Sinclair Broadcast Group recently began informing its viewers that it does not expect DirecTV to continue to carry any of Sinclair’s stations after the existing carriage agreement terminates on February 28, 2013. Although DirecTV and Sinclair have been negotiating for quite some time in an effort to reach a new agreement, at this time it does not appear that these efforts will be successful. Although Sinclair does not believe that it is constructive to negotiate its private business relationships in public, Sinclair is informing the public in advance of the end of carriage because it is aware of the impact on a segment of the public from the end of the relationship between the Sinclair stations and DirecTV.
We are very sorry that we have not been able to reach agreement with DirecTV and regret the inconvenience this will cause to DirecTV subscribers who want to continue to watch the extremely popular programming that airs on our stations. We wish to remind these subscribers that numerous other means exist for receiving our stations, including your local cable provider, Dish Network, and in some markets either Verizon FiOS or AT&T U-verse, as well as over-the air. Also we suggest that you call DirecTV at 1-800-DIRECTV (347-3288) and let them know you want them to continue to carry your local stations.
Answers to some of the questions you may have about this matter are set forth below. We appreciate your understanding and patience with regard to this matter. Thank you.
Q: What is retransmission consent?
A: Retransmission consent is a process created by federal law pursuant to which cable and satellite companies negotiate with the owners of television stations for the right to carry those stations on their cable systems.
Q: Can television stations require satellite companies to carry them?
A: Yes, they can by making something referred to as a must-carry election, which would then require carriage for a three-year period.
Q: Why didn't Sinclair elect must-carry for its stations?
A: Sinclair chose not to elect must-carry in order to have the right to negotiate with the cable and satellite system to receive certain things, such as compensation and channel position, which it would not receive by making a must-carry election. As a result of Sinclair’s retransmission consent election, the relationship between Sinclair and DirecTV is essentially the same as the typical commercial relationship that exists between any wholesaler attempting to sell its product to a retailer so that the retailer can then sell the product to consumers in its market.
Q: Why should satellite companies have to pay to carry a television station?
A: Local TV stations pay millions of dollars each year to buy high-quality programming and to produce important informational programs, such as the local news. It is just standard business practice that the satellite companies should pay for the right to resell programming to their subscribers.
Q: But aren't television stations available for free over-the-air?
A: Local TV stations are available over-the-air at no cost with the use of an antenna. However, this doesn't mean that satellite companies have the right to resell our signals without properly compensating us. It is no different from the fact that local radio stations are free over-the-air, but a satellite radio company like XM Radio has no right simply to carry local stations and charge subscribers for it.
Q: Don't television stations benefit from carriage on satellite systems in the form of larger audiences and increased advertising revenues?
A: All channels benefit from being carried on a cable or satellite system; local TV stations as well as cable networks which are also advertising supported. We are simply asking to be treated fairly, based on the popularity of our programming, in the amount we are compensated.
Q: Doesn’t Sinclair make its money through advertising sales? So why also charge for retransmission consent?
A: It is true that our primary source of revenues comes from advertising sales. However, we are entitled to be compensated fairly when another company uses our content and re-sells it to the public.
Q: Is this just a dispute about money?
A: Although Sinclair does not believe it is productive to negotiate its private business relationships in the public, the inability to reach agreement with DirecTV is about more than just money.
Q: Is it fair to characterize Sinclair as "pulling its stations" from the DirecTV satellite system?
A: We would not characterize this as Sinclair "pulling its stations" or DirecTV "refusing to carry" Sinclair's stations. This is simply the case of a buyer and seller being unable to agree on price, something that occurs every day in both commercial and consumer transactions.
Q: What is the best way for the public to influence this matter?
A: We believe that DirecTV’s subscribers should simply let DirecTV know that they will no longer subscribe to DirecTV if it does not carry the stations that they want. We also believe it would be appropriate for DirecTV subscribers to demand that DirecTV reduce their bills if they no longer carry one or more of the most popular channels. DirecTV can be reached at 1-800-DIRECTV (347-3288).
Q: How long is this dispute likely to last?
A: It is impossible to answer this question accurately, although it is certainly possible that DirecTV will never carry the Sinclair stations in the future.
Q: Won't DirecTV just bring in another station from another market with the same programming?
A: Contracts, the law and FCC regulations severely restrict DirecTV’s ability to do this. Local TV station programming contracts generally provide for market exclusivity (including network primetime and sports programming). Additionally, programming Sinclair stations produce, such as local news, wouldn't be available from another, out-of-market station.
Q: Doesn't this punish the consumer?
A: Consumers have other means for obtaining the Sinclair stations, such as their local cable company, Dish Network, in some cases either Verizon FiOS or AT&T U-verse or over-the-air, and so, while we recognize and apologize for the inconvenience associated with switching providers, no significant detriment to the consumer will result from DirecTV’s failure to carry these stations.
Q: Wasn’t Sinclair given the airwaves by the government?
A: Sinclair has paid billions of dollars over time to purchase our TV stations and to be able to use the public airwaves. Additionally, each of our stations pays an annual fee to the government, so no the airwaves weren’t given to us for free.
Q: Isn’t this just about greed?
A: No. It’s about us being a publicly traded company that has a fiduciary responsibility to operate the company profitably. Given that we spend millions of dollars each year to buy and produce high-quality programming, it is only right and fair that satellite companies compensate us fairly for a portion of our cost, especially since they are re-selling our content to their subscribers. In addition, the inability to reach agreement with DirecTV is related to other material matters besides the amount we are to be paid.
Q: Won’t this cost get passed on to the consumer?
A: That is a question for DirecTV to answer. They may pass these costs on to their subscribers or they could choose just to reduce the profits they make. Alternatively, they could negotiate to reduce the fees they pay for programming which is far less popular than the programming provided by the Sinclair stations and for which, we believe they pay disproportionately high prices as compared to the amount being requested by Sinclair.
We are very sorry that we have not been able to reach agreement with DirecTV and regret the inconvenience this will cause to DirecTV subscribers who want to continue to watch the extremely popular programming that airs on our stations. We wish to remind these subscribers that numerous other means exist for receiving our stations, including your local cable provider, Dish Network, and in some markets either Verizon FiOS or AT&T U-verse, as well as over-the air. Also we suggest that you call DirecTV at 1-800-DIRECTV (347-3288) and let them know you want them to continue to carry your local stations.
Answers to some of the questions you may have about this matter are set forth below. We appreciate your understanding and patience with regard to this matter. Thank you.
Q: What is retransmission consent?
A: Retransmission consent is a process created by federal law pursuant to which cable and satellite companies negotiate with the owners of television stations for the right to carry those stations on their cable systems.
Q: Can television stations require satellite companies to carry them?
A: Yes, they can by making something referred to as a must-carry election, which would then require carriage for a three-year period.
Q: Why didn't Sinclair elect must-carry for its stations?
A: Sinclair chose not to elect must-carry in order to have the right to negotiate with the cable and satellite system to receive certain things, such as compensation and channel position, which it would not receive by making a must-carry election. As a result of Sinclair’s retransmission consent election, the relationship between Sinclair and DirecTV is essentially the same as the typical commercial relationship that exists between any wholesaler attempting to sell its product to a retailer so that the retailer can then sell the product to consumers in its market.
Q: Why should satellite companies have to pay to carry a television station?
A: Local TV stations pay millions of dollars each year to buy high-quality programming and to produce important informational programs, such as the local news. It is just standard business practice that the satellite companies should pay for the right to resell programming to their subscribers.
Q: But aren't television stations available for free over-the-air?
A: Local TV stations are available over-the-air at no cost with the use of an antenna. However, this doesn't mean that satellite companies have the right to resell our signals without properly compensating us. It is no different from the fact that local radio stations are free over-the-air, but a satellite radio company like XM Radio has no right simply to carry local stations and charge subscribers for it.
Q: Don't television stations benefit from carriage on satellite systems in the form of larger audiences and increased advertising revenues?
A: All channels benefit from being carried on a cable or satellite system; local TV stations as well as cable networks which are also advertising supported. We are simply asking to be treated fairly, based on the popularity of our programming, in the amount we are compensated.
Q: Doesn’t Sinclair make its money through advertising sales? So why also charge for retransmission consent?
A: It is true that our primary source of revenues comes from advertising sales. However, we are entitled to be compensated fairly when another company uses our content and re-sells it to the public.
Q: Is this just a dispute about money?
A: Although Sinclair does not believe it is productive to negotiate its private business relationships in the public, the inability to reach agreement with DirecTV is about more than just money.
Q: Is it fair to characterize Sinclair as "pulling its stations" from the DirecTV satellite system?
A: We would not characterize this as Sinclair "pulling its stations" or DirecTV "refusing to carry" Sinclair's stations. This is simply the case of a buyer and seller being unable to agree on price, something that occurs every day in both commercial and consumer transactions.
Q: What is the best way for the public to influence this matter?
A: We believe that DirecTV’s subscribers should simply let DirecTV know that they will no longer subscribe to DirecTV if it does not carry the stations that they want. We also believe it would be appropriate for DirecTV subscribers to demand that DirecTV reduce their bills if they no longer carry one or more of the most popular channels. DirecTV can be reached at 1-800-DIRECTV (347-3288).
Q: How long is this dispute likely to last?
A: It is impossible to answer this question accurately, although it is certainly possible that DirecTV will never carry the Sinclair stations in the future.
Q: Won't DirecTV just bring in another station from another market with the same programming?
A: Contracts, the law and FCC regulations severely restrict DirecTV’s ability to do this. Local TV station programming contracts generally provide for market exclusivity (including network primetime and sports programming). Additionally, programming Sinclair stations produce, such as local news, wouldn't be available from another, out-of-market station.
Q: Doesn't this punish the consumer?
A: Consumers have other means for obtaining the Sinclair stations, such as their local cable company, Dish Network, in some cases either Verizon FiOS or AT&T U-verse or over-the-air, and so, while we recognize and apologize for the inconvenience associated with switching providers, no significant detriment to the consumer will result from DirecTV’s failure to carry these stations.
Q: Wasn’t Sinclair given the airwaves by the government?
A: Sinclair has paid billions of dollars over time to purchase our TV stations and to be able to use the public airwaves. Additionally, each of our stations pays an annual fee to the government, so no the airwaves weren’t given to us for free.
Q: Isn’t this just about greed?
A: No. It’s about us being a publicly traded company that has a fiduciary responsibility to operate the company profitably. Given that we spend millions of dollars each year to buy and produce high-quality programming, it is only right and fair that satellite companies compensate us fairly for a portion of our cost, especially since they are re-selling our content to their subscribers. In addition, the inability to reach agreement with DirecTV is related to other material matters besides the amount we are to be paid.
Q: Won’t this cost get passed on to the consumer?
A: That is a question for DirecTV to answer. They may pass these costs on to their subscribers or they could choose just to reduce the profits they make. Alternatively, they could negotiate to reduce the fees they pay for programming which is far less popular than the programming provided by the Sinclair stations and for which, we believe they pay disproportionately high prices as compared to the amount being requested by Sinclair.