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DirecTV, News Corp. far from pact on carrying the media giant's cable channels

The satellite broadcaster says it is prepared to drop more than 25 channels owned by News Corp. — including the popular FX network and 19 regional sports channels — unless the two sides can agree on a new contract by Tuesday.

October 29, 2011|By Joe Flint, Los Angeles Times
  • DirecTV and News Corp.'s agreement expires Tuesday. Above, the DirecTV building in El Segundo, as seen in 2006.
DirecTV and News Corp.'s agreement expires Tuesday. Above, the DirecTV… (Reed Saxon / Associated…)

With three days to go before their current agreement expires, DirecTV and News Corp. are still far apart on a deal to keep more than 25 networks on the satellite broadcaster's programming service.

Among the News Corp.-owned channels DirecTV is prepared to drop Tuesday are the popular FX network and 19 regional sports channels, including Prime Ticket and Fox Sports West in Los Angeles. Not part of the dispute are Fox's broadcast television stations and Fox News.

DirecTV said News Corp.'s Fox Cable unit was demanding a 40% fee increase to keep carrying the channels. In a video to subscribers, DirecTV Chief Executive Mike White said the company already pays News Corp. "nearly a billion dollars a year" for their channels and that this increase was "entirely too much."

Scott Grogin, a spokesman for the Fox Networks Group, called the 40% figure "ridiculous" and added that "even if you included the Fox stations in the negotiation, it still would not reach 40%."

Contract disputes between distributors and television networks are becoming more commonplace in the media industry. As programming expenses rise, networks look to distribution fees to help cover their costs. At the same time, distributors fear losing customers because of rising bills.

This particular spat got nasty fast. Although Fox offered to allow the channels to remain available after Tuesday's deadline, DirecTV last week alerted its 19.4 million subscribers that it would be dropping the networks. That DirecTV made that announcement the day before News Corp.'s Oct. 21 annual meeting with shareholders was not viewed as a coincidence inside the media conglomerate.

Fox fired back with ads telling DirecTV subscribers to find a new distributor. Kurt Sutter, a producer of the FX motorcycle gang drama "Sons of Anarchy," also blasted the satellite broadcaster with expletive-filled comments on Twitter.

On Thursday, DirecTV complained to the Federal Communications Commission that Fox's ads are deceptive because they imply that the broadcast stations that carry NFL football and shows such as "Glee" and "The Simpsons" also will disappear Tuesday.

"Fox is using misleading advertising informing DirecTV customers that 'soon, in some markets, you may lose your local Fox station,'" DirecTV Executive Vice President Derek Chang wrote to the FCC. "Even if the Fox cable channels are no longer carried on Nov. 1, the broadcast stations are covered under a separate agreement, which does not expire until Dec. 31," Chang's letter said.

Money is only part of the dispute. DirecTV also is resisting having to carry Fox's National Geographic, Fuel and Speed channels just to get access to the more popular networks, such as FX. Last month, DirecTV and Time Warner Cable complained to the FCC about the practice, known in the industry as "bundling."

DirecTV's Chang said the company was not against paying more for channels that subscribers watch. However, he said News Corp. was unwilling to discuss selling its networks on an individual basis.

Another interesting element to the squabble is that News Corp. President Chase Carey spent several years as chief executive of DirecTV.

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