26 Viacom properties including Comedy Central, MTV, Nickelodeon, CMT, Logo, and BET, have gone dark for DirecTV's 20 million subscribers after both sides failed to reach an agreement over carriage fees.
According to a statement released by DirecTV shortly after midnight, Viacom is looking to increase fees by up to 30% — over $1 billion. "We have absolutely no problem compensating Viacom fairly, but they have now knowingly put our customers in the unreasonable position of either accepting their extravagant financial demands or losing some of their favorite TV shows," said DirecTV exec VP Derek Chang.
Viacom released a separate statement claiming DirecTV — America's second largest pay-TV operator — has been enjoying "way below market rates" for the past seven years, and the fee increase amounts to only "a couple pennies per day, per subscriber."
Analysts say a dispute over programming fees was inevitable due to the significant ratings drop experienced by Viacom in recent years. "We anticipated such an event, although we said we didn't know if it would happen in weeks, months or years," said Todd Juenger of Bernstein Research.
Still, Viacom's importance to DirecTV means the content provider will likely get what it wants. "Viacom claims its programming represents 20 percent of the viewing on DirecTV," said Alan Gould of Evercore Partners, "so we would assume DirecTV would lose some subscribers, particularly families that want Nickelodeon."
A similar dispute between Dish Network and AMC led the latter to pull its channels from the satellite provider. But analysts expect the matter to be settled in time for the return of AMC's popular TV show Walking Dead.