DirecTV may drop News Corp. cable channels over rate dispute
More than two dozen News Corp.-owned cable channels may be dropped by satellite broadcaster DirecTV Group Inc. on Nov. 1 if the two companies can’t reach an agreement on a new distribution deal.
DirecTV, which has more than 19 million subscribers, has begun informing its customers that it would stop carrying the News Corp. channels. They include FX; the National Geographic Channel; 19 regional sports networks, including Fox Sports West and Prime Ticket, which serve the Los Angeles market; and a handful of other sports channels.
Not part of the dispute is the Fox broadcast network or the Fox News cable channel.
DirecTV said it is prepared to drop the channels because News Corp. is demanding an increase of 40% in subscriber fees for them. The company did not disclose the exact terms News Corp. is seeking.
“We already provide News Corp. nearly $1 billion a year for their channels, and we have no problem continuing to compensate them fairly,” the satellite broadcaster said in a statement, adding that the deal being offered is “unfair and unwarranted.”
A spokesman for News Corp.’s Fox Networks called the reported 40% increase “ridiculous” and added that the company has been willing to allow DirecTV to continue to carry the networks at the current rate while a new deal is negotiated.
Talks are continuing, but DirecTV Executive Vice President Derek Chang said that although some of the channels may merit rate increases, a 40% hike is out of the question.
“A 40% increase to pass on to customers is almost unconscionable,” Chang said.
Another area of contention, Chang said, is News Corp.’s desire to sell all the channels in a bundle rather than on an individual basis.
Although disputes between programmers and distributors over carriage deals are fairly common, this one has an interesting twist: News Corp. President Chase Carey previously was the chief executive of DirecTV for several years and is well versed in the company’s finances.
