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Fox warns of potential carriage dispute with DirecTV

The Fox Broadcasting logo appears on a building in Phoenix, Arizona in an undated image posted to Flickr and licensed through Creative Commons
(Photo by Tony Webster via Flickr Creative Commons, Graphic by The Desk)

Officials at Fox Corporation are warning DirecTV customers that they may have to go without Fox programming if a new contract can’t be reached between the broadcaster and the pay TV distributor by the end of the week.

On Sunday, Fox began running a notice on some of its broadcast and cable channels warning DirecTV customers that they could lose Fox programming as soon as Friday afternoon if the two sides aren’t able to come to an agreement before then.

In a statement, a Fox spokesperson said it was “committed to reaching a fair agreement with DirecTV for the continued distribution of our networks.”

“Despite our best efforts for months, we regret that DirecTV continues to demand unprecedented special treatment that represents a wholesale change to our long-standing relationship and is out of step with marketplace terms,” the spokesperson said.

No information was given about the “special treatment” DirecTV is purportedly seeking as part of a new carriage deal. But the tone of the statement seems to suggest that the two sides are debating fees that DirecTV is expected to pay Fox for the privilege of offering local Fox-owned stations and Fox’s cable channels to its customers.

Earlier this month, Fox disclosed that affiliate fees charged to cable, satellite and streaming TV services brought in $1.711 billion in revenue during the three-month period that ended September 30, a year-over-year increase of more than 2.5 percent. The affiliate fee revenue outpaced its advertising revenue for the quarter, which brought in $1.22 billion during the same period.

The majority of Fox Corporation’s affiliate revenue came from its cable channels, which include Fox News Channel, Fox Business Network, Fox Sports 1, Fox Sports 2 and Big 10 Network. According to Fox’s quarterly earnings report, the company’s cable channels brought in $1.029 billion in revenue during the three-month period that ended September 30. Cable advertisements brought in just $316 million during that same time period.

Fox executives said cable affiliate revenue increased in part due to higher contracts — which include carriage fee stipulations — imposed on pay TV systems. The increase in carriage fees can help a broadcaster like Fox offset a decline in advertising revenue that is the end result of cable and satellite customers fleeing those higher fees that are passed on to them in their bills.

An impasse between Fox and DirecTV would not just impact the 13 million customers who continue to pay for satellite television: It would also affect hundreds of thousands of customers who pay for DirecTV Stream, the streaming TV alternative operated by the company.

In addition to Fox’s cable channels, a carriage dispute would also require DirecTV and DirecTV Stream to pull Fox-owned stations in several major markets, including:

  • KCPQ (Channel 13, Seattle/Tacoma)
  • KDFW (Channel 4, Dallas)
  • KMSP (Channel 9, Minneapolis)
  • KRIV (Channel 26, Houston)
  • KSAZ (Channel 10, Phoenix)
  • KTBC (Channel 7, Austin)
  • KTTV (Channel 11, Los Angeles)
  • KTVU (Channel 2, San Francisco/Oakland)
  • WAGA (Channel 5, Atlanta)
  • WFLD (Channel 32, Chicago)
  • WJBK (Channel 2, Detroit)
  • WITI (Channel 6, Milwaukee)
  • WNYW (Channel 5, New York City)
  • WOFL (Channel 35, Orlando)
  • WTTG (Channel 5, Washington, D.C.)
  • WTVT (Channel 13, Tampa/St. Petersburg)
  • WTXF (Channel 29, Philadelphia)

Several independent and MyNetwork-partner stations owned by Fox would also be impacted, including KUTP (Channel 45, Phoenix), KCOP (Channel 13, Los Angeles), KICU (Channel 36, San Francisco/Oakland), WDCA (Channel 20, Washington, D.C.), WRBW (Channel 65, Orlando), WPWR (Channel 50, Chicago), WFTC (Channel 9.2, Minneapolis), WWOR (Channel 9, New York City) and others.

In a statement, a DirecTV spokesperson said a future deal “depends solely on Fox,” and said it is “working hard to reach an agreement” with the broadcaster.

If Fox does move forward with a blackout on DirecTV, affected customers can receive local Fox stations by purchasing an antenna and connecting it directly to the back of their TV sets. For Fox cable networks like Fox News and Fox Sports 1, a number of streaming TV services like Sling TV ($40 a month) and Vidgo ($60 a month) offer those channels alongside dozens of others, without any commitment and across a number of devices.

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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 11 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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