On Tuesday night, millions of customers of direct broadcast satellite service provider DirecTV were left without access to Nickelodeon, MTV, Comedy Central and other popular cable channels owned by Viacom, Inc. as a result of the companies’ failure to agree on renewed terms for program carriage. The impasse represents the latest in a series of recent high-profile disputes that have pitted multichannel video program distributors (MVPDs) against programmers that are demanding higher rates for carriage rights. Officials of DirecTV—the second largest MVPD in the U.S. behind market leader Comcast—charge that Viacom is seeking an excessive rate hike of 30% which, in turn, would raise DirecTV’s total carriage costs by $1 billion. DirecTV executives also complained that Viacom—which is offering more of its content free of charge online—is pursuing higher carriage fees at a time when ratings for many of its top cable networks are sinking. However, in a blog posting on Tuesday, Viacom countered that it had offered DirecTV “a fair deal” that amounts “to an increase of only a couple pennies per day, per subscriber” and that DirecTV had benefitted from “way below market rates” during its most recent seven-year retransmission term with Viacom. Citing trends in the current video marketplace in which viewers are turning more regularly to Netflix, Hulu and other sources of free or reduced cost online programming, analysts predict that disputes over MVPD retransmission costs and programming blackouts are likely to become more commonplace. Observing, “we’ve done deals with every single U.S. distributor since the last DirecTV deal,” Viacom CEO Philippe Dauman termed it “unfortunate . . . that customers are now unable to enjoy our channels.”
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Retransmission dispute forces Viacom channels off of DirecTV system
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