17 Viacom Channels To Be Dropped By DirecTV At Midnight Tonight, Unless Last Minute Agreement Is Reached

Jon Stewart and Stephen Colbert

If you scanned the headline of this story and thought "Didn't I read about this already?", there is a good reason for that. Less than two weeks after the very public battle between AMC Networks and the USA's second largest satellite provider Dish Network (that resulted in a still continuing blackout of AMC, IFC, and WE for Dish customers), DirecTV subscribers are now faced with a similar impending loss of popular channels.

One big difference between the two stories is sheer scale. AMC Networks only operates a few channels, which obviously doesn't amount to a gigantic loss in viewing choices for customers. Dish Network's subscriber base is also less than DirecTV and most of the bigger cable companies in the country. In today's scenario, over 20 million DirecTV patrons face losing access to 17 different channels, including fan favorites like Nickelodeon, MTV, and Comedy Central. The entire Viacom networks package is set to go dark at midnight tonight, barring a last minute agreement being signed.

As usual, the source of the impasse lies in the almighty dollar. DirecTV claims that Viacom is holding it up for an additional one billion dollars (that's billion with a B folks), and agreeing to such an increase would inevitably lead to a raise in rates for customers. Viacom is countering with the following arguments: 1. Viacom channels account for 20% of the service's viewership, while only receiving 5% of its programming fees, and 2. DirecTV is apparently offering them a lower rate than every single other TV provider in the nation.

These cases always effectively amount to a he said-he said back and forth, but if what Viacom is saying is true, their position sounds pretty reasonable. Then again, looking at it from the other perspective, one billion dollars is an ungodly amount of cash.

Who do you believe is more at fault here? DirecTV or Viacom?


- nickelodeon
- Comedy Central

Written by: msd85
Jul 10th, 2012, 8:38 am


Message Posted On Aug 30th, 2013, 6:20 pm
I say a pox upon both of them is what I say because they both are greedy.

Message Posted On Jul 10th, 2012, 4:29 pm
Lemmus is correct and clearly a 4:1 ratio is not sufficient either, assuming it's correct, but given the huge number of channels the have it seems pretty proportional to their percentage of the number of available "basic cable" channels so I'd not be surprised that it's close. The broadcast networks are clearly losing a percentage of viewers to the "basic cable" channels. Still, not all "basic cable" channels have the same draw of viewers so I suspect the number of viewers amongst the 17 channels is distributed quite differently but they are agreeing on them as a whole package. Let's not also forget that all Viacom channels have advertising revenue just like the broadcast ones so they can not ask a premium either but if the viewership goes down then not only does Viacom's revenue get reduced but their value to DirecTV decreases so DirecTV is taking a risk on a product they can not control and should thus not offer too full a percentage either. With HBO, Showtime, PPV events, etc. it's a direct compensation package unlike with Viacom so both are taking a risk but since viewership has increased they simply want more money but with no guarantee of future success so DirecTV should consider that when evaluating the request.


Level 39 (91%)
Points: 17879.2
Since: 08/Jul/10
Message Posted On Jul 10th, 2012, 11:44 am

You make some great points Lemmus, and had the information on the length of the new negotiating terms been available, I certainly would have included it in the article above. For what it's worth, I just read that the currently ending contract between the two groups was for seven years.


Level 2 (48%)
Points: 1
Since: 31/Jan/06
Message Posted On Jul 10th, 2012, 10:07 am

   Whether or not this is reasonable depends on whether this is an annual payment or a longer contracts. One billion dollars divided amoung twenty million patrons is $500 each.

   Where I live (Pacific North-West Canada), a "basic digital" cable package costs $70/ month. If you take 20% of that, you work out to about $170 per year. Assuming that Viacom's numbers are accurate, that's how much their channels would be worth in this market, though of course that income would be split between Viacom and DirecTV.

   So if this is a per annum cost, then that is is silly request, DirecTV could never fulfill it. On the other hand, if it's a ten year contract, then the numbers look resonable, or even low-balled. Obviously this is a simplistic comparision, but the point is that without more information no one can make a reasoned opinion about the deal.

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