DirecTV files FCC complaint against Tribune

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Satellite broadcaster DirecTV is making a federal case out of its fight with Tribune Co.

In a complaint filed at the Federal Communications Commission, DirecTV accused Tribune of reneging on a deal that would have kept the latter’s television stations on the satellite service. The filing also charges that the bankrupt Tribune’s creditors, and not its management, are calling the shots for the stations, even though they do not yet hold the actual licenses.

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

Tribune fired back that DirecTV’s filing was just another negotiating ploy.

‘Claims of ‘bad faith’ and ‘outrageous conduct’ are nothing more than negotiating tactics in an attempt to unfairly disadvantage Tribune from receiving fair-market compensation from DirecTV for carriage of Tribune’s local television stations and WGN America,’ said a Tribune spokesman.

The complaint, filed Monday, is in response to Tribune’s decision to pull its 23 television stations -- including KTLA-TV Los Angeles -- and its national cable channel WGN America from DirecTV. Tribune is also the parent of the Los Angeles Times. Tribune CEO Eddy Hartenstein, who is also the Los Angeles Times’ publisher, is a former CEO of DirecTV.

DirecTV said that last Thursday, two days before Saturday night’s deadline, it had an agreement in principle with Tribune that would have kept the stations on its service. On Friday, Tribune told DirecTV that was not the case, DirecTV’s filing said.

The reason for the about-face, according to DirecTV, was that Tribune management was overruled by the hedge fund and investment bank creditors who hold the bankrupt company’s debt.

DirecTV believes it has a smoking gun in the form of email and phone conversations between Derek Chang, its executive vice president, and Nils Larsen, the head of Tribune’s television station group. In the filing, DirecTV’s Chang said he asked Larsen why their agreed-upon deal was now no good, and that Larsen replied that ‘his constituents’ had overruled Tribune management.

Chang also said he spoke to Edgar Lee, a senior vice president of Oaktree Capital Management, L.P., who said creditors told Tribune management that they would not support the agreement in principle and that Tribune could not sign off on the deal without that approval. An assistant for Lee said Oaktree does not comment on its business. ‘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 rules,’ the company said to the FCC. ‘Indeed, DirecTV still does not know with whom it should be speaking -- Tribune’s CEO or its associated hedge funds and investment banks.’

Tribune countered that ‘any intimation that our broadcast licenses have been prematurely transferred is simply false and misleading.’ With regards to Chang’s description of his conversations with Larsen, the Tribune spokesman said that is ‘not accurate.’

The satellite broadcaster asked that the FCC find that Tribune negotiated in bad faith. It also requested the FCC to fine the media company and force it to put the channels back on DirecTV for at least a month while the two sides try to reach a new pact.

Battles over fees between programmers and distributors have become commonplace in recent years. But this one has quickly turned very ugly, with both sides accusing each other of lying.

Besides KTLA, Tribune owns television stations in several top markets, including New York, Washington, D.C., and Philadelphia. Many of those stations have rights to local sports teams including, the Mets in New York and the Phillies in Philadelphia. With baseball season starting, Tribune will encourage consumers pressure DirecTV to cut a deal and get the stations back on.

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-- Joe Flint