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TEGNA asking for “largest rate increase” ever, AT&T says

Executive says programmers demanding 24 percent increase in fees year-over-year, leading to higher bills for customers.

Executive says programmers demanding 24 percent increase in fees year-over-year, leading to higher bills for customers.

(Logos: TEGNA/AT&T, Graphic by The Desk)

Local broadcast station owner TEGNA is demanding AT&T pay an exorbitant amount of money for the right to offer its local stations to DirecTV and U-Verse customers, an AT&T executive said on Wednesday.

The executive, who provided the information on background, accused programmers like TEGNA of asking for a sharp increase in carriage fees at a time when its affiliate broadcast networks are moving top-tier programming to standalone streaming services.

Earlier this week, TEGNA pulled more than five dozen local TV stations across 51 regions from AT&T-owned DirecTV and U-Verse after the company’s contract with AT&T lapsed.

In a statement, TEGNA said it had spent months negotiating with AT&T for a new contract, but that the pay TV company “refused to reach a fair, market-based agreement with us.”

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On Wednesday, an AT&T executive said TEGNA had demanded a sharp increase in carriage fees, which the company felt was hard to justify given the fact that TEGNA’s local stations are available over-the-air for free and with the request coming at a time when broadcast networks were shifting a lot of their programming to streaming services.

“Despite their own broadcast networks moving their most anticipated series off broadcast and into their own streaming ventures, these [carriage] fees have increased an average of 24 percent every year, year after year, since 2011,” the executive affirmed.

The executive said re-transmission fees like those demanded by TEGNA are the primary reason why customers see their bills go up every year. Those fees are redundant, the executive argued, because broadcast stations like the ones operated by TEGNA are available to customers for free with an antenna.

Once rare, carriage disputes between programmers like TEGNA and distributors like AT&T are becoming more common as programmers demand more in fees that are eventually passed on to consumers. Those disputes sometimes devolved into a situation where customers lose access to one or more channels.

A person at AT&T who did not want to be identified but was familiar with negotiations between the two companies said AT&T had already offered TEGNA more money in order to keep the local stations on DirecTV and U-Verse. But AT&T’s offer wasn’t enough, and TEGNA pulled its stations from DirecTV and U-Verse on Tuesday.

On Wednesday, AT&T spokesperson Jim Kimberly said TEGNA was demanding “the largest rate increase we have ever seen and [is] intentionally blacking out its most loyal viewers.”

Kimberly hinted the stations would eventually return in a way that would cause its DirecTV and AT&T customers to pay even more in their bills over the long term.

“We challenge TEGNA to return its local stations immediately while we finalize a new agreement and pledge to pay TEGNA retroactively whatever higher rates to which we eventually agree,” Kimberly said. “We share our customers’ frustration, appreciate their patience and intend to do all we can to resolve this matter soon.”

For the time being, customers in most areas can access the one or two missing TEGNA stations by plugging an antenna into their TV set. Some customers can also stream the missing stations for free using Locast, an app that is offered on a few DirecTV and AT&T TV boxes.

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About the Author:

Matthew Keys

Matthew Keys is a nationally-recognized, award-winning journalist who has covered the business of media, technology, radio and television for more than 10 years. He is the publisher of The Desk and contributes to Know Techie, Digital Content Next and StreamTV Insider. He previously worked for Thomson Reuters, the Walt Disney Company, McNaughton Newspapers and Tribune Broadcasting.
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