DirecTV’s 20M customers have their MTV – and 16 other Viacom channels – again. The companies said this morning that they’ve resolved their 10-day contract dispute, which took more channels from more consumers than any other fight so far between a pay TV distributor and programmer. That will come as a relief to DirecTV customers who are fans of channels including Nickelodeon, Comedy Central, BET and Spike. Investors also will be glad to see an end to what many feared could have become an extended black out that might trash both companies’ earnings. In addition, Hollywood moguls will be pleased: Several have told our Nikki Finke that they’ve found it hard to promote movies while Viacom’s youth-oriented channels have been dark in so many homes.
The companies provided little information about the terms. Viacom says the deal is “long-term” and includes “an option [for DirecTV] to add the EPIX service to its entertainment offerings.” Viacom co-owns the premium movie channel with Metro-Goldwyn-Mayer and Lionsgate. DirecTV says EPIX carriage “is not required as part of the new agreement” — but that satellite customers will “gain the ability to see Viacom programming on tablets, laptops, handhelds and other personal devices via the DIRECTV Everywhere platform.” Viacom had been looking for a substantial increase in DirecTV’s payments coupled with high single digit percentage annual increases over the life of the deal.
The resolution comes less than two days after a Viacom exec said that negotiations had stalled, and that there was no end in sight to the showdown. Both companies were looking to send a signal to the marketplace: Viacom’s shareholders are counting on it to secure big increases in distributor payments at a time when ratings – and therefore ad sales – have steeply declined for channels including Nickelodeon and MTV. Indeed, DirecTV questioned the value of paying a higher price for Viacom’s channels as the audience declined. But DirecTV also needed to show that it would hold the line on programming costs. DirecTV EVP Derek Chang said the fight “serves notice to all media companies that bullying TV providers and their customers with blackouts won’t get them a better deal.” It’s especially sensitive to programming prices because video accounts for almost all of its sales. Cable operators often can compensate for additional programming expenses by raising prices for other popular services including broadband and phone connections.
Viacom appeared to have been hurt most by the impasse. Its shares fell 2% over the period. Live, full day ratings in the target demos for its channels were down 27% in the week that ended July vs the same week last year – the previous week, before the loss of DirecTV, they were -14%. But DirecTV, whose shares were off less than 1% in the 10 day period, could have suffered more long-lasting damage if the dispute dragged on. The fear was that fans of the Viacom services might begin to switch to Dish Network or cable – or simply not sign with DirecTV in the first place.
Here’s Viacom’s statement, followed by DirecTV’s:
All 26 Viacom Networks, Including Nickelodeon, Comedy Central, MTV, BET, CMT, Logo, Spike, TV Land, MTV2, VH1, VH1 Classic, Palladia, Nick Jr., Nicktoons, TeenNick, Tr3s and Centric, to Return to DIRECTV Immediately
All 26 Viacom networks, including Nickelodeon, Comedy Central, MTV, BET, CMT, Logo, Spike, TV Land, MTV2, VH1, VH1 Classic, Palladia, Nick Jr., Nicktoons, TeenNick, Tr3s and Centric, will return to DIRECTV’s channel lineup immediately. As part of the overall carriage agreement, DIRECTV has an option to add the EPIX service to its entertainment offerings.
Viacom is extremely pleased to bring its programming back to DIRECTV subscribers, and thanks everyone affected by the disruption for their patience and understanding during this challenging period.
EL SEGUNDO, Calif., July 20, 2012 – DIRECTV has reached a new long-term agreement with Viacom to restore 17 channels (including Nickelodeon, Comedy Central, MTV, BET, Spike, CMT, TV Land and ten other channels) that Viacom had taken away from DIRECTV customers on July 10. Viacom has returned all affected networks.
Financial terms were not disclosed.
In addition to the channels’ return, DIRECTV customers will also gain the ability to see Viacom programming on tablets, laptops, handhelds and other personal devices via the DIRECTV Everywhere platform. Carriage of the EPIX movie channel is not required as part of the new agreement.
“We are very pleased to be able to restore the channels to our customers and thank them for their unprecedented patience and support,” said Derek Chang, executive vice president of Content Strategy and Development for DIRECTV. “It’s unfortunate that Viacom took the channels away from customers to try to gain leverage, but in the end, it’s clear our customers recognized that tactic for what it was.”
Chang added, “The attention surrounding this unnecessary and ill-advised blackout by Viacom has accomplished one key thing: it serves notice to all media companies that bullying TV providers and their customers with blackouts won’t get them a better deal. It’s high time programmers ended these anti-consumer blackouts once and for all and prove our industry is about enabling people to connect to their favorite programs rather than denying them access.”
The dispute helped generate significant public support from hundreds of thousands of customers and also, surprisingly enough, many high-profile DIRECTV competitors. The 850 small and independently owned local cable systems that make up the American Cable Association joined the anti-blackout chorus, as did Cox Communications, Time Warner Cable and Mediacom.