Published on Sunday, 01 April 2012 03:45
It has all the twists and turns of bad CW Network drama. Yesterday morning, the retransmission fee issue was mostly settled between Chicago-based Tribune Company/Tribune Broadcasting and satellite television provider DirecTV. And then it wasn't. And then it got even stranger & uglier.
The drama first hit the public this past Monday
, when Tribune Company began its campaign to pressure DirecTV to cave in to its demands for compensation for transmitting its 23 local television stations (including WGN-TV in Chicago) and superstation WGN America, using fear-mongering techniques. Over the course of the last few days, Tribune Company issued a negative press release, started up an anti-DirecTV website, placed full page ads in its papers, ran television ads and commentaries, started social networking campaigns, urged its employees to push the issue, and of course, scared its viewers and fans to help place pressure on DirecTV.
Unfortunately, over the last year or so, these kind of tactics have become fairly commonplace negotiating tricks by companies looking to get more money out of cable & satellite companies for retransmission rights. In almost every instance, agreements between the two sides are reached before the deadline, with a few rare cases, it happening soon after the deadline. It had initially appeared that this was the case here with Tribune Company and DirecTV, as well, but it now seems that the two remain far apart and that at least one side -- Tribune Company -- is negotiating in bad faith.
DirecTV issued a statement earlier Saturday saying they had agreed to the terms
that Tribune management offered them by phone on Thursday afternoon. Since there has been a verbal agreement (and soon would be a written agreement), there will be no blackout of the Tribune-owned local stations and the retransmitting of these 23 stations will continue on as usual. Exact terms of the agreement were not made public.
The only catch was that the two sides had not yet agreed to terms for DirecTV's transmission rights to superstation WGN America. However, since both sides were seemingly on the same page and finally negotiating in good faith, WGN America would continue to be transmitted until a firm agreement could be signed.
It seemed like good news. For about an hour or so, anyway.
It didn't take long for Tribune Company to stir things up. They refused to agree to the terms that they themselves supposedly put forth on Thursday and would not agree to any terms until DirecTV also agreed to terms regarding WGN America. The company then released the following short statement:
"Tribune Broadcasting has not reached an agreement or come to terms with DirecTV on any aspect of its contract, which expires at midnight tonight. Any statement by DirecTV to the contrary is inaccurate and misleading."
DirecTV, who had not commented on the negotiation process publicly before this weekend, other than to have a short blurb on a website they owned stating they were working on reaching an agreement with Tribune Company, finally spoke out yesterday. It seemed the company had grown weary of the ugly games Tribune Company appeared to be playing, issued this very direct statement Saturday afternoon:
"We're extremely perplexed as Tribune management and DIRECTV had a handshake deal on Thursday with an agreed upon rate for their channels. Their actions are the true definition of 'bad faith' in every sense of the term.
We can't help but wonder whether Tribune's ability to negotiate a reasonable retransmission agreement with DIRECTV is being undermined by the complexities and competing interests in their lengthy bankruptcy process. Despite our best efforts to compensate Tribune fairly for both WGN America and the local stations, it seems they are focused on unduly benefiting their creditors rather than viewers. Threatening station blackouts to extract an exorbitant fee for all of Tribune's content may provide an improved return for certain banks and hedge funds, but is not in the interest of its viewers and is not a cure for bankruptcy.
If the local stations and WGN America do come down at midnight, it will be 100% Tribune's decision to take them away from customers. To come so close and then renege on terms that affect millions of customers defies Tribune's long history of protecting the public interest. However, we hope Tribune does the right thing and honors their word, keeps the channels on and puts customers before creditors."
The war of words continued on through the evening, as Nils Larsen, Tribune Broadcasting President issued another press release shortly after 10:00pm, which said:
"This situation is extremely unfortunate. 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."
Attempting to paint themselves as the victim, Larsen added:
"This is a terrible outcome for the communities we serve and we regret that DirecTV has put us in this position."
Tribune Broadcasting then demanded DirecTV to remove all Tribune-owned stations from its network at Midnight, per each local time zone. The rolling blackouts began at 11:00pm CST on the east coast, continued at Midnight in the Central time zone, 1:00am CST for the Mountain time zone, and finally at 2:00am CST for the west coast. WGN America stayed on the air until just seconds after 2:00am CST nationwide.
At that point, DirecTV posted these words up on one of its websites (which were very similar to the words from Saturday's press release, but with a bit more added to it):
"Tribune has informed us that we must take their local stations and WGN America down at Midnight PST Saturday, 3/31/12. It's the last thing we at DIRECTV want to do but we have no choice. As of Thursday, March 29th, we had a handshake deal for their channels and they reneged on their offer. Their actions are the true definition of 'bad faith', and we can't help but feel this was their intent all along given the amount of money they have spent on advertising and continue to do so.
There is a simple solution that would show that Tribune cares about its viewers and doesn't just see them as something to help them pressure DIRECTV in their negotiations: Tribune can leave their stations on the air for DIRECTV customers while they negotiate with us. We can only believe Tribune's ability to negotiate a reasonable agreement with DIRECTV is being undermined by the complexities and competing interests of their lengthy bankruptcy process. Despite DIRECTV's best efforts to compensate Tribune fairly for both WGN America and their local stations, it seems they are focused on unduly benefiting their creditors rather than their viewers. Why else would they show such bad faith actions by reneging on their offer and denying their viewers their stations when they have the ability to keep them on the air?
At this point in TRIBUNE's ongoing 3 year bankruptcy process, we understand the demands of creditors can be extreme. However, we believe the needs and good faith in their viewers should come first, not the needs of banks. To come so close and then renege on terms that affect more than five million people defies Tribune's long history of protecting the public interest. We hope Tribune will do the right thing by honoring their word, keeping their stations on DIRECTV and putting their viewers before creditors."
The Tribune Company claims that DirecTV has been airing its programming without any compensation, a deal that Tribune Company agreed to and signed off on years ago, since they make their income off of increased ratings and reach, thus increasing potential revenues from advertisers. However, there are some reports saying that DirecTV has indeed been compensating Tribune Company for its retrans rights at a rate of one cent per subscriber per day -- not a gigantic windfall of money, but still sizable each month. Some insiders report that Tribune Broadcasting is demanding an increase percentage nearing triple digits, closer to $1 per subscriber, not $0.01. DirecTV, while willing to compensate Tribune Company for its stations, appears unwilling to make a huge payment jump like that for these stations.
For now, Tribune Company is playing the victim, claiming that DirecTV will not air their stations, will not compensate them fairly and is taking away quality viewing from its viewers. DirecTV is playing the concerned party, claiming that Tribune Company is the one that demanded DirecTV remove the stations that they would rather keep on, and that Tribune Company is the one who is refusing deals, reneging on deals and being difficult. There is no way to know for certain which side is being honest and forthcoming with information for its patrons, assuming even one of them is.
While these two mega-corporations now battle it out via public statements, it is the DirecTV viewers who are the ones who suffer. The good news is that recent history shows that it is very rare when these type of disagreements last long. It is highly likely that this will be resolved quickly. It could very well end up being much ado over nothing, and not the major crisis Tribune Broadcasting has lead its fans to believe.
DirecTV, with its 19.88 million subscribers, is the #1 satellite television provider and the #2 multi-channel television provider overall, behind Comcast/Xfinity cable.