Viacom has begun warning viewers that its networks might be dropped by AT&T's U-Verse and DirecTV.
The media giant started running spots featuring its networks at 4:30 p.m. on Tuesday, March 19, 2019. Nickelodeon's spot warns that viewers could soon be missing out on Viacom's 22-plus channels and urges them to call AT&T to keep the networks available. Meanwhile, Comedy Central's spot features Trevor Noah, host of
The Daily Show delivering the message that Viacom's channels could go dark if no deal is reached in time. Viacom's current contract with AT&T’s DirecTV is set to expire midnight ET on Friday, March 22, 2019. Viewers are advised to visit
Please visit KeepViacom.com for more information.In a statement, Viacom said it was the top cable family on the AT&T service and said that it has made offers to AT&T that would allow subscribers to keep Nickelodeon, BET, MTV, Comedy Central and Paramount while lowering cable bills.
“Viacom is the No. 1 cable family serving key customers and communities on AT&T-DirecTV’s services across kids, teens, 18-49, African Americans and Hispanics. We have made a series of offers that are good for consumers and good for AT&T – giving subscribers more access to the Viacom channels they love, including Nickelodeon, BET, MTV, Comedy Central and Paramount, while enabling AT&T-DirecTV to lower customers’ bills in the process.
Unfortunately, AT&T is abusing its new market position by favoring its own content – which significantly underperforms Viacom’s – to stifle competition. AT&T-DirecTV’s behavior is also consistent with a recent pattern of gouging their customers by charging them higher prices for an inferior product with fewer channels. Especially troubling, AT&T-DirecTV is marginalizing diverse audiences in its new DTV packages and threatening to do the same with their existing products.
Viacom is committed to developing strong relationships with our distribution partners. We have successfully renewed a series of distribution relationships representing more than half our subscriber base over the last two years and have not had a disruption in our service since 2014. While we continue to make every effort to reach a new carriage agreement, AT&T’s unwillingness to engage in constructive conversations unfortunately could force a disruption in service.”
AT&T, which acquired Time Warner last year, has promised to be aggressive about programming costs on its pay-TV services, particularly DirecTV, which has been losing subscribers.
Last week, AT&T said it was raising the price on its DirecTV Now virtual MVPD service and rearranged some of its programming packages, removing networks from Viacom, AMC Networks and Discovery.
Viacom notes that if AT&T blacks out its networks on Friday, viewers will be missing key events including Nickelodeon's
Kids' Choice Awards 2019, airing Saturday, new episodes of Double Dare, Knight Squad, and Henry Danger, and BET’s one-hour primetime news special
American Injustice featuring Senators Cory Booker and Kamala Harris, who are also presidential candidates.
From
Variety:
Viacom Goes to War With AT&T Over DirecTV Carriage Deal
Viacom has declared war against AT&T, blasting the telco giant on several fronts as the companies wrestle over a carriage renewal deal that is vital to Viacom’s long-term financial health.
As of today, Viacom has begun running crawls and promo spots on its channels warning viewers that Nickelodeon, Comedy Central, BET, MTV and other channels could go dark on AT&T’s DirecTV as of midnight ET on Friday, when the current contract expires.
A Viacom spokesman accused AT&T of everything from price gouging to discriminating against “diverse audiences” with the channel selections in its latest packages of skinny bundles for the DirecTV Now and Watch TV streaming platforms.
“Unfortunately, AT&T is abusing its new market position by favoring its own content – which significantly underperforms Viacom’s – to stifle competition,” a Viacom spokesman said. “AT&T-DirecTV’s behavior is also consistent with a recent pattern of gouging their customers by charging them higher prices for an inferior product with fewer channels. Especially troubling, AT&T-DirecTV is marginalizing diverse audiences in its new DTV packages and threatening to do the same with their existing products.”
DirecTV could not immediately be reached for comment. Carriage battles between programmers and traditional MVPD distributors have ratcheted in recent years as the pay-TV marketplace has grappled with cord cutting and a flood of low-cost competitors.
The Viacom-DirecTV battle has the makings of a clash of media titans because both companies are under pressure to strike an advantageous deal.
Viacom needs to have its two dozen cablers carried by the nation’s largest MVPD, with about 25 million domestic subscribers. Viacom also needs to make sure that the rates DirecTV pays for its channels aren’t severely reduced. If so, Viacom would take a big revenue hit and it would have a domino effect with other large distributors that have favored-nations provisions in carriage deals that would allow them to also cut fees paid to Viacom.
Viacom has faced rate cuts with other distributors including the deal it struck with Charter Communications in 2017. The terms on the table from DirecTV must be significantly lower to prompt such an aggressive campaign from Viacom.
AT&T, on the other hand, is shouldering a heavy debt load and a shrinking domestic subscriber base for DirecTV. Growth at AT&T’s DirecTV Now and Watch TV skinny bundle streaming services has also slowed, as AT&T disclosed in its first quarter earnings. AT&T has let it be known that it will take a hard line with programmers in upcoming carriage deals given the state of DirecTV’s subscriber base.
“We’ve had very good success so far getting to a rationalization of those content costs,” AT&T chairman-CEO Randall Stephenson said in January. “We think this is an equation we can balance…We’ve got to get the content costs in line with what the customer is willing to pay.”
Viacom is encouraging viewers to put pressure on DirecTV to renew the channels via the KeepViacom.com website. In a memo to Viacom employees, CEO Bob Bakish raised the specter of AT&T abusing its market power at the expense of Viacom and consumers now that it is fortified with the Time Warner assets it acquired last June after it prevailed over the Justice Department in a long antitrust fight.
“AT&T continues to insist on unreasonable and extreme terms that are totally inconsistent with the market,” Bakish wrote. “Having recently acquired Time Warner, AT&T appears intent on using its new market power to prioritize its own content at the expense of consumers, who are growing increasingly dissatisfied with paying more for less.”
Here is the full memo from Bakish:
Team,
Over the past two years, we’ve made incredible progress in strengthening and evolving our domestic distribution business.
Not only have we secured more carriage for our brands with existing partners and new, we’ve also expanded the definition of partnership to include new elements, like advanced advertising and co-production arrangements. In the process, we’ve renewed and extended more than half of our subscriber base, securing deals with Altice, Charter, Comcast and others, to give audiences greater access to our brands, and more choice in how they consume our content – most recently in the Charter Essentials product, which Charter announced a few weeks ago.
In that same spirit of partnership, Viacom has been working to negotiate an agreement with AT&T to renew distribution of our channels on DirecTV and AT&T video services. We’ve made a series of offers that are both good for consumers and good for AT&T – giving subscribers more access to the Viacom channels they love, while enabling AT&T to lower subscribers’ bills and provide customers with a variety of packages and price points. Importantly, our offers would ensure that AT&T is able to continue serving the diverse audiences that prefer Viacom to any other cable programmer. And, consistent with our other recent distribution deals, we want to work with AT&T on new opportunities that go beyond traditional carriage.
Despite these efforts, AT&T continues to insist on unreasonable and extreme terms that are totally inconsistent with the market. Having recently acquired Time Warner, AT&T appears intent on using its new market power to prioritize its own content at the expense of consumers, who are growing increasingly dissatisfied with paying more for less.
Because of AT&T’s unreasonable position, today we began to warn subscribers that they may lose our channels when our contract expires on Friday, March 22. This would be our first disruption since 2014, so we remain hopeful that we can reach an agreement that fairly values the amazing entertainment brought to life by our brands, and by your talent, creativity and hard work.
I realize that many of you, and your families and friends may be AT&T-DirecTV subscribers. Please feel free to share a link to http://www.keepviacom.com, which will be updated with relevant news and information.
Of course, we’ll continue to update you as this situation develops over the next few days.
Best,
Bob
###
From
Deadline:
Viacom Warns Viewers A Potential DirecTV-U-Verse Blackout Is Just Days Away
Setting the stage for the next major pay-TV carriage battle, Viacom is rolling out ads across Comedy Central, Nickelodeon and other networks warning viewers that DirecTV and U-verse soon could be pulling the plug.
Viacom and AT&T’s DirecTV and U-verse systems are nearing the deadline of their current carriage agreement, which expires at midnight ET on Friday (9pm PT). The saber-rattling follows AT&T’s decision last week to drop Viacom networks from the basic tier of its new DirecTV Now packages.
In a statement, Viacom said it has “made a series of offers that are good for consumers and good for AT&T,” but got a cool reception on the other side of the negotiating table.
Like Dish Network and other rivals of AT&T, Viacom is blaming the dispute in part on the makeup of the newly constituted AT&T. The telecom giant owns the No. 1 traditional satellite operator, DirecTV, cable operator U-verse (which has just shy of 4 million subscribers) and WarnerMedia’s potent mix of TV and film content. During the 16-month legal showdown with the government, which sued to try to block AT&T’s $81 billion acquisition of Time Warner, competitors argued that the combined company would use distribution and programming assets as a weapon to harm rivals and, therefore, customers.
“Unfortunately, AT&T is abusing its new market position by favoring its own content – which significantly underperforms Viacom’s – to stifle competition,” Viacom’s statement continued. “AT&T-DirecTV’s behavior is also consistent with a recent pattern of gouging their customers by charging them higher prices for an inferior product with fewer channels. Especially troubling, AT&T-DirecTV is marginalizing diverse audiences in its new DTV packages and threatening to do the same with their existing products.
“Viacom is committed to developing strong relationships with our distribution partners. We have successfully renewed a series of distribution relationships representing more than half our subscriber base over the last two years and have not had a disruption in our service since 2014. While we continue to make every effort to reach a new carriage agreement, AT&T’s unwillingness to engage in constructive conversations unfortunately could force a disruption in service.”
AT&T did not immediately respond to Deadline’s request for comment.
At the same time it is warning customers, Viacom is also trying to buck up internal morale. Last week, when DirecTV Now dropped Viacom from a basic tier of its skinny bundle, the company’s stock dropped (along with those of Discovery and AMC Networks) and questions were raised once again about the company’s trajectory. The rebuff came after two years of progress by CEO Bob Bakish.
The new leader has set about repairing the distribution relationships that had deteriorated badly under predecessor Philippe Dauman. Despite waning ratings and a transforming TV bundle environment, Dauman took a hyper-aggressive negotiating stance and the result was a series of pitched and costly battles. Viacom and Suddenlink, which is now part of Altice, had a blackout that lasted three years.
Here is the full text of Bakish’s memo to employees:
Team,
Over the past two years, we’ve made incredible progress in strengthening and evolving our domestic distribution business.
Not only have we secured more carriage for our brands with existing partners and new, we’ve also expanded the definition of partnership to include new elements, like advanced advertising and co-production arrangements. In the process, we’ve renewed and extended more than half of our subscriber base, securing deals with Altice, Charter, Comcast and others, to give audiences greater access to our brands, and more choice in how they consume our content – most recently in the Charter Essentials product, which Charter announced a few weeks ago.
In that same spirit of partnership, Viacom has been working to negotiate an agreement with AT&T to renew distribution of our channels on DirecTV and AT&T video services. We’ve made a series of offers that are both good for consumers and good for AT&T – giving subscribers more access to the Viacom channels they love, while enabling AT&T to lower subscribers’ bills and provide customers with a variety of packages and price points. Importantly, our offers would ensure that AT&T is able to continue serving the diverse audiences that prefer Viacom to any other cable programmer. And, consistent with our other recent distribution deals, we want to work with AT&T on new opportunities that go beyond traditional carriage.
Despite these efforts, AT&T continues to insist on unreasonable and extreme terms that are totally inconsistent with the market. Having recently acquired Time Warner, AT&T appears intent on using its new market power to prioritize its own content at the expense of consumers, who are growing increasingly dissatisfied with paying more for less.
Because of AT&T’s unreasonable position, today we began to warn subscribers that they may lose our channels when our contract expires on Friday, March 22. This would be our first disruption since 2014, so we remain hopeful that we can reach an agreement that fairly values the amazing entertainment brought to life by our brands, and by your talent, creativity and hard work.
I realize that many of you, and your families and friends may be AT&T-DirecTV subscribers. Please feel free to share a link to http://www.keepviacom.com, which will be updated with relevant news and information.
Of course, we’ll continue to update you as this situation develops over the next few days.
Best,
Bob
###
From
Broadcasting & Cable:
Viacom Warning Viewers About AT&T BlackoutContract expires at midnight FridayViacom has begun warning viewers that its networks might be dropped by AT&T’s U-Verse and DirecTV.
The programmer started running spots featuring its networks at 4:30 p.m. on Tuesday. In one spot, Trevor Noah, host of Comedy Centrals's Daily Show warns that viewers could soon be missing out on Viacom's 22-plus channels and urges them to call AT&T to keep the networks available.
In a statement, Viacom said it was the top cable family on the AT&T service and said that it has made offers to AT&T that would allow subscribers to keep Nickelodeon, BET, MTV, Comedy Central and Paramount while lowering cable bills.
“Unfortunately, AT&T is abusing its new market position by favoring its own content – which significantly underperforms Viacom’s – to stifle competition. AT&T-DirecTV’s behavior is also consistent with a recent pattern of gouging their customers by charging them higher prices for an inferior product with fewer channels. Especially troubling, AT&T-DirecTV is marginalizing diverse audiences in its new DTV packages and threatening to do the same with their existing products,” Viacom said.
“Viacom is committed to developing strong relationships with our distribution partners. We have successfully renewed a series of distribution relationships representing more than half our subscriber base over the last two years and have not had a disruption in our service since 2014. While we continue to make every effort to reach a new carriage agreement, AT&T’s unwillingness to engage in constructive conversations unfortunately could force a disruption in service.”
AT&T, which acquired Time Warner last year, has promised to be aggressive about programming costs on its pay-TV services, particularly DirecTV, which has been losing subscribers.
Last week, AT&T said it was raising the price on its DirecTV Now virtual MVPD service and rearranged some of its programming packages, removing networks from Viacom, AMC Networks and Discovery.
Viacom notes that if AT&T blacks out its networks on Friday, viewers will be missing key events including the Kids Choice Awards on Satuday and BET’s one-hour primetime news special American Injustice featuring Senators Cory Booker and Kamala Harris, who are also presidential candidates.
###
From
Forbes:
Will Viacom Channels Go Dark On DirecTV?
Viacom is warning subscribers to AT&T’s DirecTV service that their access to the company’s cable networks including BET, Comedy Central, MTV, and Nickelodeon may end unless a disagreement over fees can be resolved before their contract expires Midnight Friday.
According to a memo from Viacom CEO Bob Bakish that was distributed to the press, AT&T is “abusing its new market position by favoring its own content -- which significantly underperforms Viacom’s -- to stifle competition.” The memo goes on to accuse the telecom giant of wanting to charge its customers higher prices for an "inferior" product.
Viacom started a public relations campaign aimed at DirecTV’s subscribers with some of the company’s biggest stars including Trevor Noah of The Daily Show. It also is running a crawl on its channels on the bottom of the screen of DirecTV subscribers and has launched a website called http://www.keepviacom.com/.
“Viacom has made many offers to AT&T-DirecTV that would: Keep these channels on the air; Enable AT&T-DirecTV to lower bills now (and) give consumers more choice,” Keepviacom says. “Rather than work on their customers’ behalf, AT&T-DirecTV continues to raise prices while taking away channels.”
AT&T, for its part, doesn't want customers to lose access to Viacom's channels but believes that it needs to take a hard line on the media company's fees. The telecom giant was "disappointed" that Viacom chose to put DirecTV customers in the middle of negotiations.
"The facts speak for themselves: several of Viacom’s channels are no longer popular," according to an AT&T statement. "Viacom’s channels in total have lost about 40% of their audience in the past six years. Viacom is a serial bad actor in these business negotiations and has repeatedly used these tactics with other distributors."
Both companies are under pressure to strike a deal. As Variety notes, if Viacom significantly cuts the retransmission fees that it charges DirecTV, other pay-TV providers would demand similar treatment. AT&T, on the other hand, needs as many distribution partners as it can get to pay down its heavy debt load from its $67.1 billion acquisition of DirecTV in 2015.
More than 1 million subscribers dropped DirecTV in 2018 thanks to the rise of cord-cutters and increased competition. Interest in the company's DirecTVNow "skinny bundle" also is starting to wane. Customer defections will increase if the DirecTV can't offer Viacom's channels.
A spokesman for DirecTV had no immediate comment.
As advertising spending shifts online, retransmission fees are becoming increasingly important for media companies. Market research firm Kagan expects them to hit $12.8 billion in 2023.
Disputes over retransmission fees are becoming increasingly contentious.
Subscribers to DirecTV’s main rival DishNetwork haven’t had access to HBO and Spanish language network for months after the satellite provider failed to come to term on new distribution agreements. As a result, nearly 1 million net customers dropped DirecTV last year. HBO is part of AT&T’s WarnerMedia business it acquired last year in its $85.4 billion acquisition of Time Warner. More people are expected to drop Dish when the new season of Game of Thrones starts in April.
“We have successfully renewed a series of distribution relationships representing more than half our subscriber base over the last two years and have not had a disruption in our service since 2014,” Bakish wrote. “While we continue to make every effort to reach a new carriage agreement, AT&T’s unwillingness to engage in constructive conversations, unfortunately, could force a disruption in service.”
###
From
Bloomberg:
Viacom Warns of Blackout on DirecTV, Accuses AT&T of Abuses- Company says Time Warner’s new owner favors its own content
- Programmer warns viewers of dispute in onscreen messages
Viacom Inc. is warning pay-TV customers of AT&T Inc. that they could lose access to channels such as Nickelodeon and MTV unless the companies reach a new programming agreement.
The current contract between the parties expires Friday, Viacom said Tuesday in an email. The media company began activating a “crawl” message on its networks, alerting customers of the looming dispute. The owner of DirecTV, AT&T is the largest pay-TV provider in the U.S., with 24.5 million subscribers.
Viacom, which also owns Comedy Central and BET, says it has made a series of offers to AT&T that allow the company to lower customers’ bills. The New York-based media company accused AT&T of using its new market position, as owner of Time Warner, to favor its own content.
Price disputes between media companies and pay-TV system owners reflect pressure on both sides to squeeze more money from a shrinking pool of cable and satellite customers. Programmers like Viacom count on ad revenue and subscriber fees to pay for the TV shows and movies they air. Pay-TV system owners like AT&T are losing customers to lower-priced options like Netflix Inc.
“AT&T continues to insist on unreasonable and extreme terms that are totally inconsistent with the market,” Viacom Chief Executive Officer Bob Bakish said in a memo to employees. “Having recently acquired Time Warner, AT&T appears intent on using its new market power to prioritize its own content at the expense of consumers, who are growing increasingly dissatisfied with paying more for less.”
Network Competition
AT&T didn’t immediately respond to a request for comment. In April, the company will raise prices on its streaming pay-TV service. The company boosted prices for its satellite TV service in January.
The phone giant completed the purchase of Time Warner last year and in the past month won a final victory over the U.S. Justice Department’s efforts to stop the deal on antitrust grounds. Since then AT&T has begun reorganizing the business, which includes Warner Bros. studios, HBO and Turner Broadcasting. The division, which operates networks that compete with Viacom, has been rechristened WarnerMedia.
Viacom shares fell as much as 3.7 percent to $26.50 in extended trading. AT&T was little changed at $30.65. Viacom was among several media stocks that slumped on March 13 following reports that AT&T would be removing channels from a reshaped DirecTV Now streaming service.
###
Update (3/23) - From
Billboard:
MTV, VH1 Stars Urge People to Call AT&T and DirecTV Amid Viacom NegotiationsTrevor Noah, Lindsay Lohan, Abbi Jacobson, Pauly D and Nicole Polizzi, among other Viacom talent, are asking their social-media followers to call AT&T-DirecTV and post on their social platforms as the expiration date for the conglomerates' contract is set to expire Friday.
The stars of MTV, Comedy Central, VH1 and other channels shared the following message on Thursday, with some adding more personalized messages to the beginning or end of the form message. "AT&T-DIRECTV is about to drop MTV, VH1 and up to 21 other channels. If that happens you won’t be able to watch me on Lindsay Lohan’s Beach Club! Call 1-888-250-5557 and tell AT&T-DIRECTV to keep MTV. Go to http://keepviacom.com for more info. #keepviacom."
"If AT&T-DIRECTV drops @MTV ,we’re ALL gonna be newly inducted members of the IFF!" Jersey Shore star Pauly D wrote.
"I’m not catfishing you," Catfish's Nev Schulman added.
The messages come as Viacom and DirecTV's contract is one day away from expiring, and the two conglomerates are in negotiations for another deal. AT&T has already dropped Viacom channels from the DirecTV Now streaming service; the AT&T U-verse and DirecTV could be next.
"Unfortunately, AT&T is abusing its new market position by favoring its own content — which significantly underperforms Viacom’s — to stifle competition," Viacom said in a statement on Thursday about the negotiations. "AT&T-DirecTV’s behavior is also consistent with a recent pattern of gouging their customers by charging them higher prices for an inferior product with fewer channels. Especially troubling, AT&T-DirecTV is marginalizing diverse audiences in its new DTV packages and threatening to do the same with their existing products."
The current carriage agreement between AT&T U-verse and DirecTV and Viacom expires at midnight on Friday. The Hollywood Reporter has reached out to AT&T-DirecTV, Comedy Central and MTV for comment.
###
###
From
The Los Angeles Times:
Trevor Noah and Tyler Perry wade into fee dispute between Viacom and AT&TViacom Inc. is locked in a high-stakes showdown with AT&T as the telecommunications giant weighs whether to drop Viacom’s cable networks — including MTV, Comedy Central, VH1, BET and Nickelodeon — to save $1 billion a year in programming costs.
The two companies have been negotiating this week to try to hammer out a new carriage contract with a 9 p.m. PDT Friday deadline looming. Without a new agreement in place, or a short-term extension, AT&T would be forced to remove Viacom’s channels from its DirecTV, U-Verse and WatchTV services.
Programs like “The Daily Show with Trevor Noah” and “South Park” on Comedy Central; “SpongeBob SquarePants” and “Paw Patrol” on Nickelodeon; and “Love & Hip Hop Hollywood” on VH1 would disappear for AT&T’s customers.
Viacom has enlisted several of its top stars, including Trevor Noah, Tyler Perry and Lindsay Lohan, to rally fans to pressure AT&T to keep the channels.
"If you think government shutdowns are bad, get ready for something worse. AT&T-DirecTV might drop Comedy Central and up to 22 other Viacom channels,” Noah posted on Twitter. “If that happens, you won’t be able to watch The Daily Show with me! Call 888-250-5557 and tell AT&T-DIRECTV to keep Comedy Central.”
Perry weighed in on Facebook: “This is crazy. I’ve had DIRECTV for years. You can’t just drop BET!!! And not expect there to be backlash.”
AT&T is the nation’s largest pay-TV provider. Its various TV services, including the DirecTV Now streaming service, have about 24.5 million subscribers. For example, DirecTV is one of the largest pay-TV providers in the Los Angeles area, with about 1 million subscribers.
The dispute comes as both companies struggle to adapt to industry shifts. Streaming services such as Hulu and Netflix have provided consumers with lower-cost alternatives to high-quality television.
Viacom has suggested that it is prepared to lower its fees to strike a deal with AT&T.
“We’ve made a series of offers that are both good for consumers and good for AT&T – giving subscribers more access to the Viacom channels they love, while enabling AT&T to lower subscribers’ bills and provide customers with a variety of packages and price points,” Viacom Chief Executive Bob Bakish said in a note to staff members this week. “Despite these efforts, AT&T continues to insist on unreasonable and extreme terms that are totally inconsistent with the market.”
Aside from disagreements over fees, Viacom and AT&T are also tussling over how widely Viacom channels will be available on streaming platforms that compete with DirecTV.
Viacom’s channels aren’t as popular as they were a few years ago — its ratings are down 40% since 2011, according to analysts. And DirecTV has been walloped by customer defections, a problem that has weighed on AT&T’s stock price for much of the last year.
DirecTV lost about 650,000 subscribers in the fourth quarter, underscoring the big challenges facing the El Segundo pay-TV service. AT&T bought DirecTV in 2015 for about $50 billion. Last year, the Dallas telecommunications company paid $85 billion for Time Warner Inc., which owns HBO, CNN, TNT and TBS. Now AT&T is choking in debt: more than $175 billion.
AT&T Chief Executive Randall Stephenson told Wall Street that reducing debt is a top priority.
“DirecTV pays Viacom about $1 billion a year. That’s a lot of cash AT&T could use” for paying off debt, Bernstein & Co. media analyst Todd Juenger wrote Thursday in a research report. “How many other low-risk opportunities does AT&T have to save $1 billion in cash?”
Other analysts said dropping Viacom could be catastrophic for DirecTV, which carries 17 Viacom channels.
“We think AT&T is being a bit irrational,” Marci Ryvicker, media analyst with Wolfe Research Securities, wrote in a report. She noted Viacom channels account for nearly 20% of viewership on the DirecTV service.
The ongoing negotiations at the DirecTV campus in El Segundo suggest that AT&T isn’t prepared to permanently drop the channels. If there is a blackout, it may be brief, analysts speculated.
“We’re disappointed to see Viacom put our customers in the middle of their negotiations,” AT&T said in a statement. “We are on the side of customer choice and value and want to keep Viacom’s channels in our customers’ lineups. The facts speak for themselves: Several of Viacom’s channels are no longer popular. Viacom’s channels in total have lost about 40% of their audience in the past six years.”
Viacom’s weakness in such contract negotiations is one reason why its controlling shareholder, Shari Redstone, wants to combine the company with CBS Corp. Pay-TV operators would be unlikely to drop the channels if they were packaged with the CBS network — one of the most popular in television. However, it is up to the boards of Viacom and CBS to decide whether they want to restart merger talks.
CBS also may come to blows with the phone company this year; the broadcast network’s distribution contract with AT&T expires at the end of June.
###
From
Reuters:
Viacom, AT&T negotiations weigh on possible CBS tie-up: sourcesViacom Inc’s bitter contract renewal talks with AT&T Inc’s DirecTV that could see the blackout of MTV, Nickelodeon and Comedy Central by midnight Friday are weighing on a possible tie-up of CBS and Viacom, sources familiar with the discussions said.
Although the boards of CBS and Viacom have not discussed or decided on pursuing a merger, these sources say they are studying AT&T’s impact on Viacom and how it affects the company’s motivation to pursue a CBS merger. Viacom needs to resolve the AT&T contract before considering any other strategic moves including mergers and acquisitions, sources said.
Both companies are controlled by the Redstone family’s National Amusements Inc, which pushed for a merger last year but backed off as CBS explores other options before deciding on another run at Viacom.
Viacom would take a substantial financial hit without an AT&T deal. AT&T is Viacom’s largest distributor, representing 24.5 million total video subscribers, and was responsible for about 15 percent of Viacom’s 2018 revenue. At stake are about $2 billion annually in fees and advertising, which are seen declining in any new deal, according to Wall Street estimates.
The 2017 Viacom and Charter Communications Inc renewal resulted in a 15 percent rate decrease. A similar outcome with AT&T could lead to a $156 million drop in annual affiliate fees paid by AT&T to Viacom, although some analysts have estimated an approximate 10 percent decrease this time.
Viacom and AT&T declined to comment. Negotiations continued as of Friday afternoon, sources said.
Failure to reach a deal is seen emboldening CBS and Viacom’s controlling shareholder’s position to put the companies together to give them better leverage in future distribution contract talks.
“Viacom’s clear need for greater negotiating leverage after being dropped by AT&T might be the final factor necessary to drive the long-speculated CBS-Viacom merger given the common control of both companies by the Redstone-controlled National Amusements,” Credit Suisse analyst Doug Mitchelson said in a research note this week.
If AT&T and Viacom walk away from the table, the No. 2 U.S. telecoms company’s position could also be weakened, especially if it faces a combined CBS and Viacom by the end of June, when CBS’s contract with AT&T expires.
Dropping the CBS broadcast network and NFL games would be disastrous to AT&T, and they may end up paying more for Viacom channels through CBS, analysts have said.
Losing Viacom will also weaken AT&T’s leverage as it faces Walt Disney Co later this year, according to Mitchelson.
Shares of Viacom closed down 2.46 percent at $25.34 on Friday while AT&T shares closed flat at $31.07.
###
Originally published: Tuesday, March 19, 2019 at 11:38pm GMT.H/T: Huge thanks to @TVShowsFan for the news!; Additional source: PopCulture.
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