U.S. telecom behemoth AT&T, Inc. T and leading TV broadcaster TEGNA Inc. TGNA have finally reached a multi-year carriage agreement, following a 24-hour extension to the contract's initial Dec 4 expiration deadline.
This fresh contract puts an end to the potential blackout of TEGNA’s 46 local TV channels on DIRECTV and U-verse. The financial details of the deal have been, however, kept under wraps.
While TEGNA accused AT&T for not reaching a fair, market-based deal with the former, AT&T objected to the high fees demanded by TEGNA.
It is worth noting that AT&T has scaled up to the highest position in the U.S. pay-TV market with the purchase of DIRECTV for $48.5 billion. The deal has reached AT&T’s pay-TV customer count to 26 million.
Interestingly, part of the rationale behind AT&T’s DIRECTV purchase was to enhance its bargaining power while negotiating with TV-station owners. Given its solid base of 6 million U-verse TV customers along with DIRECTV’s 20 million satellite-TV customers, the company intended to lower its programming costs by attaining leverage over broadcasters like TEGNA in such negotiations.
Interestingly, television companies of late have been seeking higher prices for their programs, resulting in frequent channel blackouts for cable and satellite companies.
Notably, TEGNA had been involved in a similar retransmission tussle with satellite TV operator DISH Network Corp. DISH this year. After a roughly two-day blackout of TEGNA’s 46 local TV channels on DISH’s network in 39 markets across 33 states and the District of Columbia, the companies finally reached an agreement.
Meanwhile, AT&T recently renewed deals with TV-station owners Tribune Media Company TRCO and Media General Inc.
AT&T currently has a Zacks Rank #2 (Buy).
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