Bloomberg News

Viacom Says DirecTV Talks Are Now at ‘Impasse’

July 19, 2012

Viacom Inc. (VIAB:US), owner of MTV, Nickelodeon and Comedy Central, said program-fee talks with DirecTV stalled, signaling a longer blackout for 20 million subscribers who lost the pay-TV networks nine days ago.

“We’ve reached an impasse,” Denise Denson, executive vice president of content distribution at New York-based Viacom, said yesterday in a phone interview. “They’re not negotiating productively. I don’t see any end to this blackout.”

DirecTV said Viacom was misrepresenting the talks. The El Segundo, California-based satellite-TV provider said it had agreed on major points for a new fee agreement restoring the channels, and that an accord was close until Viacom demanded the movie channel Epix be included.

“Viacom insists that we carry the Epix channel at an additional cost of more than half a billion dollars,” DirecTV (DTV:US) said in a statement. “We know our customers don’t want to pay such an extreme price for an extra channel, they simply want the ones they had returned to them.”

DirecTV, the second-largest pay-TV provider in the U.S., pulled 17 standard-definition and nine high-definition Viacom channels on July 10 after the two companies failed to reach an agreement on a new contract. Since then, DirecTV customers have been without popular cable shows such as “The Daily Show” on Comedy Central.

DirecTV said on July 17 it was closer to restoring Viacom’s channels as talks continued. The company reiterated that view yesterday, calling Viacom’s characterization “completely inaccurate.”

Epix Channel

Viacom “made a proposal last night for our carriage of the 17 channels they pulled from DirecTV and we accepted all material terms for those channels, including an increase that was more than fair,” DirecTV said in the e-mailed statement.

Epix, a movie channel that Viacom’s Paramount Pictures started in 2009 with Lions Gate Entertainment Corp. (LGF:US) and Metro- Goldwyn-Mayer Studios Inc., has gained limited distribution on pay-TV systems. The three biggest, Philadelphia-based Comcast Corp., DirecTV and New York-based Time Warner Cable Inc. (TWC:US), don’t offer the channel.

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

‘Deny,’ ‘Delay,’

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

Viacom’s Denson said yesterday that DirecTV has spent little time on contract talks.

“They spend 10 minutes a day negotiating the deal,” Denson said. “That’s all the time they devote to this -- it’s deny, delay, deceive.”

Meanwhile, Viacom’s audience has shrunk 20 percent since the blackout began, estimates Todd Juenger, an analyst at Sanford C. Bernstein & Co. in New York.

Viacom Chief Executive Officer Philippe Dauman met with DirecTV CEO Mike White last week during Allen & Co.’s media conference in Sun Valley, Idaho, according to Denson. Over the course of a 30-minute talk, Dauman offered a compromise that White said he would consider, she said, declining to discuss specifics.

“Mike never called back,” Denson said.

To contact the reporters on this story: Edmund Lee in New York at elee310@bloomberg.net; 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

  • VIAB
    (Viacom Inc)
    • $84.35 USD
    • 0.34
    • 0.4%
  • DTV
    (DIRECTV)
    • $76.96 USD
    • 0.22
    • 0.29%
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