good faith rules," says the complaint.
Fights over retransmission consent aren't uncommon, but because DirecTV is the second-biggest TV distributor in the U.S., and because Tribune's local stations have sports rights at the beginning of the baseball season, the controversy has the potential of outraging millions of TV viewers. Some of the stations drawn into the dispute include local Fox and CW affiliates, threatening consumer access to hit shows like American Idol and Glee as well as local markets' ability to watch the Mets, Phillies, and both of Chicago's baseball teams.
Tribune says that DirecTV is being greedy. The company points out that DirecTV has never paid for local stations, but have charged consumers a 'substantial monthly fee' for access to these channels. "What we are asking for is less than a penny a day per subscriber," Tribune is telling its customers, also promising that rates shouldn't be changed as a result of the demand.
DirecTV wants the FCC to appoint a team with full authority to negotiate a binding agreement, and reauthorize its carriage of Tribune’s local broadcast stations while negotiations occur.