Channels such as Nick at Night, Comedy Central, Spike TV, and MTV went dark just before midnight as DirectTV stopped broadcasting 17 channels owned by Viacom.
At issue; Viacom's insistence for what DirectTV calls a "30% increase" in fees which Viacom says is only "pennies per day" for each customer.
"We have been very willing to get a deal done, but Viacom is pushing DirecTV customers to pay more than a 30 percent increase," Derek Chang, DirecTV's executive vice president of content, strategy and development, said in the statement sent late yesterday New York time. "Viacom sent us a letter last night that outlined our obligations to remove the channels by midnight or face legal action."
The standoff marks the latest fee tussle between a pay-TV provider and program supplier. Such fights have blacked out millions of subscribers in recent years, including 14 million Dish Network Corp. customers who lost access to AMC Networks Inc. last month. Viacom said on its blog that its programs amount to 20 percent of the audience at DirecTV. DirecTV cited falling ratings at Viacom's channels.
"It has been inconceivable that any distributor could drop Viacom's networks, mostly because of Nickelodeon," Todd Juenger, a Sanford C. Bernstein & Co. analyst in New York, wrote in a note in June. "But ratings are down, often significantly, at networks representing 71 percent of Viacom affiliate fees."
DirecTV dropped Viacom's channels about 10 minutes before midnight with no warning, Viacom executive Mark Jafar said in a blog post. He said DirecTV "refused to engage in meaningful conversation."
"We are deeply disappointed that DirecTV dropped Viacom's channels before our midnight deadline this evening, severing our connection with its nearly 20 million subscribers nationwide," Jafar said. "We proposed a fair deal that amounted to an increase of only a couple pennies per day, per subscriber, and we remained willing to negotiate that deal right up to this evening's deadline."
In its own posting, DirecTV said Viacom demanded a 30 percent increase in fees over the term of a new contract, amounting to more than $1 billion in additional costs. Viacom said its fees account for less than 5 percent of the satellite service's programming expenses, and that DirecTV "enjoyed way below market rates for Viacom's networks for a very long time."
DirectTV plays hardball with its vendors, no question about it. This is the third time in the last two years they've temporarily suspended programming, but never this many channels.
If things hold true to form, the stations will be back on the air in 2 or 3 days. In the meantime, I'll have to do without watching reruns of CSI on Spike for a while.