DirecTV seems to have the edge in my non-scientific checks with industry watchers who monitored the contract dispute that for 10 days prevented 20M satellite customers from seeing Viacom’s 17 channels. But there are champions for both sides — and nobody outside of the companies knows enough about the financial terms to make a solid case for his or her view. Here’s what I’m told: DirecTV’s first year payment to Viacom in the seven-year deal is a double-digit percentage step up from what it was paying before, but less than the 30% that DirecTV said Viacom initially wanted. After that, DirecTV’s outlay for Viacom’s channels will rise by mid-single digit percentages each year. The deal gives DirecTV the right to stream Viacom programming to its customers — both inside and outside of their homes — via the satellite provider’s TV Everywhere program. And it doesn’t have to carry premium movie channel Epix, but has the option to pick it up.
When the talks initially broke down, Viacom said that its channels accounted for about 5% of the nearly $10B that DirecTV spent on programming last year — about $500M. Some say that the new deal would bring that to 6%, or $600M, but that’s in dispute. Whatever the case, DirecTV’s outlays apparently will be high enough so Viacom won’t have to revise contracts that assure other pay TV providers that they’ll pay the lowest rates. But they may not be high enough to meaningfully compensate for the advertising Viacom is losing as a result of the steep ratings declines at channels including Nickelodeon and MTV. Meanwhile DirecTV tells customers in an email that their “patience during this unfortunate Viacom blackout has helped to serve notice to every media company that you and our other customers will not be bullied” — presumably into paying extravagant amounts for programming.
What do the experts on Wall Street say? Depends on whom you ask. Bernstein Research’s Todd Juenger is firmly in the DirecTV-won camp. “The Viacom/DirecTV dispute may be remembered as a critical turning point in programmer/distributor negotiations,” he says. “For the first time in memory, it was the distributor that won the public relations war.” He says that the terms for Viacom were “way below the market’s and Viacom’s expectations.” Wells Fargo’s Marci Ryvicker also believes that DirecTV “may have won this battle….It is good for both companies that this is over, but we think leverage may have been with the distributor this time.”
Nomura Securities’ Michael Nathanson couldn’t disagree more. “This deal reinforces the power of Viacom’s networks and brands, especially in the face of weak short-term ratings,” he says. “It also helps set the template for future deals and debunks the bearish thesis of dropping any networks or not having enough clout over distributors given recent concerns over Nickelodeon ratings.” Barclays Capital’s Anthony DiClemente also concluded that “the deal represents a favorable outcome for Viacom—including a more than 20% initial step up in fees—and is yet another example of the leverage that content owners maintain in these negotiations.”
Investors also seem divided. DirecTV shares fell 1.3% on Friday, while Viacom was -0.5%. But if you start at July 9, just before the dispute became public, then DirecTV is -1.9% while Viacom is -2.6%.


I can tell you who lost; DirecTV customers who will still be charged their full bill even though all those channels were removed for 10 days.
Yeah, “all those channels” of which any one given Directv household watches all of 2 shows on average.
Then those DirecTV customers were being pretty foolish. I know people who called DirecTV threatening to cancel over not having the Viacom channels, and DirecTV offered a monthly discount, free NFL Sunday Ticket, HBO, Showtime, etc. to get them to stay.
You can threaten to cancel DirecTV all you want, but they have you in a contract. So, sure, cancel. You still have to pay for the remainder of your contract.
Im sure that your “friend” got NFL Sunday ticket for free. My friend called and complained and they gave him and six friends Super Bowl tickets for life.
As a paying consumer, it is fully your responsibility for not having immediately called DirecTV when your channels went dark to find a solution for your inconvenience. Subscribers were offered either free short-term access to premium channels or $25 in credits over a 2-3 month window.
Since when has a cable provider contacted YOU to reimburse YOU for your troubles? This is the real world and you need to be responsible for yourself.
It’s in any company’s self interest to make sure customers are happy enough to remain customers. Nobody expects them to be mind readers, but customer research combined with common sense should give them indications of trouble that can be averted before they lose a customer for good. Once a customer has motivated themselves enough to end the relationship, it’s probably too late to change their minds.
“weak short-term ratings” LOL….does this idiot work for Viacom? Nick is in a tale spin from which it will never recover.
Whoever won, it sure wasn’t the consumers. Nothing that happened here addresses their major pain points, and if anything seems to reinforce them.
They’re still being charged too much for too many channels and too many shows they don’t care about. And they’ll probably face more and more of these negotiation-fueled programming outages, where the industry fights over money while giving the customers no compensation and no meaningful apologies.
Cut the cord if satellite companies are too much of a pain, especially for the price. I’m a cable customer till the end of the Olympics that is, and even so, it’s not worth the money. I’ll Roku/Netflix everything from here on out.
Uhhh Bruce, if you believe you’re paying too much for a product, don’t pay for it anymore.
Yes, the individual decision to “cord-cut” is the final step in losing the customer, potentially for good. Of course this doesn’t happen all at once, but it is happening, and particularly if you focus in on the youngest, least-set-in-their-way customers.
Meanwhile, keep kidding yourself that industry is not hurting itself in the long run. The immediate impact is muted because many customers are on contract, or were bought off with a short-term perk, or didn’t bother to call in to demand one.
But while contract or inertia may have prevented immediate action, it doesn’t mean customers didn’t notice that they got hurt, that this way of buying entertainment is on a steepening decline of being less reliable and less cost effective, and that they weren’t pushed one step closer to being ready to bolt.
Just cut the cord. Buy a Roku box and save.
Yep, cut the cord and wait till your internet bill rises to compensate for your lack of a cable bill.
Comcast is already talking about tiered packages where high bandwidth customers who watch a lot of video online are charged more. They will get their money out of you one way or another.
Of course you can always throw up an antenna for locals and get shows on DVD, but how many more years will dvd be around? Plus theres talk of broadvpcast dying and switching to the cable model.
Its only a matter of time before cutting the cord will cost as much as not cutting the cord, the best way to avoid it is wean yourself off their programming entirely and find new hobbies. Until then you will be enslaved to the content providers and distributers in one form or another, and they will find new ways of keeping the yoke around your neck.