Dauman Says DirecTV Deal Terms Better After Blackout

Viacom upfront tops $2.8B

By Jon Lafayette -- Broadcasting & Cable, 8/3/2012 10:21:38 AM

Viacom CEO Philippe Dauman says the company got a better deal from DirecTV after a bruising negotiation that left Nickelodeon, MTV and other channels blacked out for nine days.

Dauman also said that Viacom completed its upfront, with sales hitting $2.8 billion.

Speaking during Viacom's earnings conference call with analysts, Dauman called the DirecTV negotiations a success. "In fact, the deal we ultimately signed was materially better for Viacom than the deal what was on the table at the time that DirecTV made the unfortunate decision to drop our networks," he said.

According to Dauman, the DirecTV deal calls for an initial rate increase of "significantly more" that 20% and "healthy annual increases in excess of those we had in the expired deal for the remainder of the seven-year term."

The new DirecTV deal will contribute to double-digit growth in domestic affiliate revenues in the quarter ending in September, he said.

The deal also called for increased carriage of NickToons and some high-definition channels domestically, carriage of Viacom networks in Latin America, and the availability of Paramount movies on video on demand on DirecTV.

Terms for carrying Viacom's joint venture premium service Epix were agreed to, but it's up to DirecTV whether or not to carry Epix.

"In short we are extremely pleased with our DirecTV agreement and only disappointed that so many of our viewers were deprived of their favorite channels for nine long days," Dauman said.

Viacom reported a 7% drop in domestic advertising revenue in the third quarter and said that the DirecTV interruption will reduce as revenue growth by 1.5% in the current quarter. Despite that, the company is expecting sequential improvement in ad revenue growth.

Despite ratings issues at many of its channels, Dauman also said he was pleased with the results of Viacom's upfront negotiations.

"Overall our total upfront dollars were more than $2.8 billion up from last year. And we secured solid mid-single increases in pricing," he said.

Dauman did not specify how big Viacom's volume increase was. Industry sources say that volume for the cable upfront was up 4-5%. Other cable programmers were reporting price increases in the mid to high-single digits.

At Nickelodeon, which had to issue make goods during the Christmas season because of a sudden double digit ratings shortfall, Dauman said. "We were able to main the same share of the kids' upfront volume as last year."