12:40pm PT by Eriq Gardner
DirecTV Now Seeks $75 Million in Al Jazeera Lawsuit As Carriage Deal Nears End
DirecTV is turning the screws on Al Jazeera America as the Qatari-backed cable news network experiences some internal turmoil.
A June 11 court filing previously under seal and obtained by The Hollywood Reporter reveals that DirecTV is looking to amend its lawsuit against Al Jazeera America to include the results of audits uncovered in the discovery phase. As a result, a lawsuit that previously demanded $28.5 million has been upped to $74.5 in claimed damages. What's more, the filing reveals that DirecTV will no longer be obligated to pay for Al Jazeera America after July 31.
Al Jazeera America was the result of its parent company's purchase of Al Gore's Current TV in January 2013. At the time, Time Warner Cable exercised the right to terminate the channel from its service before a deal was reached between the parties to restore it.
But this had consequences.
Because other cable and satellite distributors had "most favored nation" deals with Current TV, Al Jazeera was required to offer the same licensing terms to them. DirecTV is suing Al Jazeera America with allegations it never got such an offer.
Gore filed his own lawsuit against Al Jazeera for withholding $65 million in escrow from the $500 million purchase of Current TV. He called the Al Jazeera-TWC deal "ill-advised, one-sided and unprofitable" expressly because other distributors would benefit. He alleged that Al Jazeera was "encouraging distributors to file baseless claims" so as to access the money.
Whether or not that's true could be headed to trial, but in the meantime, DirecTV has been pursuing its claims against Al Jazeera with no hint of settlement. According to a motion to amend the complaint, Al Jazeera America made deals with or extended offers to other distributors from September 24, 2013 to the present. (Those deals possibly ended lawsuits or threatened lawsuits from the other distributors.)
The result was that other distributors got "net effective rates lower than what AJA charges to DirecTV," according to the complaint. Since DirecTV wasn't given the same opportunity, it says that Al Jazeera America owes an additional $46 million on top of the $28.5 million it previously wanted over the older alleged MFN breach. DirecTV is looking to amend its lawsuit to reflect this after getting information from auditors at PricewaterhouseCoopers in discovery.
The original version of DirecTV's lawsuit also claimed that Al Jazeera was in breach of another part of the contract that defined the type of programming to be carried on the cable news network. DirecTV says it signed up for shows like "Google Current," "News Current," "Trivia" and "Current Hottie" before an acquisition was made and Al Jazeera America began broadcasting more traditional-type news programs.
DirecTV is now backing off this claim for declaratory relief that the programming doesn't meet the contractual content requirements, but that's hardly good news for Al Jazeera America, which recently replaced its chief executive, attempted to reshuffle its lineup amid rating woes, and also is battling multiple lawsuits alleging discrimination against former employees.
According to the plaintiff's legal papers, "While DirecTV still believes that AJA is in breach of this provision, the claim will not be resolved before July 2015, and the expiration of the Agreement will therefore moot the claim before it can be decided."
In other words, DirecTV will soon get the right to remove Al Jazeera America from its service. If a new carriage agreement is reached, on the other hand, DirecTV will know exactly what type of programming its getting.