• by Karlene Lukovitz  @KLmarketdaily, December 5, 2022

After loud public saber-rattling by Fox and pooh-poohing by DirecTV last week, the companies reached a multiyear agreement on Saturday, after extending their Friday deadline to continue negotiations. 

As usual in carriage renewal negotiations, the terms were not disclosed.

However, DirecTV, which is owned by AT&T and private equity firm TPG, released a statement asserting: “As expected, we renewed with Fox without affecting the entertainment experience for our customers, while still holding the line against the usual scare tactics.”

The renewal means continued access to F1, F2, Big Ten Network, Fox Deportes and Fox Soccer Plus, and retransmission consent for local Fox TV stations in 18 markets, for DirecTV satellite, DirecTV Stream and U-verse subscribers.

Last Sunday, Fox began using a crawl across its Big Ten, FS1 and Fox News networks (although Fox News was not part of the DirecTV deal) — to tell viewers that DirectTV subscribers could lose access to Fox networks if a renewal with DirecTV could not be reached. Fox accused DirecTV of demanding “unprecedented special treatment that represents a wholesale change to our longstanding relationship and is out of step with marketplace terms.”

With the ballooning costs of distribution rights to key sports driving up both traditional pay-TV and streaming services, liberal not-for-profit Media Matters for America last week ran a campaign urging  DirecTV subscribers to pressure DirecTV to reject any significant hike from Fox in these latest negotiations. 

“Fox Corp., the same Murdoch-run company behind Fox News, is up to dirty tricks yet again — trying to force DirecTV to raise rates on consumers, and holding sports channels hostage to do it,” Angelo Carusone, president of Media Matters, charged in a release announcing the campaign. “For years, the Murdochs have used heavy-handed and deceitful tactics to pit consumers against cable companies so that Fox Corp. can profit and resist any outside accountability.” 

Last month, a group of YouTube TV subscribers filed a proposed class action against The Walt Disney Company, alleging that Disney leveraged its ownership of sports giant ESPN and live streaming provider Hulu to made anticompetitive deals with YouTube and other direct competitors in the livestreaming sector that have resulted in their YouTube TV subscription prices nearly doubling.  

The Fox/DirecTV negotiations took place during a peak sports period for Fox, including the World Cup tournament and the Big Ten championships, as well as the NFL. 

During last month’s quarterly earnings report, Fox CEO Lachlan Murdoch told investors that the company expects a “tailwind” from carriage fee increases resulting from a three-year cycle of affiliate renewals now beginning. 

Carriage deal revenue is reported as part of affiliate revenue. In fiscal 2022, affiliate revenue accounted for 49% of Fox’s total revenue of $14 billion — more than advertising, notes Deadline. 

Fox hasn’t actually carried through with a blackout since 2019, when Dish Network stations went dark for 10 days. 

However, it has frequently threatened blackouts, including during a negotiations dispute with Altice in October.