Pay television provider DirecTV says it has still not settled the issue of a “clean slate” agreement imposed by the Walt Disney Company as a requirement of a new carriage agreement for the entertainment giant’s broadcast and cable TV networks.
In a brief filed with the Federal Communications Commission (FCC) this week, attorneys representing DirecTV said their counterparts at Disney were not being fully honest in their response to a complaint filed with the regulator over the clean slate clause.
The complaint was filed last month while DirecTV and Disney were negotiating toward a new contract that allows the satellite and streaming TV provider to carry Disney-owned channels like ESPN, Freeform, FX and National Geographic. Disney also owns eight ABC television stations, which hold broadcast licenses issued and regulated by the FCC. Federal regulators require broadcasters and pay TV programmers to negotiate in “good faith” when engaged in distribution-related discussions.
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In its complaint, DirecTV said the “clean slate” clause would have required it to waive any right to criticize Disney’s carriage terms as anticompetitive, and would have extended that ban to complaints filed with the FCC in the future. It said the FCC recently found those terms to be violations of the good faith requirement.
Last week, Disney issued a response, saying the clean slate requirement is a routine agreement between broadcasters and pay TV operators, and that DirecTV had agreed to similar terms in past carriage deals. It also said the intention behind the clean slate agreement was not to prevent the company from filing good faith complaints in the future.
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DirecTV responded on Monday, saying officials at Disney waited until after the FCC complaint was filed to clarify that its clean slate term was never meant to apply to regulatory matters. DirecTV also affirmed it supplied Disney with a proposed contract that limited the clean slate agreement to matters involving direct litigation, something that the broadcaster has yet to accept.
“DirecTV sent Disney draft language excluding FCC complaints on September 11,” officials wrote in their reply, according to a copy obtained and reviewed by The Desk. “Disney has not rejected this language, but the parties have not yet finalized a long-form agreement, so the issue may not be quite as settled as Disney suggests.”
The matter is not expected to impact the current distribution of Disney-owned channels on DirecTV, which remain on the service under a tentative deal reached in mid-September. But it could result in the FCC fining Disney, as the agency did with Nexstar after a Hawaii-based cable operator lodged a similar complaint last year (which Nexstar is appealing). The findings in the Nexstar case serves as the main foundation of DirecTV’s complaint against Disney.
While Disney is hoping the FCC tosses DirecTV’s complaint now that the carriage dispute is settled, DirecTV is pressing on, saying the agency has an obligation to scrutinize bad faith complaints even when they are later withdrawn.
“Here, the parties reached an agreement on their carriage dispute, and Disney has conceded that the right to file complaints challenging a party’s good faith cannot be negotiated away,” attorneys for DirecTV said.
