Cablevision Says Tribune Has ‘Anti-Consumer’ Demands

Cablevision Systems Corp. (CVC), the New York-area cable provider, blacked out WPIX and other Tribune Co.-owned stations, accusing the bankrupt company of “anti- consumer” demands in its negotiations about fees.

Tribune, along with investors including hedge funds such as Oaktree Capital Management LP and Angelo Gordon & Co., are asking for tens of millions of dollars in new fees for WPIX and other stations, Cablevision said in a statement today.

Cablevision pulled the stations “while in the middle of negotiations,” Tribune said in a separate release. Tribune would have extended the current carriage agreement while negotiations continued, the company said.

It’s the second blackout in about four months for Tribune after satellite provider DirecTV (DTV) pulled out 23 Tribune local outlets for four days in April. DirecTV blamed Tribune for negotiating in bad faith after discussing terms with management, only to have them overruled by the bankrupt company’s creditors. Tribune denied the accusation.

Pay-TV providers are pushing back on rising retransmission fees to support profit margins while avoiding increasing cable bills. Dish Network Corp. (DISH) yesterday reached an agreement with Sinclair Broadcast Group, which also owns local affiliates, and Time Warner Cable Inc. (TWC) last month agreed to restore Hearst Television Inc.’s 29 local TV stations after a 10-day blackout.

Retransmission fees are the payments pay-TV operators make to network affiliates for the right to carry their stations.

‘Illegal Tying’

Tribune’s WPIX and stations including WCCT, carried in parts of Connecticut, and WPHL, which had been available in a small portion of New Jersey, were blacked out from Bethpage, New York-based Cablevision services.

Tribune is attempting to “illegally tie” the carriage of WCCT to WPIX and other “less popular Tribune-owned channels,” by requiring Cablevision to take both stations, Jim Maiella, a Cablevision spokesman, said in an e-mail.

“We are pursuing both legal and regulatory options to stop Tribune’s illegal tying and will continue to hold the line on increasing programming costs,” Maiella said.

Tribune has the same retransmission agreements with Cablevision as it does with all other cable and satellite providers, Gary Weitman, a Tribune spokesman, said via e-mail.

“This approach is more efficient, benefits subscribers, is completely lawful, and fully complies with the FCC’s good faith negotiation rules,” he said.

Tribune Bankruptcy

Tribune, the Chicago-based owner of newspapers and TV stations, filed for bankruptcy in 2008, after the buyout led by real-estate billionaire Sam Zell.

A plan for the company to exit bankruptcy and be owned by its senior lenders, including the hedge-fund investors, was approved by U.S. Bankruptcy Court Judge Kevin Carey last month. That plan will be implemented later this year, should the company win approval from federal regulators to transfer its television and radio licenses to the new owners.

Cablevision said Tribune’s creditors are “trying to solve Tribune’s financial problems on the backs of Cablevision customers.”

Tribune, in its statement, said Cablevision’s blackout is “designed to mislead their subscribers who rely on Tribune’s local stations.”

To contact the reporter on this story: Alex Sherman in New York at asherman6@bloomberg.net

To contact the editor responsible for this story: Cecile Daurat at cdaurat@bloomberg.net

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