Tribune threatens to pull stations from DirecTV
At issue are fees that Tribune, which is also the parent of the Los Angeles Times, wants DirecTV to pay in return for carrying its local stations.
Such fees are known in the television industry as retransmission consent agreements. As broadcasters have faced greater competition for advertising revenue from cable television, most have sought to establish a second revenue stream through retransmission consent fees. Cable networks already have duel revenue streams.
Tribune's current agreement with DirecTV expires at midnight March 31, and the company said it wanted to start alerting viewers now of a possible disruption of service.
“Despite our best efforts, DirecTV is refusing to offer a fair deal and we remain far apart in negotiations,” said Tribune Broadcasting President Nils Larsen.
With more than 19 million subscribers, DirecTV is the nation's second-largest pay TV distributor, behind Comcast. In a statement, DirecTV said, "We anticipate that Tribune will honor its 165-year history of serving the public interest and allow the stations to remain on as we continue to negotiate." The company added that it has "no problem compensating Tribune fairly."
Tribune Co. declined to comment on how much it is seeking from DirecTV. The company did say in its statement that DirecTV has never paid to carry its local stations in the past.
However, DirecTV does pay to carry WGN America, the Tribune-owned national cable channel that carries Chicago Cubs and White Sox baseball as well as Chicago Bulls basketball. A person familiar with the matter not authorized to speak publicly about negotiations said previous deals for WGN America have also included Tribune's local stations.
Feuds over programming fees have become commonplace in the media industry. Usually a deal is reached before a contract expires, or the two sides agree to keep a channel available to subscribers while they continue to negotiate. On some occasions, though, subscribers lose a channel while the two sides try to hammer out an accord. In 2010, ABC pulled its signal from Cablevision, depriving viewers of a portion of the Oscar awards.
Most of Tribune's stations, including KTLA, are affiliated with the CW, a broadcast network co-owned by CBS Corp. and Time Warner Inc. The CW appeals primarily to teens and young adults with shows such as "Gossip Girl" and "The Vampire Diaries." Tribune also owns a handful of Fox affiliates.
The 1992 Cable Act gave broadcasters the right to seek retransmission consent fees. At that time, most chose instead to leverage that right into new cable channels. News Corp., for example, launched FX and persuaded cable and satellite distributors to pay for that, and carry its local TV stations as part of the deal. NBC took a similar approach for the channel that ultimately became MSNBC.
Now broadcasters typically seek cash from distributors for their television stations. Typically, local TV stations ask for as little as a few cents per month, per subscriber up to as much as $1 dollar per month, per subscriber.
Tribune President and Chief Executive Eddy Hartenstein is a former CEO of DirecTV.
-- Joe Flint
Photo: Tribune's Nils Larsen. Credit: Tribune.
For the record: A previous version of this post stated Tribune owned 16 stations. It owns 23 stations.