Contract Dispute Between DirecTV and Viacom Have Left Many Popular Cable Channels Blacked-Out
Over 20 million subscribers to DirecTV experienced blackouts at midnight Tuesday, July 10, 2012, from their favorite channels such as Comedy Central, MTV, VH1, TV Land, CMT, BET, Logo, Nickelodeon, and Spike. The dispute arises from the impending contract renewal between DirecTV and Viacom as a 7-year contract nears its’ end.
Both parties involved claim the other has unreasonable demands in contract amendments. DirecTV claimed that the new contract with Viacom would demand an increase of 30% in royalties and increase of about $1 billion outlay in total. On the other hand, Viacom is claiming that in their previous 7-year contract it was paying below-market rates for programming.
Both DirecTV and Viacom have gone to the blogs in an attempt to gain public support of the many unhappy subscribers. Below are the press releases from both parties:
Viacom Press Release:
“We are deeply disappointed that DirecTV dropped Viacom’s channels before
our midnight deadline this evening, severing our connection with its nearly 20
million subscribers nationwide. We proposed a fair deal that amounted to an
increase of only a couple pennies per day, per subscriber, and we remained
willing to negotiate that deal right up to this evening’s deadline. However,
DirecTV refused to engage in meaningful conversation. We are hopeful that
DirecTV will work with us toward a resolution, and stop denying its subscribers
access to the networks they watch most.”
DirecTV Press Release:
"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. Viacom sent us a letter last night 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.
We have absolutely no problem compensating Viacom fairly, but they
have now knowingly put our customers in the unreasonable position of
either accepting their extravagant financial demands or losing some of
their favorite TV shows. We feel our customers should not have to pay
more for these networks than the customers of any other TV provider. We
reiterated this to Viacom today and have not heard back from them.
We understand that Viacom’s actions are inconveniencing our customers
so we are doing everything we can to help them find alternative
programming until this gets resolved. Customers will now see a variety of
replacement channels available to them on one screen, in a Mix Channel
format, when they tune to a Viacom channel. For instance, those going to
the Nickelodeon channel slot will see alternative choices for children’s
programming such as The Disney Channel, ABC Family, Cartoon
Network, PBS Sprout, The Hub and Boomerang. Customers can also see
full-length Viacom episodes for free by going to www.directvpromise.com
and clicking on the ‘Other Ways to Watch’ tab.”
I’m sure everyone will agree that the sooner that this contract renewal is resolved, the better.
*Allison K. Rogers is Legal Writer and Legal Publication Specialist at The National Law Review.