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TEGNA could lose more in battle with DirecTV over affiliate fees

Both sides have until prime-time to reach a new or temporary deal before TEGNA's 60-plus channels are pulled.

Both sides have until prime-time to reach a new or temporary deal before TEGNA's 60-plus channels are pulled.

The television studio of TEGNA-owned ABC affiliate KXTV in Sacramento. (Photo via Google Street View)

The clock is winding down on broadcaster TEGNA and satellite TV service DirecTV to reach a new deal covering affiliate fees for around 60 local television stations.

Over the weekend, stations owned by TEGNA began notifying viewers that their channels could be dropped from DirecTV and U-Verse if both sides are not able to reach a new carriage agreement by Thursday.

The messaging came amid negotiations between TEGNA and DirecTV that aimed to have a new deal in place by the November 30 deadline, when DirecTV’s agreement with TEGNA expires.

The contract officially ends at 8 p.m. Eastern Time (5 p.m. Pacific Time), according to a source familiar with the matter, and if a new deal or extension isn’t reached by then, vast parts of the country could be without one or more major network affiliate on DirecTV and its sister platforms.

Over the past few years, broadcasters like TEGNA have demanded higher fees from cable and satellite companies in exchange for the rights to their channels. The right to seek out payment in exchange for carriage of channels was codified in an amendment to the Communications Act that Congress passed in 1992.

The last time TEGNA and DirecTV engaged in a spat was just three years ago, when DirecTV was a wholly-owned subsidiary of AT&T (the company was spun off in 2021; AT&T now owns 70 percent of the new DirecTV). Then, officials at TEGNA said they were simply seeking “a fair, market-based agreement” — which broadcasters typically say when they are demanding more money for the same set of channels.

At the time, a spokesperson for DirecTV said TEGNA was demanding “the largest rate increase we have ever seen,” and claimed TEGNA was using its viewers as bargaining chips while negotiations continued behind closed doors. During the dispute, DirecTV pointed customers to Locast, a streaming service that offers free access to local TV channels in many of the affected markets where TEGNA’s stations operate. (Locast was shut down the following September.)

The issue between TEGNA and DirecTV was ultimately settled a few weeks later, with both sides reaching a new agreement — the specifics of which were never released publicly — that allowed DirecTV to restore TEGNA’s channels to its platform.

This time around, DirecTV hasn’t accused TEGNA of demanding skyrocketing rates, but affiliate fees are almost certainly behind the apparent impasse between both sides.

“We are working hard to reach a fair, market-based agreement with DirectTV based on the competitive terms we’ve used to reach previous deals with DirectTV and other major providers,” a TEGNA spokesperson told The Desk on Saturday, using near-identical language found in the company’s statement three years ago during its dispute with DirecTV.

“Thus far, DirecTV has refused to agree to such terms, which is why we have begun informing DirecTV and U-Verse customers that they may lose access to their local TEGNA station and our valuable programming,” the spokesperson continued. “We hope that DirecTV is willing to negotiate a market-based deal before the November 30 deadline and doesn’t take away DirecTV and U-Verse customers’ local news, weather, sports and network programs.”

Officials at DirecTV who spoke with The Desk on background believe TEGNA may not be in as strong a position to bargain as they might think. They note that most prime-time series and sports programming available on TEGNA’s local TV stations are widely accessible on streaming — and, in some cases, those services even carry streaming versions of TEGNA’s channels on a 24-hour basis.

For instance, TEGNA’s 15 CBS affiliates are available through the premium version of Paramount Plus with Showtime, which costs $12 per month and includes live access to local CBS stations and affiliates. Prime-time CBS programming is also available on-demand, and all subscription tiers of Paramount Plus include live NFL games aired on local CBS broadcast outlets.

The same is true for NBC, whose streaming service Peacock offers live access to “Sunday Night Football” games aired on the network. Like Paramount Plus, Peacock also has an ultra-premium tier that costs $12 a month and includes live access to NBC stations and affiliates, including over 20 that are owned by TEGNA.

Things are a bit more complicated for viewers who live in areas where TEGNA owns seven Fox affiliates and over a dozen ABC affiliates. Streaming versions of ABC and Fox affiliates aren’t available through a standalone, network-operated service like Peacock or Paramount Plus, but next-day programming from both networks is available on Hulu, the Disney-owned streaming service that starts at $8 per month.

The biggest inconvenience will be to viewers who live in one of the seven areas where TEGNA owns the local Fox station. Fox has territorial rights to live National Football League (NFL) games aired before prime-time on Sundays, and doesn’t make those games available to stream through the Fox Sports app without a cable or satellite subscription. If TEGNA’s stations disappear from DirecTV and U-Verse, credentials used to access live Fox Sports programming through that app will also stop working.

In all areas, DirecTV and U-Verse customers can watch TEGNA’s local stations with a conventional over-the-air antenna plugged into the back of their TV set. And TEGNA’s local news streams on a wide variety of free platforms, including Fox Corporation’s Tubi.

But the lack of distribution on DirecTV — which, taken into account with U-Verse and its streaming variations, is still one of the largest pay TV platforms in the country — could hammer TEGNA hard where it counts: Advertising revenue. The lack of reach could ultimately convince marketers to spend with TEGNA’s competitors whose channels are available on DirecTV and U-Verse — and it comes at a critical time when local TEGNA stations are trying to grow their political revenue during the pivotal 2024 presidential election cycle.

TEGNA could use some help in that department: Non-political advertising revenue came in at $312.4 million during its most-recent financial quarter of 2023, down from $320.8 million earned during Q3 2022. Political ad revenue came in at $11.6 million, down from $92.9 million that local stations took in during the same time period last year.

TEGNA was not alone in experiencing a softening of the advertising market — other broadcasters saw the same effect as marketers eased on their spending during and immediately after the global coronavirus health pandemic. But while other media companies have seen advertisers return to their platforms, TEGNA has yet to experience the same — which may be why the company is willing to pull its local channels off DirecTV.

But with the proliferation of low-cost, no-contract streaming services offering many of the same shows found on TEGNA’s stations — and, in some cases, streaming simulcasts of TEGNA’s local channels — the broadcaster might be waiting a while for DirecTV to blink.

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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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