DirecTV is having disagreements with Viacom Inc., which may result in DirecTV subscribers losing access to shows like The Jersey Shore, SpongeBob Squarepants, The Daily Show With Jon Stewart, and The Colbert Report.
In a blog post from Viacom’s website, spokesperson Mark Jafar wrote that despite Viacom’s “best efforts,” DirecTV rejected proposals to renew their contract. Almost 20 million DirecTV customers will no longer have access to Viacom’s 26 channels including MTV, Nickelodeon, and Comedy Central unless a new deal is struck by midnight.
Lately media companies and cable/satellite TV companies have been sparring over the cost of content. The cable/satellite TV companies have to pay a fee to media companies that lets them carry channels like MTV and Comedy Central. These programming costs are the largest for distributors.
For example AMC Networks, the company that has “Breaking Bad,” “Mad Men,” and “The Walking Dead” was removed from Dish Network on July 1st after the two companies could not reach a new contract. Viacom is currently in the process of negotiating a new deal to replace their current seven year contract after it expires.
Viacom Chairman Sumner Redstone said that the contract they have with DirecTV is “ancient by the standards of the ever-evolving media industry – which means that DirecTV has enjoyed way below market rates for Viacom’s networks for a very long time.” DirecTV said that Viacom is insisting to be paid 30% more (around a billion extra dollars) for the same programming.
“If Viacom wants so much more, then we believe your family needs to be able to choose which Viacom networks you want to pay to keep and which ones you don’t,” said DirecTV in a question and answer section on their website.
“To be clear, we have offered Viacom increased fees for their networks going forward; we just can’t afford the extreme increases they are asking for,” said DirecTV.
This is the second time that a distributor threatened to black out Viacom’s channels because of a contract dispute. In 2004, Dish Network dropped Viacom’s cable networks after the two failed to reach an agreement. After citing the popularity of Viacom’s channels, BTIG analyst Richard Greenfield noted that the black out lasted only 46 hours before Dish caved in to Viacom’s demands.
“It will be interesting to see whether DirecTV’s [CEO] Mike White wants to go to war with Viacom and make the same mistake Charlie Ergen made 8 years ago. Hard to imagine DirecTV without Nick and Nick Jr.,” said Greenfield in a blog post.