Bloomberg News

AT&T Settles Suit Over Refusal to Carry Al Jazeera

June 10, 2014

AT&T Inc. (T:US) settled a lawsuit over its refusal to carry Al Jazeera Satellite Network’s U.S. cable-news channel on its pay-television service.

The accord will allow Al Jazeera America onto AT&T’s U-verse pay-TV service as part of the settlement, said two people familiar with the agreement who asked not to be identified because the terms were private. The details weren’t outlined in court filings yesterday in Delaware Chancery Court in Wilmington.

The deal underscores the growing importance to TV distributors of programming networks, even new ones such as Al Jazeera America. The nascent cable news network has faced challenges gaining an audience in the U.S., partly because Americans remember the channel as the forum for Osama bin Laden’s video messages after the Sept. 11, 2001, terrorist attacks.

AT&T agreed in May to buy satellite provider DirecTV (DTV:US) for $48.5 billion, an acquisition that could quickly turn the company into one of the largest TV distributors in the U.S. AT&T currently has about 5.7 million TV subscribers. If the acquisition passes regulatory review the company can add DirecTV’s 20.3 million U.S. customers to its TV business.

AT&T and Al Jazeera said in court filings they were dismissing “all claims” and paying their own litigation expenses. Larry Solomon, an AT&T spokesman, declined to comment on the settlement, as did Dawn Bridges, a spokeswoman for Al Jazeera America.

In a June 4 court filing, the companies told Delaware Chancery Court Judge Sam Glasscock they had “reached a settlement in principle” and anticipated they would be dismissing their claims.

Contract Dispute

The accord doesn’t resolve challenges by Bloomberg News, the New York Times (NYT:US) and other media outlets to the refusal by AT&T and Al Jazeera to make public terms of the contract dispute that prompted AT&T to bar the cable channel from debuting on its system last year.

Al Jazeera sued AT&T in August, alleging the phone provider violated contracts by refusing to allow the broadcaster’s new channel on its cable-TV network.

Gore’s Current TV

The network, controlled by the Qatari royal family, paid $500 million for former U.S. Vice President Al Gore’s money-losing Current TV and rebranded it. Buying Gore’s channel gave Al Jazeera America access to about 43 million U.S. homes, almost half of the nation’s pay-TV households.

Al Jazeera hired big-name personalities such as former CNN anchors Soledad O’Brien and Ali Velshi to help build its U.S. brand. Programs include “Real Money” with Velshi and the current affairs show “Consider This” with former CBS News correspondent Antonio Mora.

AT&T, based in Dallas, said its decision not to run Al Jazeera was prompted by a failure to settle disputes over contract terms.

Al Jazeera argued in court papers that AT&T’s contract claims were a pretext and the cable provider banned the Qatari broadcaster’s channel to avoid a backlash in conservative states such as Texas.

Al Jazeera blacked-out many of the contract terms at issue when it filed its lawsuit, prompting reporters for Bloomberg News and the Associated Press and a stringer for the New York Times to challenge the removals. AT&T also redacted those terms in its court filings.

Redacted Contract

Glasscock concluded in October that AT&T and Al Jazeera wrongfully kept secret key terms of the contract dispute and ordered the companies to release most of the information. On May 30, the Delaware Supreme Court dismissed Al Jazeera’s appeal of Glassock’s ruling.

Still, lawyers for the Qatari broadcaster are asking Glasscock to let it withdraw the redacted complaint from court records. That would allow Al Jazeera and AT&T to keep the disputed terms private. The judge has agreed to hear arguments on the request.

The case is Al Jazeera America LLC v. AT&T Services Inc., CA 8823, Delaware Chancery Court (Wilmington).

To contact the reporters on this story: Jef Feeley in Wilmington, Delaware at jfeeley@bloomberg.net; Edmund Lee in New York at elee310@bloomberg.net

To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net; Sarah Rabil at srabil@bloomberg.net Peter Blumberg


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