Services & Software

DirecTV-Viacom spat may black out top cable channels today

If a deal isn't reached by midnight tonight, millions of DirecTV customers will lose channels such as Nickelodeon, Comedy Central, and MTV.

The cast of "Jersey Shore" may disappear for DirecTV subscribers.

DirecTV customers may soon need to get their "Jersey Shore" and "Daily Show" fix elsewhere.

A dispute over terms of a new distribution agreement between DirecTV and Viacom, which operates channels such as MTV and Comedy Central, could leave millions of satellite-TV customers without their favorite cable channels if a deal isn't struck by midnight tonight.

DirecTV has rejected all of Viacom's proposal, and has proposed an offer that is below the industry rate, Viacom said in a blog post late yesterday.

DirecTV said the companies continue to talk. It also create a site devoted to the issue, and argues that Viacom wants customers to pay 30 percent more to keep the same channels.

"That's an extra billion dollars for the exact channels you already receive," DirecTV CEO Mike White said in a video on the site. "We think that's unreasonable."

White added that DirecTV was open to an a la carte model, in which customers could pay for just the channels it watches, but said Viacom rejected the idea.

These disputes over distribution and programming fees aren't unusual, and there have been a number of public spats that have resulted in the temporary blackout of key channels. The likelihood that these negotiations go down to the wire or result in pulled channels underscores the growing tension between the entertainment companies and the distributors like the cable and satellite TV providers.

Earlier this year, Time Warner and MSG Network patched up their fight, ending a 48-day blackout of Knicks coverage during the height of "Linsanity." Two years ago, Cablevision dropped the Food Network and HGTV for a few weeks amid their own fight over programming fees. Cablevision has a similar disagreement with Fox Networks that year as well.

But a dispute could seriously hurt DirecTV, said BTIG Research analyst Richard Greenfield. He noted that Dish Network similarly fought Viacom over higher programming fees in 2004, and caved after 46 hours.

"It will be interesting to see whether Mike White wants to go to war with Viacom and make the same mistake (former Dish CEO) Charlie Ergen made 8 years ago," Greenfield said in a blog post.

Still, others believe the market will begin re-evaluating the value of Viacom's worth, considering ratings are off their peak for major channels such as Nickelodeon and MTV. At the same time, alternative entertainment sources such as Netflix have taken some of the momentum from those channels.

"We believe it is no longer inconceivable that a distributor would drop Viacom, or at least engage in a public battle with them over price increases," said Sanford Bernstein analyst Todd Juenger.

Beyond MTV and Comedy Central, the current dispute could leave more than 20 million DirecTV subscribers without 24 other channels, including Nickelodeon, BET, VH1, Spike TV, TV Land, and CMT.

Viacom is looking for a higher rate as its current agreement is seven years old.

"DirecTV has enjoyed way below market rates for Viacom's networks for a very long time," Viacom said in its blog posting.

Viacom said it would continue to work on an agreement. But if the two sides don't reach a deal, the consumer will pay the most with the loss of their favorite cable channels.

Updated at 9:23 a.m. PT: to include a response from DirecTV.