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Viacom Says DirecTV Users Lose 26 Channels in Impasse

July 10, 2012

Viacom Says DirecTV Users Will Lose 26 Channels in Impasse

A DirecTV employee performs a satellite installation at a customer's home in Bixby, Oklahoma. Photographer: Paul Taggart/Bloomberg

Viacom Inc. (VIAB:US) said an impasse in contract talks with DirecTV (DTV:US) may mean almost 20 million subscribers will lose access to 26 channels, including MTV, Nickelodeon and Comedy Central.

A blackout will occur at midnight tonight if the two sides don’t reach a new fee agreement, New York-based Viacom said in a blog posting yesterday. The companies may agree to keep talking past the deadline. Viacom is demanding DirecTV take its channels down during any continuation of talks, a DirecTV spokesman, Darris Gringeri, said in an e-mail.

The standoff marks the latest fee tussle between a pay-TV provider and programmer, after such fights have blacked out channels to millions of subscribers. Viacom said on its blog programs from its networks amount to 20 percent of viewers at El Segundo, California-based DirecTV, the largest U.S. satellite service. DirecTV says Viacom’s ratings are down.

“It has been inconceivable that any distributor could drop Viacom’s networks, mostly because of Nickelodeon,” Todd Juenger, a Sanford C. Bernstein & Co. analyst in New York, wrote in a note in June. “But ratings are down, often significantly, at networks representing 71 percent of Viacom affiliate fees.”

Viacom fell (VIAB:US) 1.6 percent to $46.86 at the close in New York. The Class B stock has gained 3.2 percent this year. DirecTV declined 0.3 percent to $48.69 and has climbed 14 percent this year.

Robert Mercer, a spokesman for DirecTV, said in an interview the 26 channels include nine high-definition versions of the 17 Viacom networks carried by the company.

Contract Talks

The parties have been negotiating for several months and extended their current seven-year agreement past the original June 30 expiration while talks continued, Viacom said.

Dish Network Corp. (DISH:US) last month replaced channels from AMC Networks Inc. (AMCX:US) on its system. Those channels include AMC, We TV, IFC and the Sundance Channel. The move by Dish cost those channels 14 million potential viewers.

In its own posting, DirecTV said Viacom is demanding a 30 percent increase in fees over the term of a new contract, amounting to more than $1 billion in additional costs. Viacom said its fees account for less than 5 percent of the satellite service’s programming expenses.

“The rate increase we’re asked for constitutes a few pennies per month per subscriber,” Mark Jafar, a Viacom spokesman, said in a telephone interview.

Viacom has enlisted some of its stars, including Comedy Central’s Daniel Tosh and Stephen Colbert, as well as Snooki from MTV’s “Jersey Shore” in a commercial urging DirecTV subscribers to petition the provider not to drop the shows.

To contact the reporter on this story: Kelly Blessing in New York at kblessing@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net


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Companies Mentioned

  • VIAB
    (Viacom Inc)
    • $71.61 USD
    • 0.14
    • 0.2%
  • DTV
    (DIRECTV)
    • $84.15 USD
    • -0.28
    • -0.33%
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