DirecTV Settles Tribune Pay Dispute to End Blackouts

DirecTV (DTV), the largest U.S. satellite- TV company, reached an agreement to carry Tribune Co. (TRB) television stations, ending a four-day blackout of 23 local outlets as Major League Baseball’s 2012 season gets under way.

The deal will allow DirecTV subscribers in Chicago, New York, Philadelphia and Washington to watch their teams, Tribune said yesterday in a statement. WGN America, Tribune’s national cable channel, is also covered. Terms weren’t disclosed.

Tribune had pulled the stations off the air for DirecTV subscribers on April 1. The companies came to terms almost a week after an earlier proposal was rejected by Tribune creditors, according to DirecTV. The Chicago-based newspaper publisher and broadcaster, in bankruptcy since 2008, sought retransmission fees from DirecTV for carrying local stations.

“We’re pleased that Tribune and their creditors now recognize that all DirecTV wanted from day one was to pay fair market rates for their channels,” Derek Chang, a DirecTV executive vice president, said in a separate statement. “It’s unfortunate that Tribune was willing to hold our customers hostage in an attempt to extract excessive rates, but in the end we reached a fair deal.”

DirecTV, based in El Segundo, California, rose 0.3 percent to $49.05 at 9:45 a.m. New York time. The shares had advanced 14 percent this year before today.

Bad Faith

The dispute over payments took an unusual turn April 2 when DirecTV filed an FCC complaint against Tribune for negotiating in bad faith. DirecTV accused Tribune of agreeing to terms on March 29 and then rejecting the deal a day later when debt holders including Oaktree Partners, Angelo Gordon & Co., JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc. (C) overruled management.

Five million DirecTV households had been blacked out from at least one station, according to DirecTV. The blackout “cries out for an examination in Washington” of retransmission laws that allow content providers to pull their content as leverage for more money, DirecTV said in its statement.

A 1992 U.S. law mandates pay-TV companies must negotiate retransmission fees for local broadcast stations unless the stations choose to give their programming for free in exchange for guaranteed carriage. Pay-TV companies paid $1 billion in retransmission fees to local affiliate broadcast channels in 2010, according to Bloomberg data.

To contact the reporter on this story: Michael White in Los Angeles at mwhite8@bloomberg.net; Alex Sherman in New York at 8278 or asherman6@bloomberg.net

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