The Sting: DIRECTV v. Tribune

The Players: DIRECTV and Tribune Broadcasting.

The Set-Up: DIRECTV's retransmission consent agreement with Tribune expired at midnight, Saturday, March 31. The two sides said they had been negotiating in good faith for months... but as the deadline approached, no progress had been made.

The Hook: Saturday morning, DIRECTV issues a statement saying the satcaster accepted Tribune's financial terms - offered by phone - to carry its 23 local broadcast stations and WGN, thereby ensuring customers wouldn't lose access to local programming.

The Tale: An hour after DIRECTV declared the dispute squashed, Tribune issued its own statement saying that no agreement had been reached "on any aspect of its contract... Any statement by DIRECTV to the contrary is inaccurate and misleading." Two hours later, DIRECTV is forced to revise its initial statement by saying it was "extremely perplexed" by the developments as brass thought there was "a handshake deal" between the two parties to move forward. The failed negotiations resulted in Tribune stations in 19 markets going black on DIRECTV.

The Wire: The plot thickens, as an unlikely ally comes forward for DIRECTV. ACA President & CEO Matt Polka, undoubtedly identifying with the satcaster's plight, says Tribune's decision to pull its stations supports the cable group's long-held belief that Congress and the FCC must fix retransmission consent regulations. "Until the law and rules change, everyone can expect that TV station owners will continue their 'blackmail or blackout' strategy to the detriment of consumers and competition," he said.

Further, analysts have chimed in saying this retrans impasse is far more than your 'run of the mill' dispute. Bernstein Research's Craig Moffett notes that not only does this battle involve major markets (e.g. Fox affiliates LA, NY, Chicago, Seattle, Philly, etc...), but Tribune is headed by former DIRECTV President Eddy Hartenstein. "DIRECTV therefore has the great bad fortune of having to negotiate with not just one, but two of its former leaders (the other is Fox's Chase Carey), each of whom intricately understands DIRECTV's vulnerabilities in a dispute of this kind."

The Shut-Out: DIRECTV files a complaint with the FCC seeking an "immediate intervention and expedited ruling" against Tribune for failing to negotiate in good faith, bringing into question whether the company's broadcast licenses have been "prematurely, and inappropriately, transferred to bankruptcy creditors." The satcaster said Wall St. greed had forced Tribune management to renege on their 'handshake' agreement that would have avoided the whole mess.

The Sting: At the end of the day, Moffett says, the issues are the same as they are in other retrans disputes... a demand for more cash that will ultimately be decided by who can cause who the most damage. "Pain for the broadcaster is felt immediately, in the form of lost distribution (and ad dollars)"... while "pain for the distributor... is felt slowly," the analyst said. Making it worse (for distributors) is the loss of unique programming, like local sports. "In this environment, the broadcaster wins, and the issue is only a matter of degree; broadcasters win small against big distributors and big against small ones," he said. •

'Troubling' Cable Ratings Fall

Across the entire board, cable net audiences dropped 8% y/y, marking the seventh sequential month of declines. But analysts are unsure exactly what's creating the drop: Increased online viewing, declining TV ownership, and/or an improving job market?

First off, says Citi's Jason Bazinet, cable's not alone, as broadcast ratings have sagged by 7% during primetime over the past year for three of the Big Four: Fox (-24%), CBS (-3%) and ABC (-3%). NBC rated slightly better up 2%, the analyst said.

Within cable, Discovery seems to be performing the best (up 9%), driven largely by Discovery ID (+37%), Science (+16%) and Animal Planet (+6%). And, Bazinet said, OWN has posted three straight months of growth up 37%. On the flip side, Viacom has been hurting the worst, suffering from an 18% ratings decline across all time slots, representing six consecutive months of double-digit declines.

So broadcast ratings are down, but not nearly as severe as cable's... What gives? "We watched cable network ratings decline during seven of the last nine months, and we've seen total day ratings fare worse than prime time," Bazinet said. "First, SVOD is taking share. Second, better employment rates may be resulting in lowering day-time television viewing" while having less of an impact on prime time. •

Etc.: FCC: What is MVPD? - CVC & MSG PO'ed at NYDN - OWN Gets Needed Boost

Rules & Regs: The FCC is seeking public comment on how to define a multichannel video programming distributor (MVPD), and how to interpret the term 'channel' as used within MVPD. Seems the request came after the agency realized it couldn't clearly define SkyAngel as an MVPD, thus qualifying it for program access and retransmission consent considerations. The issue stems from a 2010 program access complaint filed with the FCC by SkyAngel against Discovery. (The company wanted the FCC to intervene on its behalf when Discovery ended its retrans deal.) While SkyAngel does offer a subscription-based service of several channels, the FCC said it failed to demonstrate it was an MVPD thereby deserving relief under the program access rules. The agency went on to say that the term 'channel' "appears to include a transmission path as a necessary element... (and) the Bureau was unable to find that SkyAngel provides its subscribers with a transmission path." The FCC also said that its initial findings (or lack thereof) would not ultimately decide whether SkyAngel was not an MVPD, and the company's complaint against Discovery is still pending. The ruling has far-reaching implications, as any new definition of MVPD could impact other players in the space, such as Netflix, Hulu, Aereo, and others. Comments are due by April 30.

Disputes: From our friends at CableFAX comes word that Cablevision and The Madison Square Garden Co. are pursuing "options" against the NY Daily News. At issue seems to be an article that suggested the Knicks kept Jeremy Lin's injury hush-hush until after the NBA's playoff ticket deadline had passed. More to come... --- Not surprisingly, SiriusXM CEO Mel Karmazin opposes Liberty Media's attempt to take "de facto" control of the satellite radio company. SiriusXM on Friday asked the FCC to "dismiss or deny" Liberty's application. WSJ has details and backstory. --- In yet another retrans dispute, DIRECTV lost access to local stations owned by Pappas Telecasting in four small markets. Said DIRECTV in response to Pappas' rate hike: "We're a video distributor, not an ATM." Stations caught in the spat are Fox and ABC affiliates in Lincoln, NE; the Azteca station in Omaha; the CW affiliate in Des Moines; and the CBS affiliate in Yuma, AZ.

Strategy: Netflix has purchased the domain name DVD.com, saying it cares about maintaining a "healthy" DVD business. --- Disney's Marvel Studios says it will stage free early screenings of its new film "The Avengers" in cities where the movie generates the most buzz on Facebook.

In Court: The Ninth Circuit Court of Appeals affirmed a 2009 decision that says cable operators' programming bundles do not constitute a violation of the Sherman Antitrust Act.

Research: In an Informa survey of TV, telco, internet execs, 21.8% of respondents said social networking sites like Facebook and Twitter are the types of companies that can convince users to pay for digital content, as opposed to only 16.8% that said network operators could. Interestingly enough, 27.7% said OTT services like Netflix and device manufacturers (Apple, Sony) had the best chance.

Dist.: WSJ is reporting that OWN has struck a distribution deal with Comcast, adding about 17M subscribers. The net now reaches 83M HHs.

Advertising: YouTube is pushing a new ad-platform to support the launch of its TV-like channel offering: selling sponsorships that include display, overlay and pre-roll spots, as opposed to targeting traditional TV demographics. AdWeek has this story.

M&A: Sinclair closed the acquisition of Freedom Communications' broadcast assets for $385M. Stations included in the deal: WPEC (CBS) West Palm Beach, WWMT (CBS) Grand Rapids/Kalamazoo/Battle Creek,
WRGB (CBS) Albany, WCWN (CW) Albany, WTVC (ABC) Chattanooga, WLAJ (ABC) Lansing, KTVL (CBS) Medford-Klamath Falls, and KFDM (CBS) Beaumont-Port Arthur-Orange. --- Frontier said Monday it had completed its entire 14-state conversion process of all assets associated with the 2010 acquisition of Verizon wireline exchanges nine months ahead of schedule.

Tech: Concurrent released a software update to its MediaHawk VX platform that enables operators to insert unique ads into individual VOD sessions at any point during playback. --- Reports suggest the new Windows phone from Nokia will have a live TV app called NokiaTV. The Verge has details and screenshots. --- LodgeNet intro'd its new 'interactive programming guide' solution that provides channel browsing without the need for a connected TV or an in-room STB.

Ratings: CBSSports and Turner said the ratings for its coverage of the 2012 Final Four was the highest since 2005.

Over, Up & Under: Rogers said its LTE network is live in Calgary and Halifax, now reaching 12M Canadians. --- Amazon's LOVEFiLM will begin offering BBC content in Germany. --- Ofcom says demand for mobile broadband capacity in the UK is expected to increase 80-fold by 2030. --- Orange said it is making its social TV app TVCheck available to all consumers in the UK. --- News Corp.'s Star satellite TV service landed the broadcast and digi rights for the international cricket tournament played in India spanning six years and almost 100 matches.

Labor: AllThingsD says Yahoo is prepping for those major layoffs.

People: Sumner Redstone will receive a star on Hollywood Boulevard. --- Discovery CEO David Zaslav's pay increased 23% to $52.4M last year. --- FT is reporting that the departure of two key directors at BSkyB could "weaken" the board's unanimous backing of James Murdoch as chair. Read more.

--- Catch today's media market news in The Evening BRIDGE. •