DirecTV, Viacom license-fee dispute leads to blackout

The ability to watch online-content for free landed square in the middle of an expected finger-pointing brouhaha between satellite provider DirecTV (NYSE: DTV) and multi-channel programmer Viacom (NYSE: VIA).

"Viacom dropped its networks from DirecTV," the satellite company said in a news release.

"DirecTV dropped 26 Viacom channels," Viacom spokesman Mark Jafer blogged.

Reality lies somewhere in the middle along with the elephant in the room: DirecTV subscribers can see Viacom content online without having to turn on their satellite boxes.

"Customers can … see full-length Viacom episodes for free by going to www.directvpromise.com and clicking on the 'Other Ways to Watch' tab," the service provider said in its news release.

Both sides admit that negotiations for a new contract between the two went down to the last minute, but "the eleventh hour has come and gone and, unfortunately, the unthinkable has happened," Jafer wrote. "DirecTV dropped the channels without giving Viacom adequate warning."

DirecTV, of course, saw things differently.

"We have been very willing to get a deal done but Viacom is pushing DirecTV customers to pay more than a 30 percent increase, which equates to an extra $1 billion, despite the fact that the ratings for many of their main networks have plummeted and much of Viacom's programming can be seen for free online," Derek Chang, DirecTV EVP of content, strategy and development, said in a news release issued by the satellite provider. "Viacom sent us a letter …. That outlined our obligations to remove the channels by midnight or face legal action just as they were falsely telling viewers DirecTV was responsible. Let's be clear, Viacom took these channels away from DirecTV viewers."

And in the middle of it all is online video, which, another industry executive in an unrelated story, believes will force the MVPD community to do the unthinkable and unbundle its programming packages.

"Something's got to give. They can't keep passing on to consumers 10 percent increases," BET founder Robert Johnson said upon arriving at the Allen & Co. media conference in Sun Valley, Idaho, Bloomberg reported. BET, incidentally, is one of the Viacom channels no longer available on DirecTV.

Johnson reportedly said that 17 channels account for 85 percent of cable television viewers. He didn't say which channels they are.

In addition to BET, Viacom said that Nickelodeon, Comedy Central, MTV, VH1, CMT, Logo, Spike, TV Land, MTV2, VH1 Classic, Palladia, Nick Jr., NickToons, TeenNick, Nickelodeon West, Tr3s, Centric, MTV India, and the apparently not redundant Nickelodeon HD, Comedy Central HD, MTV HD, BET HD, VH1 HD, CMT HD and Spike HD are no longer airing on DirecTV.

DirecTV, in its news release, promised a "variety of replacement channels" will take the place of the lost Viacom programs and, of course, viewers can look for the content online.

For more:
 - see this DirecTV release
 - read this Viacom blog
 - and the Bloomberg story

Related articles:
DirecTV pulls Viacom channels, rejecting 30 percent rate hike
Viacom stock slips on news of DirecTV dispute
AT&T OK with AMC; Dish breaks off service

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