July 11th, 2012
DirecTV customers may be noticing that some of their favorite channels – including MTV, Comedy Central and Nickelodeon – went missing around midnight on Tuesday. DirecTV and media conglomerate, which owns eight of the top 30 cable networks, as well as the rights to popular shows like The Daily Show and Spongebob Squarepants, have been unable to reach a deal that would allow DirecTV to continue carrying their programming.
DirecTV has said Viacom is asking for exorbitant prices, but as Viacom points out, they’re just asking for what’s fair. DirecTV’s 20 million subscribers make up 20% of Viacom’s national pay-TV audience, but what DirecTV pays to carry those channels only makes up 5% of Viacom’s subscriber revenue.
DirecTV and Viacom have both taken to social media and even traditional advertising mediums to air their grievances, including websites and Twitter hash tag campaigns. On it’s website DirecTV directed its customers to go to online sites to view the content that had removed from their lineup, but Viacom quickly closed that avenue and removed free online content from several sites, including Jersey Shore and The Colbert Report.
DirecTV has said Viacom is asking for nearly a billion dollars for the new contract, but Viacom pointed out that it breaks down to only 60Â¢ a day per subscriber. Seeing as how DirecTV customers pay an average of $20 more a month for comparable programming than DISH customers, why does DirecTV have such a problem with pennies a day? Because, like Viacom and industry analysts have pointed out, DirecTV wouldn’t be able to easily pass those cost increases onto the customer.
“It’s hard for [DirecTV] to raise their prices much more than 3% to 4%, because the economy’s bad and people’s salaries are going up 1%,” says Rich Tullo, a senior analyst at Albert Fried. “It’s just not going to fly. Really, that’s the issue at play.”
DirecTV claims to not want raise rates on their customers, but in the seven years since they last negotiated with Viacom, DirecTV has raised rates 52%. In 2012 DirecTV is projected to make $5 billion in profit, but they’re not willing to let go of any of those profits to ensure their customers receive the channels they pay for every month.
Categories: DISH & TV news