Viacom Channels Go Dark on DirecTV
Viacom Inc. (VIA, VIAB) channels–including Nickelodeon, MTV and Comedy Central–went dark for DirecTV Group Inc. (DTV) subscribers overnight after the two sides failed to come to an agreement on programming fees.
The dispute highlights intensifying friction between content companies and pay-TV distributors over costs of programming, as cheap online-video offerings like Netflix Inc. (NFLX) provide alternatives to traditional pay-TV packages.
The blackout also comes as Viacom has seen its ratings decline recently for top shows like Nickelodeon’s “SpongeBob SquarePants” and MTV’s “Jersey Shore.” While fee disputes are common in the pay-TV industry, this one is significant because it pits one of the nation’s largest cable operators against the country’s second-largest pay-television operator, with about 20 million subscribers.
In a blog post late Tuesday, Viacom said it had offered DirecTV a “fair deal” on rate increases, amounting “to an increase of only a couple pennies per day, per subscriber.”
DirectTV, meanwhile, said in its own statement that it had been “very willing to get a deal done” but criticized what it described as a 30% rate increase–equal to around $1 billion–demanded by Viacom. DirecTV also noted that Viacom was seeking the increase at a time when ratings at many of its top networks are sinking and as it gives away much of its content online.
Viacom, meanwhile, has said DirecTV benefited from “way below market rates” in its seven-year-old deal with the content company, a contract that is “ancient by the standards of the ever-evolving media industry.” According to Viacom, DirecTV has offered a rate that is lower than Viacom receives from any other TV distributor.
Signs of the dispute emerged publicly Monday night as both parties attacked each other in blog posts and on affiliated websites, a common tactic in such disputes
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