Analysts believe that Viacom will ultimately get a fee hike of around 27 percent -- almost in line with the 30 percent boost that DirecTV says Viacom is requesting.
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DirecTV’s seven-year contract with Viacom Inc. expired midnight Tuesday, meaning that customers are without 17 channels, including Nickelodeon, MTV and Comedy Central, Reuters reports.
According to the report, DirecTV executives had approached Viacom with a new proposal and a request to continue broadcasting the channels while talks continued. They did not get a response.
DirecTV has nearly 20 million subscribers, making it the largest U.S. satellite TV provider. Satellite TV providers pay a fee to media companies, like Viacom, that allows them to carry channels like Nickelodeon and Comedy Central.
“In the last seven years since we did the last DirecTV deal, we have successfully and peacefully concluded affiliate agreements with every major distributor in the U.S.,” Viacom CEO Philippe Dauman told reporters at a conference in Idaho this morning. “We are prepared to move forward. It’s unfortunate consumers, for the first time, are not able to enjoy our channels.”
This stalemate between the media company and the satellite TV provider comes less than two weeks after AMC Networks, the company behind Breaking Bad and Mad Men, was removed from the Dish Network lineup, because the two companies were unable to reach a new contract.
The purchase of television programs is the single biggest cost for distributors, who have fought back in recent years against what they consider unreasonable “carriage fee” increases by content producers like Viacom, Reuters reports.
“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,” DirecTV Executive Vice President Derek Change said in a statement.
Companies such as Viacom usually bundle their networks together, which forces distributors to carry lower-rated networks, such as Nick Jr., along with more popular channels such as MTV.
This practice has led to debate in the industry about unbundling networks, which would allow customers to choose only the channels that they want to watch.
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