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DirecTV has asked the Federal Communications Commission to intervene in its dispute with Tribune Co. over “retransmission consent” fees, which resulted in a blackout of Tribune television programming for millions of its subscribers.
In a complaint filed April 2, DirecTV says senior executives at Tribune Co. had reached an agreement in principle with the satellite television provider on March 29, but reneged on March 30 when they were overruled by creditors in Tribune's bankruptcy case. Their behavior, DirecTV, constitutes a failure to negotiate in “good faith” under the 1992 Cable Act.
“DirecTV negotiated with Tribune for months, only learning on the very eve of expiration that it had never been dealing with anyone who had the authority required under the [FCC] rules,” the complaint reads. “Indeed, DirecTV still does not know with whom it should be speaking--Tribune's CEO or its associated hedge funds and investment banks.”
After entering bankruptcy in December 2008, Tribune sought FCC approval to transfer its broadcast licenses to a new entity, which ultimately will include three of Tribune's largest creditors--JP Morgan Chase Bank; Angelo, Gordon & Co.; and Oaktree Partners--as voting and equity interests. The FCC has yet to rule on those transfers, however.
Because of the impasse, millions of DirecTV subscribers have been without access to 23 local Tribune television stations and WGN America since midnight on March 31.
The issue of retransmission consent negotiations has garnered increasing attention on Capitol Hill and at the FCC, following much-publicized blackouts of local TV stations for customers of cable and satellite companies.
With advertising revenues declining and the price of sports rights soaring, broadcasters have been fighting distributors for higher and higher retransmission fees, money that is eventually passed through to consumers in the form of higher monthly rates.
The cable and pay-TV industries claim the current rules favor broadcasters, who can simply shut off their signal when negotiations reach an impasse.
Section 325(b)(1)(A) of the Cable Act states that a television station's signal may not be retransmitted by a multichannel video programming distributor, or MVPD, without the “express authority of the originating station.”
Under FCC rules implementing the 1992 Cable Act, a broadcaster may be found to have violated “good faith” bargaining rules “based on the totality of the circumstances of a particular retransmission consent negotiation.” But there has been only one instance in which the FCC found a company to have negotiated in “bad faith.”
The FCC launched a rulemaking proceeding a year ago to explore whether the agency should, or could, do more to prevent blackouts of television programming when negotiations to renew retransmission consent agreements stall. The agency has yet to take any substantive action.
Absent congressional action, there is little the FCC could do under the current statute.
Retransmission consent fees usually range from a few cents to $1 per subscriber per month.
Tribune is reportedly seeking “less than a penny a day per subscriber” in retransmission compensation from DirecTV to carry its local television stations, and an undisclosed amount for WGN America.
The complaint can be seen at http://op.bna.com/der.nsf/r?Open=sbay-8sysga.
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