Entertainment Industry

Category: DirecTV

Tribune and DirecTV make a deal

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Tribune Co. television stations, including KTLA-TV Los Angeles, are coming back to satellite broadcaster DirecTV.

After a very public feud, DirecTV reached a five-year agreement late Wednesday to pay Tribune to carry its 23 local television stations around the country and its national cable channel WGN America. With more than 19 million subscribers, DirecTV is the second-largest pay-TV operator behind Comcast Corp. It has a market share of around 20% in Los Angeles.

KTLA returned to the air shortly before 6 p.m.

“We are extremely pleased to have reached an agreement with DirecTV and to return our valuable news, entertainment and sports programming to DirecTV subscribers,” said Nils Larsen, Tribune Broadcasting president. “On behalf of Tribune Broadcasting, I want to thank viewers across all of our markets for their support, understanding and patience during the negotiating process — we truly regret the service interruptions of the last several days.”

DirecTV Executive Vice President Derek Chang said the satellite broadcaster was pleased that "Tribune and their creditors now recognize that all DirecTV wanted from day one was to pay fair market rates for their channels .... we are very happy to close the deal and put this behind us.”

Tribune, which is also the parent of the Los Angeles Times, had pulled its stations from DirecTV last weekend. The next few days saw both companies take public shots at each other. DirecTV accused Tribune of reneging on an agreed-upon deal, which Tribune denied. Then DirecTV filed a complaint against Tribune with the Federal Communications Commission, charging that creditors of bankrupt Tribune, not its management, are calling the shots for the stations.

That the fight was resolved on the opening day of the baseball season is probably not a coincidence. Many of Tribune's stations, including WGN-TV Chicago and WPHL-TV Philadelphia, have rights to local teams, and sports fans can be very vocal when denied their home team's games.

Disputes between programmers and distributors over fees have become very common over the past few years, although it is still rare that channels are pulled down. Broadcasters such as Tribune are eager to collect so-called retransmission consent fees from cable and satellite operators.

While distributors initially resisted paying broadcasters to carry their signals, it has become an accepted practice. In this case, DirecTV and Tribune were haggling over price. Terms of the agreement were not disclosed.

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DirecTV files FCC complaint against Tribune

DirecTV and Tribune are fighting
Satellite broadcaster DirecTV is making a federal case out of its fight with Tribune Co.

In a complaint filed at the Federal Communications Commission, DirecTV accused Tribune of reneging on a deal that would have kept the latter's television stations on the satellite service. The filing also charges that the bankrupt Tribune's creditors, and not its management, are calling the shots for the stations, even though they do not yet hold the actual licenses.

"In another case of runaway Wall Street greed, some of America’s wealthiest hedge funds and investment banks, including Oaktree Partners, Angelo Gordon, JPMorgan Chase, Bank of America and Citibank forced Tribune’s senior management to renege on an agreement that would have kept DirecTV customers connected to their local programming," DirecTV said in a statement. "Their actions represent a brazen attempt to extract yet another bailout on the backs of innocent viewers."

Tribune fired back that DirecTV's filing was just another negotiating ploy.

"Claims of 'bad faith' and 'outrageous conduct' are nothing more than negotiating tactics in an attempt to unfairly disadvantage Tribune from receiving fair-market compensation from DirecTV for carriage of Tribune’s local television stations and WGN America," said a Tribune spokesman. 

The complaint, filed Monday, is in response to Tribune's decision to pull its 23 television stations -- including KTLA-TV Los Angeles -- and its national cable channel WGN America from DirecTV. Tribune is also the parent of the Los Angeles Times. Tribune CEO Eddy Hartenstein, who is also the Los Angeles Times' publisher, is a former CEO of DirecTV.

DirecTV said that last Thursday, two days before Saturday night's deadline, it had an agreement in principle with Tribune that would have kept the stations on its service. On Friday, Tribune told DirecTV that was not the case, DirecTV's filing said. 

The reason for the about-face, according to DirecTV, was that Tribune management was overruled by the hedge fund and investment bank creditors who hold the bankrupt company's debt.

DirecTV believes it has a smoking gun in the form of email and phone conversations between Derek Chang, its executive vice president, and Nils Larsen, the head of Tribune's television station group. In the filing, DirecTV's Chang said he asked Larsen why their agreed-upon deal was now no good, and that Larsen replied that "his constituents" had overruled Tribune management.

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Consumers left in dark during fight between Tribune and DirecTV

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Consumers are caught in the middle of a fight between media giants.

This time, it's Tribune Co. and satellite broadcaster DirecTV who are squabbling. The debate is over fees that Tribune, the parent of the Los Angeles Times, wants DirecTV to pay to carry its local television stations, including KTLA-TV Channel 5 in Los Angeles.

Early Sunday, Tribune signals around the country started coming off of DirecTV's satellite service. The first channels to vanish were WPIX-TV in New York, WPHL-TV in Philadelphia and WDCW-TV in Washington. Then the rest of Tribune's 23 stations, including KTLA-TV, went dark on DirecTV. Also off of DirecTV is Tribune's national cable channel, WGN America.

Battles over fees between programmers and distributors have become commonplace in recent years. Typically, agreements are reached without consumers losing channels. But on occasion, channels are pulled off while the two sides negotiate. In the fall of 2010, Fox pulled its TV stations off of Cablevision Systems, a large East Coast cable operator, for more than two weeks until a new contract was signed.

Over the weekend it looked like a channel blackout would be averted. DirecTV said it was willing to accept Tribune's terms to pay for its local stations, leading to hopes that the signals would stay on the air.

However, Tribune quickly responded that, in contrast to what DirecTV had said, the two sides were far apart on an agreement. The talks are now stalled, said a spokesman for Tribune. While Tribune was encouraging its viewers to complain to DirecTV, the satellite broadcaster told its subscribers that "there is no need for you to do anything at this time as these matters are typically resolved in a short amount of time."

Bitterness is apparent on both sides. DirecTV said Tribune had reneged on a "handshake deal" and was behaving in "bad faith." DirecTV even suggested that Tribune's own financial woes (the company is in the process of trying to emerge from bankruptcy) was leading it to make short-sighted decisions.

Tribune Broadcasting President Nils Larsen countered that "DirecTV is refusing to offer a fair deal." Tribune also accused DirecTV of trying to mislead consumers with regard to the status of talks. "There has been no agreement of any kind, handshake or otherwise," the company said.

On Sunday, DirecTV said it remains "willing and available at a moment’s notice to resolve this as soon as possible" and implored Tribune to "do the right thing for their viewers and our customers and put the channels back up while we continue to negotiate."

Tribune President and Chief Executive Eddy Hartenstein, who is also publisher of the Los Angeles Times, is a former CEO of DirecTV.

With over 19 million subscribers around the country, DirecTV is the nation's second-largest pay-television provider, behind Comcast Corp. By removing its signals from DirecTV, Tribune is risking a hit to its ratings and a potential loss of advertising revenue. Conversely, DirecTV could face a backlash from subscribers angry at being deprived of a channel and being used as pawns in a fight over money.

Until the feud is resolved, subscribers to DirecTV will lose lots of sports programming that is carried by Tribune's stations. For example, WGN-TV carries the Cubs and White Sox. WPIX-TV has broadcast rights to the New York Mets and WPHL-TV carries the Phillies.

Most of Tribune's stations, including KTLA, are affiliates of the CW Network, whose popular shows include "The Vampire Diaries" and "Gossip Girl." Tribune also owns affiliates of other networks, including Fox and ABC.

As is often the case these days, many took to the social networking site Twitter to voice their frustrations with both companies. Some were a little sarcastic. 

"Oh no, DirecTV is denying viewers of KTLA who want to watch 'The Healing Power of Juicing,' " cracked one Twitter user who was making fun of infomercials that run on KTLA during late night and early morning hours. 

Others were lamenting the loss of KTLA. "That was the one news station I could actually watch and stand," tweeted one consumer.

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Photo: DirecTV dishes outside of an apartment building. Credit: Associated Press.

Tribune tells DirecTV to take stations down

Tribune tells DirecTV to take stations down

Unable to reach a new agreement, Tribune Co. told DirecTV to pull the signals of its 23 television stations off the satellite broadcaster, the media company said late Saturday night.

DirecTV subscribers to Tribune stations such as WPIX-TV in New York and in other East Coast locales were the first markets expected to lose their channels. In Los Angeles, KTLA-TV should be off of DirecTV after midnight unless a deal or some sort of a temporary extension is reached. However, a last-minute breakthrough seems very unlikely.

Because Tribune's KTLA is the local affiliate of the CW in Los Angeles, this will mean DirecTV subscribers could lose access to such shows as  “America’s Next Top Model,” “Gossip Girl,” and "Vampire Diaries.”

The two sides spent the last few days trying to reach an agreement while simultaneously criticizing each other publicly. Early Saturday, DirecTV said it had agreed to terms offered by Tribune to carry its television stations, leading many to assume that the two sides had settled their differences.

However, Tribune soon fired back that DirecTV was misleading people and that there was no agreement in place. Tribune is the parent of the Los Angeles Times. It president and CEO, Eddy Hartenstein, is a former chief executive of DirecTV.

“This situation is extremely unfortunate,” said Nils Larsen, Tribune Broadcasting president. “We don’t want anyone to lose the valuable programming we provide, but we simply cannot get fair compensation from DirecTV and we cannot allow DirecTV to continue taking advantage of us.”

At issue are fees that Tribune wants DirecTV to pay in return for carrying its signals. Tribune says that DirecTV has never paid for the Tribune programming it rebroadcasts over its system, though, the media company alleges, DirecTV pays other broadcasters for the same kind of programming.

DirecTV has indicated it is willing to pay to carry Tribune's television stations, but finding common ground on a price tag has proved difficult.

The sticking point, according to people familiar with the situation, are terms for WGN America, the Tribune-owned national cable channel that carries Chicago Cubs and White Sox baseball as well as Chicago Bulls basketball.

With over 19 million subscribers, DirecTV is the nation's second-largest pay-television provider after Comcast Corp., the Philadelphia-based cable company that has almost 24 million subscribers. DirecTV has a market share of just over 20% in Los Angeles.

Disputes between broadcasters and pay television distributors have become commonplace in recent years. Typically deals or extensions are reached without viewers losing channels. However, on occassion a channel does come off when the two sides cannot agree.

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.

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-- Joe Flint

Photo: In this 2009 file photo, a DirecTV satellite dish in a residential area adjoining downtown Jackson, Miss., is shown. Credit: Rogelio V. Solis / Associated Press

Media giants score legal victory against foes of bundling channels

Don't look for your cable company to let you pick what channels you want to get anytime soon.

A panel of judges for the U.S. 9th Circuit Court of Appeals in San Francisco sided with a dozen media giants including News Corp., Time Warner, DirecTV and Comcast in a class-action suit that was looking to do away with the practice of bundling multiple channels together and selling them as a package, a long-standing industry tradition.

Bundling is when programmers sells their channels in bulk to distributors. For example, Walt Disney Co.'s ESPN typically cuts deals with cable and satellite distributors for multiple channels. The distributor then sells the bundle as part of a package to consumers.

Many media watchdogs argue that bundling allows big media companies to get distribution for less popular channels in return for carrying the popular channels. A distributor can pay to carry just ESPN and none of its spinoffs. However, the cost is usually higher than if the distributor agrees to carry several ESPN channels. The consumer who might only want ESPN must pay to get the extra ESPN channels too. 

In affirming a U.S. District Court ruling in California, the 9th Circuit panel said that bundling is not a violation of antitrust laws. The plaintiffs -- a group of cable and satellite television subscribers -- argued that programmers abused their market power and harmed competition by requiring distributors to sell channels in prepackaged tiers rather than on an individual, or a la carte, basis.

The attorney for the plaintiffs, Maxwell Blecher of the Los Angeles law firm Blecher & Collins, said he will either seek a hearing in front of the full 9th Circuit or appeal to the Supreme Court.

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Tribune threatens to pull stations from DirecTV

Tribune's Nils Larsen
Tribune Co., owner of 23 television stations across the country including KTLA-TV Los Angeles, is threatening to pull its channels from satellite broadcaster 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.

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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.

DirecTV and News Corp. reach new deal

News Corp. has struck a new deal that will keep its powerful cable and broadcast channels on satellite broadcaster DirecTV.

The two sides had been bickering over a new contract and DirecTV was set to drop more than two dozen News Corp.-owned Fox cable networks, including the popular FX entertainment channel and Los Angeles regional sports outlets Prime Ticket and Fox Sports West, on Tuesday. DirecTV has over 19 million subscribers.

The new accord not only includes Fox's cable channels, but also the local television stations that carry the programming of the Fox Broadcasting Co. including National Football League games and popular comedies "Glee" and "New Girl."

Though the contracts for Fox's local TV stations were not up until the end of the year, DirecTV did not want to have to keep negotiating new accords with News Corp. and was pushing for an all-encompassing deal, people close to the talks said. Also part of the agreement is the Fox News channel even though that contract was not due to expire until early 2012.

Terms of the deal were not disclosed. DirecTV had complained that Fox was seeking an increase of 40%. Fox called that figure ridiculous. Cable networks and broadcast channels are typically sold on a per-subscriber basis. According to SNL Kagan, FX currently gets about 40 cents per subscriber, per month. Fox Sports West gets almost $2.70 per subscriber, per month. Sports channels are usually more expensive because of their rights fee expenses.

The agreement, announced late Monday afternoon, ends several weeks of acrimony between the two companies. Fox took out advertisements suggesting consumers drop DirecTV for other distributors and Kurt Sutter, the brash executive producer of FX's motorcycle gang drama "Sons of Anarchy," took to Twitter to blast DirecTV executives.

DirecTV fired back by sending a letter to the Federal Communications Commission accusing Fox of a misleading ad campaign and even suggested that the Rupert Murdoch-owned company's conduct "is certainly not what the commission had in mind when it made Fox a steward of the nation’s airwaves entrusted to serve the public interest."

Squabbles between programmers and distributors are becoming more common. Networks look to distribution fees to cover rising programming costs. At the same time, distributors fear losing customers to rising monthly bills.

Channels rarely actually come off, but it does happen. Last year, satellite broadcaster Dish Network stopped carrying many Fox-owned cable networks for a month until a new agreement was reached.

— Joe Flint

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DirecTV takes fight with News Corp. to the FCC

Satellite broadcaster DirecTV has taken its fight with News Corp. to the federal government.

The two sides are at odds over a new distribution agreement that would keep News Corp.-owned cable channels including FX on DirecTV. If an agreement is not reached by Nov. 1, DirecTV has said it will stop carrying the channels.

In a letter to the Federal Communications Commission, DirecTV took issue with some of the advertisements News Corp.'s Fox has run to alert people to the dispute. Specifically, DirecTV accused the company of misleading consumers.

"Fox is clearly abusing the public trust by its deliberate attempt to confuse and alarm consumers," DirecTV Executive Vice President Derek Chang said to the FCC.

Chang said that although the contract dispute concerns FX, 19 regional sports networks (including Fox Sports West and Prime Ticket here in Los Angeles) and a handful of smaller channels (but not Fox News), News Corp. is leading people to think that its Fox broadcast network would also be dropped next week.

"Fox is using misleading advertising informing DirecTV customers that 'soon, in some markets, you may lose your local Fox station,'” Chang wrote to the FCC. "Even if the Fox cable channels are no longer carried on Nov. 1, the broadcast stations are covered under a separate agreement, which does not expire until Dec. 31," Chang's letter said. 

Chang went on to criticize News Corp. and its Fox unit for demanding a huge increase for the cable channels and accused them of being unwilling to negotiate a new deal for the broadcast stations even though that deal is also nearing expiration. The implication was that Fox won't talk about a new contract for its local TV stations until DirecTV comes around on an accord for the cable networks.

Although feuds between programmers and distributors are becoming commonplace in the media industry, this one has turned nasty fast. DirecTV first alerted consumers it is prepared to drop the channels last week, the day before News Corp.'s annual meeting with investors. In its letter to the FCC, DirecTV even questions whether News Corp. is fit to hold broadcast licenses, given its treatment of the satellite broadcaster.

"Such conduct is certainly not what the commission had in mind when it made Fox a steward of the nation’s airwaves entrusted to serve the public interest," the letter said.

What makes this scrape even more interesting is that News Corp. President Chase Carey used to run DirecTV for many years.

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News Corp. and DirecTV divided over bundling

Remember when you were a kid choosing a baseball team for a pick-up game and sometimes you had to take a couple of not-so-great players to get the one superstar you wanted?

Well, that is very similar to how cable programmers try to sell their channels, and some distributors are tired of it and want to take their bat and ball and go home.

One of those distributors is satellite broadcaster DirecTV, which last week started telling its customers that it may be dropping more than two dozen cable channels owned by News Corp. on Nov. 1 if the two companies can't reach a new agreement. DirecTV has said that News Corp. wants a 40% increase in subscriber fees for the channels.

"We already provide News Corp. nearly a billion dollars a year for their channels, and we have no problem continuing to compensate them fairly," the satellite broadcaster said in a statement. The deal being offered is "unfair and unwarranted."

News Corp. has countered that the 40% figure is "ridiculous."

The biggest network that DirecTV's 19.4 million subscribers may lose is FX, which is home to hit shows "Sons of Anarchy," "Louie," "Justified" and "It's Always Sunny in Philadelphia." Already outspoken "Sons of Anarchy" creator Kurt Sutter has taken to Twitter to blast DirecTV, using words that are not only inappropriate for a family newspaper, but words that would have trouble even on an X-rated website. Other channels in jeopardy include 19 of Fox's regional sports networks as well as Speed and Fuel.

But money is only part of what this battle is about. DirecTV is also resisting having to carry channels like National Geographic, Fuel and Speed just to get the more popular networks such as FX. Last month, DirecTV and Time Warner Cable both complained to the Federal Communications Commission about the practice, which is known in the industry as bundling.

DirecTV Executive Vice President Derek Chang said the company was not against rate increases for channels that were worthy of them. However, he said News Corp. was unwilling to seriously discuss selling its networks on an individual basis.

Often programmers that own multiple networks will sell them on an individual basis, but offer substantial discounts if the less sought-after channels are carried along with the highly desirable ones.

That being the case, some might wonder what the harm is with bundling. However, for smaller programmers, getting carriage on distributors becomes more difficult because bigger companies use their leverage to gobble up channel positions.

-- Joe Flint

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News Corp. and DirecTV at odds over new TV deal

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More than two dozen News Corp.-owned cable channels may go off satellite broadcaster DirecTV on Nov. 1 if the two companies can't reach an agreement on a new distribution agreement.

On Friday, DirecTV, which has more than 19 million subscribers, started informing its customers that it will drop the News Corp. channels, including FX, the National Geographic Channel, 19 regional sports networks including Fox Sports West and Prime Ticket, which serve the Los Angeles market and a handful of other sports channels. Not part of the dispute are the Fox broadcast network or Fox News.

DirecTV said News Corp. is demanding an increase of 40% in subscriber fees for the channels. The company did not go into specifics on the exact terms News Corp. is seeking.

"We already provide News Corp. nearly a billion dollars a year for their channels, and we have no problem continuing to compensate them fairly," the satellite broadcaster said in a statement, adding that the deal being offered is "unfair and unwarranted."

A spokesman for News Corp.'s Fox Networks called the 40% claim "ridiculous" and added that the company has been willing to allow DirecTV to continue to carry the networks at the current rate while a new deal is hammered out. 

Although disputes between programmers and distributors over carriage deals are fairly common, this one has an interesting twist: News Corp. President Chase Carey previously was the chief executive of DirecTV for several years and is well versed in its finances.

The feud with DirecTV is one more headache for News Corp. as it prepares for its annual meeting with shareholders Friday. That meeting was already expected to be heated in the wake of the phone hacking scandal at News Corp.'s now-closed British tabloid News of the World. That scandal hurt the company's stock price and has led to investigations into News Corp. in both Britain and the United States.

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-- Joe Flint

Photo: DirecTV dish. Credit: AP

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