Direct TV loses 17 channels
Nickelodeon, MTV, VH1, Comedy Central and other cable channels owned by Viacom were taken off of DirecTV’s lineup early Wednesday morning, beginning a channel blackout that has angered viewers across the United States.
The two companies are blaming each other for the blackout, which came amid a dispute over a new carriage contract for the Viacom-owned channels. About 20 million households are affected, representing one-fifth of all the United States subscribers to cable or satellite television service.
The blackout took effect around midnight. It is unclear when the channels will be restored. Michael Nathanson, a media analyst for Nomura, said in a note to investors Wednesday morning that he and his colleagues wouldn’t be surprised if the blackout lasted one to four weeks. However, he said, “we expect Viacom to ultimately receive a significant step-up” in the amount of money it receives from DirecTV for the right to carry its channels.
That’s what the two companies are feuding over: the amount of money DirecTV will pay for Nickelodeon, MTV and other staples of the American channel lineup. Such negotiations between companies usually take place in private and are resolved without any interruptions in programming. But this one spilled into public view late Monday night when Viacom said the two companies had “reached an impasse.”
DirecTV said in a statement early Tuesday morning that it had offered Viacom “increased fees for their networks going forward; we just can’t afford the extreme increases they are asking for.” DirecTV characterized Viacom’s request as a 30 percent increase, equivalent to “more than a billion dollars extra.” Viacom countered by saying that its current deal was seven years old.
The deal involves 17 channels, including big ones like Nickelodeon and Comedy Central and a set of smaller ones like VH1 Classic, Logo, Tr3s, Centric and Palladia. On DirecTV lineups, they have been replaced by what are called “mix channels,” alternatives that have similar content (but not the same shows) as the Viacom channels did.
“We proposed a fair deal that amounted to an increase of only a couple pennies per day, per subscriber, and we remained willing to negotiate that deal right up to this evening’s deadline,” Viacom said in a statement shortly after midnight Eastern time. “However, DirecTV refused to engage in meaningful conversation. We are hopeful that DirecTV will work with us toward a resolution and stop denying its subscribers access to the networks they watch most.”
DirecTV, in a competing statement, asserted that it tried hard to get Viacom to continue to negotiate, but “never heard back” from the company.
“We have been very willing to get a deal done, but Viacom is pushing DirecTV customers to pay more than a 30 percent increase, which equates to an extra $1 billion, despite the fact that the ratings for many of their main networks have plummeted and much of Viacom’s programming can be seen for free online,” a DirecTV executive vice president, Derek Chang, said in the statement.
He added, “We have absolutely no problem compensating Viacom fairly, but they have now knowingly put our customers in the unreasonable position of either accepting their extravagant financial demands or losing some of their favorite TV shows,” said Mr. Chang. “We feel our customers should not have to pay more for these networks than the customers of any other TV provider. We reiterated this to Viacom today and have not heard back from them.”
The actual contract between DirecTV and Viacom expired on June 30, but was extended 10 days as negotiations progressed.
DirecTV, for its part, tried to downplay the significance of the blackout by noting the time of year that it was happening. “Kids are off school and headed outdoors,” it stated on one of its Web sites Tuesday, “the Summer Olympics are on the horizon, and many of us are on vacation.” Oh, and “Viacom doesn’t have all that much original programming this summer.”
The distributor correctly noted that most blackouts, when they do happen, don’t last very long because customers pressure the companies involved to come to a new agreement. To that end, the names of both companies were “trending topics” across the United States on Twitter on Wednesday morning after the blackout commenced.
Latest response from DirecTV
This would certainly not happen for Cablevision viewers during a dispute:
Originally Posted by PlumberKhan
To thank you for your patience until Viacom channels are returned, all eight Encore Channels (including Encore Family) will be made available to all customers thru July 31st. Tune to Channels 535 to 542 to start watching.
Remember that Viacom forced us to remove Nickelodeon, MTV, Comedy Central and 14 other networks or face legal action. We expect the channels to return soon and are doing everything we can to get them back on air without an unfair increase to your bill.