Fox Using Retrans ‘Scare Tactics’ in DirecTV Dispute, Say Critics
Fox Networks’ online attempts to tie its ongoing programming cost dispute with DirecTV to a looming broadcasting deadline amount to strong-arming and intimidation, say critics of the tactic. While Fox Networks concedes the broadcasting stations aren’t immediately vulnerable as part of the dispute, the retrans deadline is close enough on the horizon to be a factor, said a Fox Networks spokesman. DirecTV and News Corp. are in a public fight over the cost of some Fox Networks cable channels, and Fox Networks has said the loss of 20 local stations remains a possibility.
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The fight is over DirecTV’s carriage of FX, National Geographic Channel, Speed Channel, Fox Soccer Channel, Fox Soccer Plus, Fox Movie Channel, Fox Deportes and FuelTV and 13 regional sports networks. Those channels will face a blackout on DirecTV unless the two sides agree to a deal by Nov. 1. DirecTV says Fox Networks is seeking an across-the-board 40 percent increase, a number that Fox Networks strongly disputes. Fox Networks has said it “asked them to pay the same price” for the “networks, shows and sports programming that their competitors pay.” A Fox spokesman declined to say why the 40 percent number is inaccurate, saying the company “won’t negotiate in public.” The choice to take the channels down is DirecTV’s and Fox Networks plans to keep the signals available beyond the deadline even if no deal is reached, he said.
Also looming, though, is a Dec. 31 broadcaster retransmission consent deal deadline. The News Corp. website on the dispute (http://xrl.us/bmg726) describes the programming fight and says “soon, some could lose the following local FOX stations,” listing the 20 stations. The site also details how to receive local channels over-the-air if the stations are dropped. Fox Networks is focused on the programming dispute at hand, said the spokesman.
The conflation of the programming disagreement with the loss of local stations is an effort to unnecessarily whip up customer interest, even though the two aren’t contractually linked, said Andrew Reinsdorf, DirecTV vice president-government affairs. News Corp., which owns Fox Networks and Fox Broadcasting, “is trying to use their local broadcast stations that are not up until the end of the year as a scare tactic with customers,” he said.
DirecTV Executive Vice President Derek Chang complained of the tactics late Thursday in a letter to FCC Media Bureau Chief Bill Lake. Chang said Fox has refused to provide a separate offer for carriage of the broadcast stations. “On the one hand, Fox has refused to negotiate in good faith for carriage of the broadcast stations. At the same time, it is informing DIRECTV customers that they may soon lose access to such stations, purposely conflating a potential November 1 deadline for cable programming with the additional loss of broadcast programming the delivery of which is assured through the end of the year. Fox is clearly abusing the public trust by its deliberate attempt to confuse and alarm consumers. 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.”
"If News Corp. is truly misleading consumers about their broadcast stations coming down, it’s just another example of broadcaster arrogance and the use of scare tactics with consumers to advance business negotiations,” said a spokesman for the American TV Alliance, of which DirecTV and other MPVDs are members. “These are the same tactics they use in retransmission consent negotiations. As an FCC licensee, this type of misleading advertising warrants careful scrutiny by the Commission."
"The record clearly shows that broadcast television programming is most watched and most valued by viewers,” said an NAB spokesman. “NAB supports fair compensation for broadcast stations, the proceeds of which can be reinvested in high quality news, sports, entertainment and public affairs programs found on local TV stations across America.”
There’s nothing coincidental about the timing of these deals, said John Hane, a lawyer at Pillsbury Winthrop. “Both have a lot on the line and are aggressive in negotiations” and it’s “common for MVPDs and for programmers to attempt to work the timing of the negotiations to their advantage,” he said. “Both parties, particularly for big negotiations,” are aware of the deals coming months and years in advance, he said. “Particularly when have two big parties, like Fox and DirecTV, both are very savvy. Both know what they are doing. Both cut the prior deal and agreed to the end date and agreed to any extensions. Every time they do that, they are cognizant of next negotiation,” said Hane.
Currently, there’s little room for regulator intervention for a fight between programmers and distributors, said broadcast lawyer Jack Goodman. Even if the fight were to bleed over into retrans discussions, it’s unlikely to see regulator involvement, unless it was a case of discrimination or refusing to negotiate in good faith, he said. As much as people have complained about tying of broadcast and cable carriage, “the legislative history of retrans, in specific language, says bargaining over the carrying of a cable channel,” is allowed, said Goodman.
DirecTV has the leverage over Fox in the dispute, according to Collins Stewart analyst Thomas Eagan in a research note Wednesday. A blackout of the cable channels seem unlikely to increase DirecTV churn, he said. While the loss of RSNs may disappoint a loyal fan base, many of those fans are likely also loyal to the NFL and would be unwilling to lose DirecTV’s NFL Sunday Ticket mid-season, he said.