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DirecTV Blackout Boosts Disney's Ratings


As the monetary dispute between Viacom (NASDAQ: VIAB) and DirecTV (NYSE: DTV) continues to heat up, young viewers of now blacked-out television stations such as Nickelodeon are flipping the channel elsewhere to get their daily small screen fix.

While Viacom's Executive Vice President Denise Denson said yesterday that there is virtually no end in sight in the current DirecTV debacle, fans of SpongeBob SquarePants and all other Nickelodeon-produced shows have resorted to stations such as Time Warner's (NYSE: TWX) Cartoon Network for the time being.

According to The New York Times, the Disney (NYSE: DIS) channel has also experienced quite a lift following the July 11 blackout with viewers increasing from 1.64 million to 2.27 million in the first five days.

News broke yesterday that several major cable providers were backing DirecTV in this particular fight, but will they continue to have the company's back once they undoubtedly see increased ratings?

Clearly DirecTV hopes so, as the company is said to be holding out on reaching an agreement with Viacom.

"They have not ever engaged in negotiations," Denson said yesterday. In fact, she noted that DirecTV is spreading word that the lack of negotiation is a form of standing up for its customers and making a statement to shareholders.

Fans of blacked out stations (including AMC, CMT, Comedy Central and MTV) are likely not appreciative of the moves DirecTV is continuing to make, as they are forced to stare at dark screens waiting for a flicker of hope. However, they have found solace elsewhere for the moment.

Ratings continue to climb for Comcast's (NASDAQ: CMCSA) Sprout and the Hub, co-owned by Discovery Communications (NASDAQ: DISCA) and Hasbro (NYSE: HAS). As young viewers jump ship quickly in search of less-obscure pastures, it will be interesting to see where adults turn to get their television entertainment - perhaps into the arms of another cable provider.

As Viacom and DirecTV decide whether or not an agreement can be reached, television spectators will continue to suffer without cherished channels and regularly scheduled programming across 26 different stations. Only time will tell if the dispute can be resolved or if subscribers will have to move on in order to catch the latest episode of Breaking Bad.

DirecTV closed yesterday at $48.60, down almost 7 percent year-over-year, while Viacom saw similar numbers with a closing price of $47.62, down just over 6% year-over-year.


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