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Small Ops Gird for Viacom Carriage Battle

MTV, Comedy Central, Other Nets Could Go Dark To NCTC Members April 1 3/25/2014 4:44 PM Eastern

More than 5 million rural cable subscribers could be without their MTV and 22 other Viacom networks at midnight on April 1 if the content giant does not reach a carriage deal with the National Cable Television Cooperative.

The NCTC, which represents about 800 cable operators in mostly rural markets across the country, is still negotiating with Viacom and is hopeful they can reach a deal before the deadline. But unlike other negotiations which were decidedly more cordial, this dispute has the potential to turn nasty.

NCTC president and CEO Richard Fickle in an interview Tuesday said that what makes the current negotiations unique is that it could be the first time the NCTC is faced with a significant blackout of programming. And unlike earlier carriage negotiations, when the parties worked out their differences during 30-to 60- day extensions of old deals, no such reprieve appears to be coming.

Fickle said price is the main issue – Viacom is asking for a rate hike that by some estimates is greater than 40 times the current inflation rate. It is a premium, Fickle said, that is forcing small operators to make a hard choice.

“It may be the first time you see small operators saying ‘I’ve got to make the choice on whether I follow the traditional path and carry all these video channels or make  some trade-offs and support growth in broadband and some other alternatives,'” Fickle said.

Viacom has been involved in some heated carriage disputes in the past – in 2012 the programmer went dark to DirecTV’s 20 million customers for about nine days. And though Fickle said he hopes the two sides can hammer out an agreement, his members are girding for a battle.

“We may be at the breaking point with some of these markets in deals like this,” Fickle said.

A Viacom spokesman confirmed that negotiations with NCTC continue, but declined further comment.

If the two sides can’t come to a compromise, the dispute could continue just as small operators are converging on Washington, D.C., for the American Cable Association’s Summit April 1-3. That, said ACA president and CEO Matt Polka, could shed an even brighter spotlight on the issue.

Reining in high programming costs has been a major issue for distributors of all sizes for years and the federal government is taking notice. In the past month, Federal Communications Commission chairman Tom Wheeler has proposed eliminating coordinated retransmission consent negotiations by television stations in the same market and is expected to take a hard line on other prgramming cost issues.

“They’re going to shine a light on themselves that’s for sure,” Polka said, adding that the upcoming review of the Comcast/Time Warner Cable merger, where programming pricing and choice will be major issues, could also be a factor.

“These all tie together because a company like Viacom has to work with a big company like Comcast/Time Warner and we expect down the road a big company like Comcast/Time Warner Cable pays less. And here comes the content companies to our members – smaller companies with less leverage – to pay more. There’s definitely a lot of focus and we think there should be a focus on this kind of behavior because smaller consumers in our member’s markets are being harmed.”

September