DirecTV seeks FCC intervention in dispute with Tribune

MUMBAI: With more than 5 million DirecTV customers losing access to Tribune Broadcasting‘s 23 local stations in 19 cities since midnight Saturday, the satellite broadcaster Monday announced that it has filed a complaint with the Federal Communications Commission seeking an immediate intervention and expedited ruling against Tribune for failing to negotiate in good faith and bringing into question whether broadcast licenses have been prematurely, and inappropriately, transferred to bankruptcy creditors.

"In another case of runaway Wall Street greed, some of America‘s wealthiest hedge funds and investment banks, including Oaktree Partners, Angelo Gordon, JP Morgan 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. Their actions represent a brazen attempt to extract yet another bailout on the backs of innocent viewers," the company said in a statement.

The complaint specifies Tribune‘s most senior executives represented themselves as possessing authority to negotiate a retransmission consent agreement and, in fact, achieved such an agreement in principle with DirecTV on 29 March.

However, late the following day, Tribune executives rescinded the agreement, following pressure from bankrupt Tribune‘s hedge fund and investment bank creditors.

"Two days prior to expiration of the existing carriage arrangement, the parties reached an agreement in principle for continued carriage," the complaint reads. "The following day, however, Tribune reneged on that agreement. Tribune later confirmed that its management had been overruled by the hedge fund and investment bank creditors.

"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. Indeed, DirecTV still does not know with whom it should be speaking — Tribune‘s CEO or its associated hedge funds and investment banks," the complaint continues.

After entering bankruptcy in December 2008, Tribune sought FCC approval to transfer its broadcast licenses to a new entity that will eventually emerge in Tribune‘s reorganisation. Three of Tribune‘s largest creditors—JP Morgan Chase Bank; Angelo, Gordon & Co. and Oaktree Partners — will control 30 per cent of the voting and equity interests, Tribune explained.

But the FCC has yet to rule on those transfers. That means those same hedge funds and investment banks currently lack authority over Tribune broadcast operations, DirecTV said.

Tribune Broadcasting issued the following statement today regarding its negotiations with DirecTV and filing with the Federal Communications Commission:

“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,” Tribune said in a statement.

“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.”

Tribune reiterated its key demand that it wants an agreement with DirecTV that is similar to those it 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,” the statement added.

Earlier Tribune Broadcasting switched off across DirecTV‘s 19 markets in the US at midnight 31 March after the two parties failed to reach an agreement over commercial terms.

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