The follow is a letter sent by DirectTV executive Derek Change to the FCC's Media Bureau Chief William Lake regarding Fox. For some background, there have been on going negotiations to keep the Fox suite of programming on DirectTV but with the deadline quickly approaching (November 1), Fox has started to run ads on their local channels informing customers that they will lose Fox unless they call DirectTV. It's a power play move that all networks do when they are in negotiations. Those of us in Austin have seen ESPN run similar commercials about the Longhorn Network. By contacting the provider, it allows the networks to nickel and dime at the negotiation table.
I want to alert you to a disturbing development that relates to the broadcast stations owned and operated by Fox Broadcasting Company, Inc. ("Fox"). Specifically, in the midst of a dispute over cable programming, Fox is using misleading advertising informing DIRECTV customers that "soon, in some markets, you may lose your local Fox station," even though our retransmission consent agreement does not expire for over two months. Furthermore while Fox continues to run these misleading ads, Fox has refused to provide us a separate offer for the continued carriage of its broadcast stations.
The first part of DirectTV's complaint is that Fox is misleading customers by letting them know that they will be losing the local Fox station. This not only shows bad faith but also leads to customers calling up DirectTV with complaints. The local network deal doesn't expire until the end of the year which means that Fox is running advertisements informing customers of impending doom when the reality is that they have plenty of time to iron out a new deal.
The carriage agreement between DIRECTV and a number of cable networks controlled by Fox Cable Networks, Inc. expired on September 30. Although the parties have been negotiating for months, Fox continues to demand that DIRECTV customers pay significantly more for the same channels they already receive. At present, DIRECTV is carrying this programming under an interim extension agreement. If a new deal is not reached, DIRECTV will suspend carriage of these cable channels on November 1.
The carriage agreement covers such channels as FX and Fuel, both of which are relevant to the UFC's deal with Fox. According to the complaint, Fox is attempting to raise the price for their carriage of channels. It's typical for most television negotiations, with ABC and NBC having done the same a few years back with Cablevision and Comcast. The deal technically expired but both acted in good faith with an extension agreement. However, with only four days remaining in October, it is likely these channels will get pulled until a new deal can be reached.
Even if the Fox cable channels are no longer carried on November 1, the broadcast stations are covered under a separate agreement, which does not expire until December 31. Fox, however, is running advertisements asserting that DIRECTV viewers "soon could even lose" the Fox broadcast stations in their local markets. One such advertisement ran in the widely-circulated Los Angeles Times editions for Sunday, October 23, a copy of which is attached hereto. In addition, Fox's television advertisements on its local broadcast stations state that viewers could lose local channels (showing clips from Glee and NFL games) that are not subject to this agreement. Ironically, at the same time it is airing these warnings, Fox has repeatedly refused to provide us with a separate offer for carriage of the Fox broadcast stations.
The Fox broadcast channels are the local Fox network, such as Fox 5 in New York. The deal isn't close to expiring and both parties have considerable time to reach an agreement. DirectTV feels that running advertisements during highly rated broadcasts is bad faith and misleading to customers. DirectTV also asserts that Fox hasn't made any effort to right the situation by providing an offer for Fox broadcast networks.
On the one hand, Fox has refused to negotiate in good faith for carriage of the broadcast stations. At the same time, it is informing DIRECTV customers that they may soon lose access to such stations, purposely conflating a potential November 1 deadline for cable programming with the additional loss of broadcast programming the delivery of which is assured through the end of the year. Fox is clearly abusing the public trust by its deliberate attempt to confuse and alarm consumers. Such 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.
DIRECTV still hopes to arrive at a fair agreement with Fox before its subscribers are deprived of any programming. In the meantime, we have demanded that Fox immediately stop running advertisements that mislead consumers by suggesting that DIRECTV subscribers may not be able to receive Fox broadcast stations. To date, Fox has failed to do so.
Because of Fox's actions, DirectTV is making the assertion that they (Fox) don't deserve to be a broadcast conglomerate. This is perhaps the most important section of the email as DirectTV is not only complaining about Fox's regards to the ongoing negotiations but also the fact that by refusing to negotiate and running commercials. they are no longer fit to serve the best interest of the viewing public. It's a huge allegation and one that the FCC won't take lightly.
So what does this all mean for MMA fans? Well for those with DirectTV, it is obvious that if a new deal isn't reached by January 1, 2012 they will miss out on a ton of programming on Fuel, FX, and Fox. The UFC is planning to air 34 live events next year with 13 being PPV which means that 21 of those will use Fox, FX, and Fuel as an outlet. The UFC is also planning to finally kick off The Ultimate Fighter for countries around the world. Those episodes will be aired on Fuel making it a channel that MMA fans need to have. On top of the international Ultimate Fighters, there will also be plenty of other programming on Fuel.
Obviously, there is still 60 days left for DirectTV and Fox to hammer out a deal. That's plenty of time and this shouldn't be a cause for concern at this moment. However, the fact that DirectTV has aired grievances with the FCC doesn't exactly bode well for the situation either. This is business as usual in the broadcasting business, we're just seeing the happenings first hand.