DirecTV, Viacom End Dispute, Bringing 17 Channels Back to Subscribers
After a lengthy dispute that left millions of viewers without Nickelodeon, Comedy Central, MTV, BET, Spike, CMT, and TV Land for 10 days, DirecTV (NYSE: DTV) and Viacom (NASDAQ: VIA) (NASDAQ: VIAB) have announced that they have reached a new long-term agreement that will ensure viewers can keep up with Snooki and SpongeBob.
Neither company is willing to disclose the financial terms of the deal. But it was widely reported that Viacom wanted a 30 percent rate increase to sign a new contract with DirecTV. The satellite provider fought against this demand, a move that ultimately earned the support of three competitors -- Time Warner Cable (NYSE: TWC), Mediacom Communications, and Cox Communications.
When Viacom pulled its networks from DirecTV, viewers had to look elsewhere for their daily entertainment fix. Some chose to cancel their satellite subscription. Many simply turned to other networks.
Nickelodeon, one of Viacom's most popular networks, lost 20 percent of its viewers. In the first five days following the blackout, ratings for the Disney Channel (NYSE: DIS) jumped more than 30 percent, rising from 1.64 million viewers to 2.27 million viewers. The New York Times even quoted a troubled mother, who referred to the first two days of the blackout as being "rough" on her three-year-old daughter. But the little girl quickly realized that it was time to move on. Soon she started asking to watch the Disney Channel instead of Nickelodeon, which was no longer available.
Will she and other young viewers return to Nickelodeon and other Viacom networks now that a new deal has been reached? That remains to be seen. But it is not hard to imagine that the decline in viewership -- and negative consumer reaction -- inspired DirecTV and Viacom to work out their differences. While it is unknown how many subscribers DirecTV may have lost during the blackout, a 20 percent decline at Viacom -- for any network -- could have been devastating to the company's bottom line. Program fees are an important part of Viacom's revenue. But viewers and ad sales reign supreme.
Now that the dispute is over, it will be interesting to see how long it takes for Viacom's ratings to recover. At press time, DirecTV did not update its website with any promotions regarding the new agreement. But Dish Network (NASDAQ: DISH) continued to promote its summer sale with a picture of one of Nickelodeon's most recognizable characters, SpongeBob SquarePants.
In addition to Viacom's various TV networks, DirecTV subscribers will now have the ability to view Viacom programming on tablets, laptops, handhelds, and other personal devices via the DirecTV Everywhere platform. According to the new agreement, "Carriage of the EPIX movie channel is not required." But DirecTV has the option to add the EPIX service to its entertainment offerings.
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