Tribune/Dish Blackout: No Agreement on Arbitration

Result of failure to extend contract June 13, 2016

ENGLEWOOD, COLO.—UPDATED (6/17): Tribune responded yesterday to Dish's proposal for arbitration over their carriage deal, and it was a hard no, calling the proposal "a hollow offer, designed to mislead consumers and avoid returning to meaningful negotiations."

"Dish Routinely makes these offers of arbitration instead of negotiating, and they are always rejected," said Gary Weitman. "Arbitration is an expensive substitute for the negotiating process set up by Congress and Dish has a history of walking away from arbitration when the outcomes goes against it."

Tribune specifically pointed to Dish's 2010 arbitration with NBCU/Comcast, which was covered by TV Technology sister publication Multichannel News.

Instead, Tribune is proposing that the FCC Chairman's Office monitor negotiation between the two companies. It also asks again for Dish to accept its proposed extension to Aug. 31 of a status quo basis so stations can be restored while negotiations continue.

Dish released a new press release on Friday morning, with Dish EVP Warren Schlichting saying: "If Tribune is serious in its commitment to accept fair market rates, then there is no downside for them to immediately restore the Tribune channels on Dish while allowing a neutral third-party arbitrator to review Dish's agreements with other station groups, as well as the rates that Tribune receives from our pay-TV competitors and determine the fair market rates that Tribune desires on a basis that is binding upon Dish and Tribune."

Schlichting also points out that Dish is willing to retroactively pay any new rates back to the date the channels are restored to consumers and, in regard to Tribune's point about Dish walking away from past arbitration, the model would not allow the opportunity for either company to do so.

"Regrettably, we can only interpret Tribune's unwillingness to participate in binding arbitration as an indication that it is actually angling for rates that are above fair market and that it wants to keep the Tribune channels off Dish as long as possible in order to continue to use innocent consumers as pawns to gain negotiating leverage against Dish," concluded Schlichting.
UPDATED (6/16): Announced in a press release, Dish says it has invited Tribune to enter into binding, baseball-style arbitration that were modeled off of the procedures used for the Comcast/NBCU merger. As part of the arbitration, Dish has asked that Tribune restore its channels on Dish.

"We want to return these local stations to our customers immediately, and binding, baseball-style arbitration offers a path to reach a fair deal and to serve the best interests of our customers," said Warren Schlichting, Dish executive vice president of programming.

UPDATED (6/15): Tribune’s blackout of its 42 local stations and WGN America across 33 Dish markets continues, as Tribune says that it has not heard anything from Dish in regards to negotiating a new contract.

Tribune Media Senior Vice President of Corporate Relations Gary Weitman said that Tribune submitted a proposal to Dish at 11:50 p.m. ET on Sunday evening, but have had “zero response.”

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“We repeatedly offered Dish an extension through the end of August, more than 60 days, for precisely this reason—they drag their feet in negotiations,” said Weitman. “Dish rejected every offer, which demonstrates a total disregard for their customers and our viewers.”

"Dish offered to extend the contract so that consumers would have continued access to Tribune channels while negotiations continued," said John Hall, head of corporate communications at Dish, to TV Technology. "Tribune rejected the offer. Only Tribune can cause a channel blackout. Rather than continuing to negotiate in good faith, Tribune chose to remove their channels from Dish. Rather than negotiate in the press, we suggest that Tribune respond to our last offer with a meaningful and fair offer for our customers."

Some of the programming that could be missed if the blackout continues includes Thursday’s Game 6 of the NBA Finals and this weekend’s U.S. Open.
 
Customers in 33 markets across 34 states and the District of Columbia saw 42 of their channels go dark on Sunday from a blackout by the Tribune Broadcasting Company. This is reportedly a result of the two companies failing to reach a contract extension over a raise in carriage rates.
 
“Tribune is demanding an unreasonable rate increase for channels that are available for free over the air,” said Schlichting. Tribune's Senior Vice President for Corporate Relations Gary Weitman, however, told TV Technology that "high quality programming is not free."
 
In the meantime, Dish says that it will offer affected customers free over-the-air antennas so they can watch Tribune’s local broadcast channels for free.
 
Another element of the negotiations, per Dish, was Tribune’s attempt to “force bundle” WGN America with its local broadcast stations. Dish reports that WGN America viewership is down on average more than 20 percent since it became a cable network in 2014 and that its content is often available on other channels offered by Dish. “Tribune is using local viewers as leverage to raise rates for WGN America—a channel that is in decline,” claimed Schlichting.
 
Weitman disputes these claims about WGN America being in decline to TV Technology, citing two original shows that premiered on the network in the past year, "Underground" and "Outsiders." Weitman says both shows were among the top 15 scripted cable shows for the 2015-2016 TV season in the Nielsen ratings
 

Dish claims that it offered a short-term contract extension to Tribune to renew carriage of its local stations that would include a retroactive true-up when new rates were agreed upon. The true-up would reportedly have reimbursed Tribune at the new rates for the period of any contract extension while maintaining customer’s abilities to access Tribune’s stations during negotiations.

“Actions like these are precisely the reason that Congress has mandated, and the FCC has opened, a formal process to investigate tactics like this,” said R. Stanton Dodge, Dish executive vice president and general counsel. The FCC issued a Notice of Proposed Rulemaking in September 2015 on what constitutes negotiating for retransmission consent in good faith; Dish and other companies and public interest groups of the American Television Alliance have asked that Tribune’s tactics be considered as violations of good faith negotiations.

"Tribune Broadcasting has negotiated comprehensive agreements with all of its cable, satellite and telco providers," said Weitman. "We've reached fair market deals with all of them. We're off Dish Network because it refuses to offer us what we both know to be fair market value."

Weitman said in a statement over the weekend that Tribune offered to extend negotiations with Dish. "We want to reach an agreement with Dish... Dish has refused our offer." Tribune also noted in its statement that Dish has a track record in these retransmission disputes, with failed negotiations leading to blackouts 12 times before in the last three years.
 

“Each year, the cost to carry local broadcast stations rises far beyond the rate of inflation, leading to blackouts across the country that affect millions of subscribers of various pay-TV companies,” Dish said in its statement. Media industry analysis company SNL Kagan reports that broadcast fees were grew from $215 million in 2006 to around $4.9 billion in 2014; SNL Kagan forecasts those feeds could reach $10.3 billion by 2021.

Affected stations on the black out across the 33 markets include ABC, CBS, CW, Fox, NBC, MyNetwork and independent stations. A full list of the stations can be found here.

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