Viacom, AT&T Talks Continue Nearly Two Days After Contract End – Update

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UPDATE at 5:45PM PT: Viacom and AT&T are still at the negotiating table trying to hammer out a new carriage deal, nearly two days past the expiration of the previous contract, people familiar with the talks are telling Deadline this evening.

One sign possibly pointing to a resolution is that Viacom has stopped running the crawl on its channels warning of an imminent blackout. It’s unclear if that means for certain that a deal is imminent, but had talks truly gone south the networks would have already gone dark. At stake are some 24.5 million households across DirecTV satellite systems and U-Verse cable.

Sources had indicated Saturday morning that a deal looked to be in the offing, but then 24 hours passed without any update, a sign of the degree of complexity and delicacy of the talks.

PREVIOUSLY: Viacom and AT&T remain in carriage negotiations but have failed to reach an agreement before the expiration of their current carriage deal at midnight on the East Coast. The signals of 23 Viacom networks have not gone dark yet across DirecTV and U-Verse, an outsized chunk of the pay-TV universe, but they will unless a new deal can be put in place.

The high-stakes dispute follows the consequential step last week by AT&T to eliminate some Viacom channels as well as offerings from Discovery, A+E Networks and AMC Networks, from its “skinny-bundle” service, DirecTV Now. Cutting those networks from the newly configured basic tier of DirecTV Now was widely interpreted as a judgment of Viacom’s viability in the rapidly evolving TV ecosystem. Although the company once controlled some of the most valuable properties in the media business, the disruption of digital content and streaming has eroded ratings on many networks across the dial. Programmers like Viacom, whose lineups lack must-see live fare like sports or news, find themselves with less clout in carriage talks.

Battling those headwinds, Viacom CEO Bob Bakish has worked diligently since getting the top job in December 2016 to repair distribution relationships that had deteriorated under his predecessor, Philippe Dauman. He successfully worked out renewals with Charter, Altice and other major operators, and Viacom has not suffered a blackout since 2014. The value of AT&T carriage in terms of fees and advertising has been estimated at $2 billion by Wall Street analysts.

Across the aisle at AT&T, the mission is to cut costs as the company looks to pay down debt associated with its $81 billion acquisition of Time Warner. DirecTV remains the No. 1 satellite operator in the U.S., but it is continuing to lose subscribers, in keeping with industrywide cord-cutting trends. Its internet-delivered offshoot, DirecTV Now, came out of the gate strong after launching in 2016, but has also recently shed subscribers. Its reset with two streamlined packages, at $50 and $60 a month, puts it in a higher bracket than some competitors. Management has warned that subscriber losses for DirecTV Now could continue in the next quarter or two. But many Wall Street analysts see the upside of shaving programming costs.

“We’ve got to get the content cost growth in line with what the customer is willing to pay,” AT&T CEO Randall Stephenson said during AT&T’s fourth-quarter earnings call in January. “And the customer is willing to pay virtually no additional money right now. So the content costs have to reflect that. We will be very assertive as we go through the course of this year to control the spend on content costs.”

Given the urgency of each company’s agenda, it was hardly surprising that the dueling statements issued by each party were quite pointed. The AT&T-Time Warner deal gave Viacom another card to play. As Dish Network recently has in its still-unresolved impasse with HBO, Bakish’s troops have invoked the merger as an unfair, anti-competitive element.

“Unfortunately, AT&T is abusing its new market position by favoring its own content – which significantly underperforms Viacom’s – to stifle competition,” Viacom alleged earlier this week. AT&T shot back by calling Viacom a “serial bad actor.” It bluntly alleged that “several of Viacom’s channels are no longer popular. Viacom’s channels in total have lost about 40% of their audience in the past six years.”

This article was printed from https://deadline.com/2019/03/viacom-att-pass-midnight-deadline-with-talks-to-avoid-blackout-continuing-1202580792/