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DirecTV Files FCC Complaint Against Tribune

4/02/2012 4:07 PM Eastern

DirecTV filed a complaint with the Federal Communications Commission Monday, claiming Tribune Co. failed to negotiate in good faith after creditors of the broadcaster blocked what the satellite giant thought was a completed retransmission consent agreement.

Tribune pulled its 23 broadcast stations across the country from DirecTV on March 31. The blackout affects about 5 million DirecTV customers in large markets like Los Angeles, New York and Chicago.

"Two days prior to expiration of the existing carriage arrangement, the parties reached an agreement in principle for continued carriage," DirecTV said in the complaint. "The following day, however, Tribune reneged on that agreement. Tribune later confirmed that its management had been overruled by the hedge fund and investment bank creditors."

Tribune has been in bankruptcy court since 2008. Its biggest creditors include hedge funds and investment banks like Oaktree Partners, Angelo, Gordon & Co., JP Morgan Chase, Bank of America and Citibank.

"DirecTV negotiated with Tribune for months, only learning on the very eve of expiration that it had never been dealing with anyone who had the authority required under the [FCC] rules," the satellite giant said in the complaint. "Indeed, DirecTV still does not know with whom it should be speaking -- Tribune's CEO or its associated hedge funds and investment banks."

According to the filing, Tribune has sought FCC approval to transfer its broadcast licenses to a new entity that will eventually emerge in Tribune's reorganization. Three of its largest creditors -- JP Morgan, Angelo Gordon and Oaktree Partners -- will control 30% of the voting and equity interests.

But according to DirecTV, the FCC has not yet approved those transfers, meaning the hedge funds and investment banks have no current authority over Tribune's broadcast operations.

Tribune tried to clarify its position in a statement on April 1, claiming it "never had an agreement, handshake or otherwise, with DirecTV on Thursday, March 29 or any other day."

"To say differently is inaccurate and misleading," Tribune continued, adding that DirecTV has a long track record of similar types of actions.

DirecTV is asking the FCC to require Tribune to immediately negotiate in good faith, including appointing a negotiating team with the authority to reach an agreement and requiring Tribune to grant DirecTV an extension of at least one month to continue talks.

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