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TEGNA says DirecTV dispute hurt revenue during Q4

The company would have seen a 2 percent increase in subscription revenue during 2023 had DirecTV agreed to a higher rate last December, the local broadcaster said.

The company would have seen a 2 percent increase in subscription revenue during 2023 had DirecTV agreed to a higher rate last December, the local broadcaster said.

The studios of KUSA-TV in Denver, Colorado, one of over 60 television stations owned by TEGNA. (Photo via Google Street View)
The studios of KUSA-TV in Denver, Colorado, one of over 60 television stations owned by TEGNA. (Photo via Google Street View)

A weeks-long dispute with satellite and streaming television provider DirecTV impacted TEGNA’s ability to generate critical subscription revenue during the fourth quarter of the year, the broadcaster affirmed this week.

On Thursday, TEGNA said its subscription revenue would have been “nearly flat” on a year-over basis had it not been for a “temporary disruption of service with a distribution partner” that was resolved on January 14.

The revelation was made in TEGNA’s fourth quarter (Q4) and full-year earnings report from 2023, in which the local television broadcaster said it generated $726 million during Q4, or 21 percent lower compared to the same time frame in 2022.

Of that, the broadcaster earned $339 million in revenue accrued from charging cable and satellite companies fees for the carriage of its local TV stations, an amount that was down 9 percent on a year-over basis.

TEGNA did not name DirecTV as the distributor at the center of the dispute that caused it to experience lower subscription revenue, but the company did say the issue was “successfully resolved” on January 13. That day, a TEGNA spokesperson affirmed it had resolved a weeks-long carriage dispute with DirecTV, which allowed its channels to be restored to the satellite and streaming provider as well as U-Verse.

The dispute began in early December, when a three-year contract between DirecTV and TEGNA expired with no new agreement in place. The lack of a deal meant DirecTV was forced to pull TEGNA’s ABC, CBS, CW Network, Fox and NBC affiliates during the final weeks of the National Football League’s (NFL) regular season.

During the blackout, officials at DirecTV accused TEGNA of demanding a significant hike in fees that the satellite broadcaster would be forced to pay in exchange for the privilege of carrying its local TV stations. DirecTV offered TEGNA a temporary extension of its prior agreement that would have kept the channels in place, with a promise to fulfill back pay to TEGNA at a future agreed-upon rate. The broadcaster rejected the offer, The Desk reported.

DirecTV also offered TEGNA the opportunity to relegate its broadcast channels into an à la carte package that would be sold to subscribers at a special rate that TEGNA would help set, the company said. The move would require customers to opt-in to pay a separate fee for TEGNA’s stations if they did not choose to receive them another way, such as with an antenna. TEGNA rejected this offer, too.

The situation was ultimately resolved in mid-January, on the very day that the NFL’s playoff stretch was set to begin. The resolution allowed DirecTV to offer customers football games aired on TEGNA-owned CBS and Fox stations that weekend. Financial terms of the new deal were not disclosed.

Leaving weeks of subscriber revenue on the table cost TEGNA at a time when it really needed that money: On Thursday, the company reported total company revenue at $2.9 billion, down 11 percent on a year-over basis due to a lack of political and core revenue.

Football aside, there was less-compelling programming aired on network television last year compared to 2022. NBC is TEGNA’s largest programming partner — more of its local TV stations are affiliated with NBC compared to any other network — and the company struggled to generate the same return on its local TV ad inventory in 2023 compared to 2022, when NBC had both the Super Bowl and the Winter Olympics.

While some TEGNA stations are affiliated with Fox and benefit from live events like last year’s Super Bowl and World Series, Fox is affiliated with the fewest number of TEGNA-owned stations compared to other networks, the broadcaster said.

To make up for this, TEGNA relied on cash coming in from its cable and satellite distributors. Like other broadcasters, TEGNA has steadily raised the rate it charges pay TV distributors in order to offset an industry-wide trend of consumers “cutting the cord,” or moving away from cable and satellite platforms for cheaper streaming options.

For 2023, subscription revenue came in at $1.5 billion, which was about the same as the prior year. Had TEGNA been able to convince DirecTV to agree to a higher rate last December, the broadcaster said its subscription revenue would have increased 2 percent for the year.

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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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