Bloomberg News

DirecTV Says It’s Closer to Deal With Viacom

July 18, 2012

DirecTV (DTV:US) is closer to restoring Viacom Inc. (VIAB:US)’s 26 channels, including MTV, Nickelodeon and Comedy Central, as discussions between the two sides continue, according to the satellite-TV provider’s head of content.

“There’s been progress,” Derek Chang, DirecTV’s executive vice president of content, strategy and development, said yesterday in a phone interview. “We’ve been getting closer. We would love to be done with this thing, but we have to do it in a way that we can protect our customers.”

DirecTV, the largest U.S. satellite-TV provider, lost 17 standard-definition and nine high-definition channels from Viacom on July 10 after the two sides failed to reach an agreement on a new contract. Viacom demanded the networks be dropped and threatened to sue El Segundo, California-based DirecTV if it didn’t comply, Chang said.

Viacom is asking for a 30 percent rate increase over the term of the new contract, Chang said, amounting to more than $1 billion in additional costs. DirecTV has forecast that its total programming expenses will rise almost 10 percent this year.

Viacom has countered by saying its fees account for less that 5 percent of the satellite service’s programming expenses.

Viacom began offering new episodes of “The Daily Show” and “The Colbert Report” on the Web yesterday after pulling some of its online programming last week. The New York-based company said in a blog posting that the decision was meant to be “helpful to our fans with DirecTV.”

Back on TV

“We’re happy Viacom has put programming back on the Internet because it allows our viewers to watch those shows,” Chang said. “But clearly we want to get the programming back on TV at a reasonable price.”

Mark Jafar, a Viacom spokesman, declined to comment.

DirecTV rose 1.2 percent to $48.78 yesterday in New York trading. The shares have climbed 14 percent this year. Viacom’s Class B stock (VIAB:US), up 3.4 percent to $46.96 in 2012, was little changed yesterday.

DirecTV isn’t the only pay-TV broadcaster locked in a contract dispute. Dish Network Corp. failed to reach an accord with AMC Networks Inc. and replaced its channels on June 30, affecting 14 million customers.

Time Warner Cable Inc. (TWC:US), the second-largest U.S. cable provider, voiced support for DirecTV and Dish in a statement yesterday, saying television networks were demanding “huge price increases.”

“We will continue to stand up for consumers against programmers’ outrageously large price increases that serve no purpose other than to line network pockets at our customers’ expense,” the New York-based company said.

To contact the reporter on this story: Alex Sherman in New York at asherman6@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net


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Companies Mentioned

  • DTV
    (DIRECTV)
    • $86.45 USD
    • 0.36
    • 0.42%
  • VIAB
    (Viacom Inc)
    • $81.15 USD
    • 0.38
    • 0.47%
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