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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Contract disputes between AT&T and local broadcast stations leave customers in the dark

Fans at CenturyLink Field cheer at the start of an NFL football game between the Seattle Seahawks and the Cincinnati Bengals, Sunday, Sept. 8, 2019, in Seattle. (Stephen Brashear / AP)

Every Sunday during football season, the Rappe family would look forward to watching Seattle Seahawks.

But when the Rappes tuned into Fox 28 on DirecTV on a Sunday earlier this year, they didn’t see cheering fans or Russell Wilson throwing a touchdown pass. Instead, they were met with a blank screen.

That’s because the Rappes are among hundreds of DirecTV customers across the region who were left in the dark as “retransmission consent” contract negotiations between AT&T – which owns DirecTV – and Northwest Broadcasting remain at a standstill.

The Rappes live in a rural area between Republic and Curlew in north-central Washington where they can’t receive local channels through an antenna or cable service. Their internet service – although functional – isn’t fast enough to stream video.

“We really depend on the channels we get and pay for through DirecTV,” Kathy Rappe said. “It’s frustrating when you want to watch a live football game, but have to watch it on another channel as a rerun.”

AT&T is also in a contract dispute with KHQ Inc., Cowles Montana Media and NBC Right Now, which resulted in a blackout of KHQ-TV on DirecTV last week, leaving customers without local news and sports.

“It’s only two channels, but they are pretty prominent channels. We’ve thought about switching (service) quite a few times, with not being able to watch the Seahawks in the past,” Kathy Rappe said. “DirecTV has had these little glitches and contract updates with different companies, but they’ve never lasted very long, maybe a few weeks. This has been going on for a long time.”

The retransmission consent negotiations with Cowles Montana Media, NBC Right Now and KHQ Inc. also resulted in a blackout of NBC affiliates in Yakima and Billings. Three additional stations, which are ABC and FOX affiliates in Montana, also were pulled from DirecTV’s channel lineup.

Retransmission consent is a process created by federal law under which cable and satellite companies negotiate with television stations for the right to carry the stations on their systems. Broadcasters receive retransmission consent fees – similar to a monthly licensing fee – from cable and satellite providers.

AT&T, which also owns AT&T TV Now and U-Verse, claims local television stations are to blame for channel blackouts and are using them as “a way to inflate their fees.”

“We remain disappointed to see Cowles Montana Media join Northwest Broadcasting and put our Spokane customers into the middle of negotiations by choosing to remove KHQ-NBC from their lineups,” the company said in a statement. “We had hoped to avoid any unnecessary interruption and asked Cowles Montana Media to keep KHQ-NBC available while we continue to negotiate. Cowles Montana Media has instead refused.”

Northwest Broadcasting owns KAYU-TV Fox 28 in Spokane.

KHQ Inc., NBC Right Now and Cowles Montana Media contend they didn’t pull their signal from DirecTV, but that the pay-TV provider is refusing to carry their stations amid negotiations for a new retransmission contract. The broadcaster’s previous contract with AT&T expired June 30.

The broadcast companies indicated in a statement they are asking to be treated fairly, with compensation based on programming popularity.

“Just because local channels are free, over the air with an antenna, it doesn’t mean satellite companies should have the right to resell our signal and charge customers for it without compensation,” a statement from KHQ-TV said.

KHQ-TV is a subsidiary of Cowles Co., which also publishes The Spokesman-Review.

Television stations can require cable or satellite companies to carry their stations for three years through what’s called a “must carry election.” KHQ Inc., NBC Right Now and Cowles Montana Media opted out of the “must carry election” so they could have the right to negotiate with pay-TV providers for compensation and network position.

NBC charges KHQ-TV to be an affiliate and the network can’t sustain services with only local advertising revenue to maintain its affiliation, said Patricia McRae, president of KHQ Inc. and Cowles Montana Media.

“When an agreement is up, you try to come to terms on rate increases. It sounds like it’s a huge giant increase, but we are not asking for anything more than we ask other cable providers,” said McRae, adding the station’s goal is to be good partners with AT&T. “We’re sorry that customers are caught in the middle, but if we can’t get to basic terms with this provider, our business will not be sustainable.”

McRae said KHQ’s blackout on DirecTV is a first for the local network, which always had successful contract negotiations in the past with pay-TV providers.

“We’ve always come to an agreement. We have never gone dark before and we want to get back on,” she said. “But, in the end, we want to have a sustainable business for us, too.”

Northwest Broadcasting President and CEO Brian Brady said in a July statement on KAYU-TV’s website that DirecTV – after a year of negotiations – insisted on changing a longstanding provision in their agreement and dictating terms on how the broadcast company can run its business and grow in the future.

Brady stated that Northwest Broadcasting offered AT&T an unconditional extension to keep stations on DirecTV during negotiations, but the pay-TV provider refused and pulled the stations from its lineup.

He said AT&T is the constant in an equation that has left subscribers without access, noting the company’s $85 billion acquisition of Time Warner Inc., which positions it as competition among local broadcast stations.

“For months, Northwest has tried to find a resolution to this standoff, usually without any response from AT&T/DirecTV,” Brady said in the statement. “It is clear that AT&T/DirecTV is working a strategy that is far bigger than getting a successful negotiation completed and giving their customers the stations back they want. It has become clear over the last couple of months that they have no intention of getting this done.”

In a statement, AT&T claimed Northwest Broadcasting “is a serial blackout artist, notorious for cutting off service to its most loyal viewers, regardless of their provider, typically days or even hours before the most popular events.”

AT&T resolved carriage disputes in July with CBS to bring back local channels in 17 markets after a three-week blackout as well as last month with Nexstar Media Group Inc. to restore 120 stations in 97 markets nationwide.

Walt Disney Co. issued a warning to AT&T’s U-verse and DirecTV customers during a recent Monday Night Football game that they could lose ABC, ESPN, the Disney Channel and Freeform if the companies fail to agree on financial terms once their current contract expires at the end of the month.

With no end in sight for contract resolutions between AT&T and local broadcast stations, subscribers have created a petition to restore Northwest Broadcasting stations. To date, more than 500 people have signed the petition, which has a goal of 1,000 signatures.

For the Rappe family, changing satellite service providers is “up in the air.” In the meantime, they plan to spend time doing other activities during Seahawks games to avoid score updates until they can watch a replay of the game.

“We’ve been loyal DirecTV customers for 20 years, and I don’t want to have to learn a new programming remote and don’t want to give up on DirecTV totally, but it depends,” Kathy Rappe said. “If it goes on too much longer in the football season, we may change.”