DirecTV's 19.9 million U.S. subscribers lost access to 17 Viacom networks, including Nickelodeon, MTV and Comedy Central, around midnight Tuesday after the two sides remained deadlocked over fees.
DirecTV claims Viacom is asking for a 30% rate increase -- amounting to an extra $1 billion in carriage fees -- while Viacom says it is asking for only "a couple pennies" more per subscriber per day.
The satellite operator said its executives reached out to Viacom both Monday and Tuesday with a new proposal "but never heard back, so DirecTV had to comply with their demand to take the channels down or face legal action," the company said in a statement.
"We have been very willing to get a deal done, but Viacom is pushing DirecTV customers to pay more than a 30% 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," DirecTV executive vice president of content, strategy and development Derek Chang said in a statement. "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."
According to Viacom, DirecTV yanked the channels at about 11:50 p.m. (ET) Tuesday. The media company said the last time it was contacted by DirecTV was 11 a.m. on Tuesday.
Viacom said in a statement, "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."
Viacom programming represents "20% of DirecTV's viewership, and only 5% of its programming costs," according to the media company. For the viewership figure, Viacom cited Nielsen's ratings analysis of DirecTV viewership of ad-supported cable networks plus Disney and Nick Jr. from Dec. 27, 2010, to Dec. 25, 2011, and Kantar Media analysis for the same networks from Jan. 1, 2011, to Dec. 31, 2011. Viacom cited SNL Kagan research for the programming cost estimate.
"We are hopeful that DirecTV will work with us toward a resolution, and stop denying its subscribers access to the networks they watch most," Viacom added.
DirecTV says 17 channels are affected; Viacom says the number is 26, including HD feeds. The channels now unavailable to DirecTV customers are: Nickelodeon, Comedy Central, MTV, BET, VH1, CMT, Logo, Spike, TV Land, MTV2, VH1 Classic, Palladia, Nick Jr., NickToons, TeenNick, Nickelodeon West, Tr3s, Centric, MTV India, Nickelodeon HD, Comedy Central HD, MTV HD, BET HD, VH1 HD, CMT HD and Spike HD.
In place of Viacom's networks, DirecTV is running "a variety of replacement channels available to them on one screen, in a Mix Channel format," according to Chang. For example, 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.
In a frequently asked questions section of DirecTV's website, one question was, "Is DirecTV going to lower my bills if it loses the Viacom channels?" The answer: "If Viacom won't allow us to offer you their channels individually, then we will certainly work to make sure you feel satisfied. Simply call a customer service agent."