DirecTV and News Corp. reach new deal

Oct. 31, 2011 3:50 PM PT

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News Corp. has struck a new deal that will keep its powerful cable and broadcast channels on satellite broadcaster DirecTV.

The two sides had been bickering over a new contract and DirecTV was set to drop more than two dozen News Corp.-owned Fox cable networks, including the popular FX entertainment channel and Los Angeles regional sports outlets Prime Ticket and Fox Sports West, on Tuesday. DirecTV has over 19 million subscribers.

The new accord not only includes Fox’s cable channels, but also the local television stations that carry the programming of the Fox Broadcasting Co. including National Football League games and popular comedies ‘Glee’ and ‘New Girl.’

Though the contracts for Fox’s local TV stations were not up until the end of the year, DirecTV did not want to have to keep negotiating new accords with News Corp. and was pushing for an all-encompassing deal, people close to the talks said. Also part of the agreement is the Fox News channel even though that contract was not due to expire until early 2012.

Terms of the deal were not disclosed. DirecTV had complained that Fox was seeking an increase of 40%. Fox called that figure ridiculous. Cable networks and broadcast channels are typically sold on a per-subscriber basis. According to SNL Kagan, FX currently gets about 40 cents per subscriber, per month. Fox Sports West gets almost $2.70 per subscriber, per month. Sports channels are usually more expensive because of their rights fee expenses.

The agreement, announced late Monday afternoon, ends several weeks of acrimony between the two companies. Fox took out advertisements suggesting consumers drop DirecTV for other distributors and Kurt Sutter, the brash executive producer of FX’s motorcycle gang drama ‘Sons of Anarchy,’ took to Twitter to blast DirecTV executives.

DirecTV fired back by sending a letter to the Federal Communications Commission accusing Fox of a misleading ad campaign and even suggested that the Rupert Murdoch-owned company’s conduct ‘is certainly not what the commission had in mind when it made Fox a steward of the nation’s airwaves entrusted to serve the public interest.’

Squabbles between programmers and distributors are becoming more common. Networks look to distribution fees to cover rising programming costs. At the same time, distributors fear losing customers to rising monthly bills.

Channels rarely actually come off, but it does happen. Last year, satellite broadcaster Dish Network stopped carrying many Fox-owned cable networks for a month until a new agreement was reached.

— Joe Flint

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