$2.7B Local TV deal could help Tribune extract increased retrans fees from pay TV providers

DirecTV (Nasdaq: DTV), Comcast (Nasdaq: CMCSA) and other national pay TV providers may face more challenging retransmission-consent negotiations with Tribune Co., which agreed Monday to buy station group Local TV Holdings for $2.73 billion in cash.

Tribune boasted that the deal will make it the biggest commercial broadcaster, with 42 stations including 14 stations in the top 20 markets. Tribune has been aggressive in its push to extract increased retransmission-consent fees from cable and satellite providers. The Local TV deal could give it more leverage with distributors, as it will be able to use the threat of station blackouts that could impact millions of pay TV subscribers.

Chicago-based Tribune was more subtle about how the acquisition could impact distributors in Monday's announcement. "The acquisition will also lead to more meaningful conversations with affiliates about distribution," the company said, adding that the deal will "translate into increased cash flow and, ultimately, greater shareholder value."

Last fall, Tribune pulled its stations from Cablevision (NYSE: CVC) for more than two months, until the MSO agreed to a new contract containing increased retransmission-consent fees. The broadcaster blacked out DirecTV subscribers during a dispute that last four days in 2012. In April, the company named Comcast and NBCUniversal veteran Dana Zimmer president of distribution.

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