It isn’t so uncommon for disputes between content and distribution giants to leave consumers without channels. But DirecTV’s battle with Tribune isn’t just another conflict over retransmission fees. It’s turned into an indictment of the Tribune company’s management in bankruptcy, and what DirecTV calls “another case of runaway Wall Street Greed,” in a press release issued when DirecTV filed a complaint with the FCC Monday afternoon.
The largest satellite TV company (DTV) not only accuses Tribune of negotiating in bad faith, it suggests that broadcast licenses have been “prematurely, and inappropriately, transferred to bankruptcy creditors.” DirecTV is asking the FCC for “immediate intervention and expedited ruling against Tribune.”
The negotiation started off fairly straightforward. Tribune wants DirecTV to pay to carry its 23 local broadcast channels. The day the two companies’ contract was set to expire, DirecTV said it and Tribune had come to terms on a deal to broadcast the stations. An hour later, Tribune said it had not reached an agreement: the 23 local stations and cable network WGN America were blacked out at midnight on April 1.
This is an increasingly big deal—more than 5 million DirecTV customers don’t have access to at least one channel. Tribune’s stations include a number of CW affiliates, like KTLA in Los Angeles. In Seattle and other places where Tribune owns Fox affiliates, DirecTV subscribers will miss out on "New Girl" Tuesday and American Idol Wednesday. With Major League Baseball’s season starting this week, Cubs and White Sox fans will lose access to the games via WGN America, and Philadelphia DirecTV subscribers won’t be able to watch the Phillies.
What exactly happened? DirecTV says in its complaint that the day after the two companies reached an "agreement in principle," Tribune "reneged on that agreement."
The problem, DirecTV argues, is that it’s unclear who is in charge. DirecTV writes in the complaint: “Tribune later confirmed that its management had been overruled by the hedge fund and investment bank creditors.” Here’s where the allegation of "runaway greed" comes into play. DirecTV argues that Oaktree Partners, Angelo Gordon, JPMorgan Chase , Bank of America and Citibank “forced Tribune’s senior management to renege… [in] a brazen attempt to extract yet another bailout on the backs of innocent viewers.”
An interesting twist — Tribune says on its website, www.telldirectv.com, "We'll also help you find another way to keep watching your favorite shows." That's right — the content owner is guiding viewers to find ways to go without their cable provider — like using an over-the-air antenna, or live streaming newscasts. Yes, the media company is convincing consumers they can cut the cord. Tribune uses the website to assert it "has NOT reached an agreement or come to terms with DirecTV on any aspect of its contract. Any statement by DirecTV to the contrary is inaccurate and misleading." But the cord-cutting advice might be the most powerful element of this website.
Tribune responded with this lengthy statement:
For months, Tribune and DirecTV have been negotiating a complex, multi-year contract for the carriage of our local television stations and WGN America. The contract is complex, in part, because it covers 23 local television stations with varying programming in 19 different markets, large and small, as well as our national cable network, WGN America. Over the course of any negotiation, parties may agree in principle on some terms and disagree on others, but it takes closure on all terms by both parties to reach an agreement. We never reached agreement with DirecTV on all the terms of the contract—not in principle, not by handshake and not on paper. We didn’t have an agreement on Thursday, March 29, and we do not have an agreement now.
Our most recent filing with the FCC regarding Tribune’s anticipated emergence from bankruptcy was merely to provide the commission with data it would need to evaluate following confirmation of a restructuring plan. Our hope was to shorten the time between confirmation of our plan and emergence from Chapter 11. Any intimation that our broadcast licenses have been prematurely transferred is simply false and misleading.
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. Tribune seeks an agreement with DirecTV that is similar to those DirecTV already has in place with hundreds of other content providers.
Finally, Tribune management, with the full support of its Board of Directors, remains firmly committed to an expeditious negotiation with DirecTV for the carriage of our local stations and WGN America in order to continue our long-standing history of public service.
Questions? Comments? MediaMoney@cnbc.com