Viacom, DirecTV End Carriage DisputeDirecTV calls programmers 'bullies' for causing blackouts 7/20/2012 07:47:16 AM Eastern
Updated 11:25 a.m. ET
Viacom and DirecTV have reached an agreement, ending a nasty
week-long dispute that had blacked out channels including Nickelodeon, MTV and
Comedy Central to DirecTV subscribers.
Financial terms were not disclosed, but DirecTV said the
resolution showed that programmers who try to bully distributors with blackouts
won't get better deals.
DirecTV says the agreement will enable its customers to see
Viacom programming on tablets, laptops, and other personal devices on what it
calls the DirecTV Everywhere platform.
It added that carriage of the Epix movie service -- a joint
venture of Viacom and several movie studios -- is not required. Viacom said
DirecTV has an option to add the Epix service to its entertainment offerings.
"We are very pleased to be able to restore the channels to
our customers and thank them for their unprecedented patience and support,"
Derek Chang, executive VP of content strategy and development for DirecTV, said
in a statement. "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 that "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
Analyst Michael Nathanson of Nomura Securitas said he
thought Viacom secured subscriber fee increases above its Most Favored Nation
Clauses in contracts with other distributors.
Nathanson calculates that Viacom will get payments of about
$280 per sub in its new deal with DirecTV, compared to $2.25 per sub in the
expired agreement. He estimates that Viacom gets about $3 per sub from other
"The deal is consistent with the company's prior guidance
for affiliate fee growth of high-single to low-double-digit growth," Nathanson
said in a report. "The unknown to us is if Viacom receives the return to market
rate all in the first year or if it is spread out over a few years. If the
step-up was all in the first year, our total domestic affiliate fee revenue
growth would increase to over 10% Y/Y in FY13, above our current 8% Y/Y
On a broader note, Nathanson says, "this deal reinforces the
power of Viacom's networks and brands, especially in the face of weak
short-term ratings. It also helps set the template for future deals and debunks
the bearish thesis of dropping any networks or not having enough clout over
distributors given recent concerns over Nickelodeon ratings."
"While [Viacom] may be somewhat disappointed by a
conspicuously futile attempt to secure carriage of its Epix JV premium channel,
we see some relief on resolving an impasse that was significantly impacting
some ratings issues, added Tuna Amobi, equity analyst at S&P Capital IQ.
In its brief release, Viacom said it was "extremely pleased
to bring its programming back to DirecTV subscribers, and thanks everyone
affected by the disruption for their patience and understanding during this