That’s what some analysts say this morning about the dispute that has left 20M satellite customers without Viacom‘s 17 channels. DirecTV’s payments to Viacom — at an estimated $2.25 per subscriber each month — amount to about $550M a year for the networks company, or 14% of its revenue, Credit Suisse’s Spencer Wang figures. But even though Viacom says it’s the most popular programmer on DirecTV, Wang observes that it lacks the bargaining clout its peers enjoy. Viacom doesn’t have a broadcast network and stations — assets that strengthen Fox, Disney, and NBCUniversal‘s hands in re-transmission consent negotiations. Viacom also doesn’t have a popular sports network, also typically considered a must-have service. Indeed, another Credit Suisse analyst, Stefan Anninger, is rooting for DirecTV to hold out. “The end result of networks driving higher fees for channels, which distributors, in turn, pass along a portion of to their subs, could be a shrinking pay TV pie, particularly as online video alternatives grow,” he says. Even if DirecTV loses some subscribers “we hope that [DirecTV's] willingness to ‘just say no,’ is contagious.”
Related: No Deal: DirecTV Loses Viacom’s Channels As Carriage Talks Break Down
But Nomura Securities’ Michael Nathanson says that Viacom has to dig in its heels. If it can’t add 60 cents to the $2.25 monthly per sub fee from DirecTV, then it might have to lower prices for other pay TV providers who have Most Favored Nation agreements which guarantee that they pay the lowest rates. If Viacom succeeds in getting DirecTV to increase its payments by 10.5%, then it could add 12 cents to Viacom’s earnings per share in the 2013 fiscal year. That would be “enough to offset any potential risk to a slowdown in advertising next year” related to the ratings weakness at Nickelodeon and MTV. He’s optimistic that Viacom will win a big increase for 2013, and then rate increases of “at least high single digits” a year for the remainder of its deal.
Related: Viacom Chief Says Paramount’s Doing “Extraordinarily Well”: Video
No matter who wins this battle, Janney Capital Markets’ Tony Wible says both companies could lose the war to keep the current system intact. If cable and satellite prices continue to rise faster than inflation, then lots of subscribers may decide to cut the pay TV cord and rely on less expensive video sources — including over-the-air TV and Internet services such as Netflix. “Can [Viacom] afford to lose [DirecTV] at a time where ad revenue numbers are under pressure?” he asks. If people ditch traditional pay TV then it would hurt “all sources of network revenue.”

As a DirecTV sub, I can say that I am not missing Viacom channels. There was only 2 channels that remotely interested me, and I can live without them.
I for one and tired of the shakedown artists (Unions and Content Providers) who use the audience as a negotiation tool. It will soon fail, and backfire. Should be fun to watch.
+1. This.
Amen
I completely agree, but it is not enough to contact Direct TV or Viacom about this. Contact Viacom’s advertisers, the companies that pay them money by the millions to advertise on their programs, and tell them you will not be supporting them as long as they are advertising/associating with Viacom. We have got to hit these money-greedy thugs where it hurts the most, and money is the ONLY thing that makes these bullies listen!
here we go blame the unions
Here are a few facts that people should consider regarding this situation.
Michael White, DirecTV CEO is pulling home $32.6 million whereas the former CEO Larry Hunter, made only $4.8 million in 2009.
DirecTV’s Key Executive’s Compensations come to a staggering $51.355 million.
According to DirecTV’s own site (investor.directv.com) their Revenues Grew 12% to $7.05 Billion during just the 1st quarter of this year. That’s $7.05 Billion (with a B) for just three months. Last quarter/annual it was “over $27 Billion”.
Their GROSS profit margin in March was 49.38% and is up 10.37% since then. Just the last several quarters show them pulling in (per quarter) 3.479B , 3.424B, 3.319B, 3.345B, 3.183B = $16.75 BILLION in GROSS profit (…and that’s during the “great recession”). It is GROSS that this company and it’s exorbitantly paid executives have been/and still are fleecing people like me and millions of other DirecTV customers all these years…and still continuously jack up our rates to get even more money. Where does their greed end? Plus last reporting shows them sitting on $21.91B in assets. On top of all that, DirecTV is also doing a $6 Billion Stock Repurchase Program – (a scheme that increases stock value -which directly benefits company executives’ personal wealth- and gives a hand out to all their friends on Wall Street).
erik – do you even have DirecTV? I’ve had them since 1994 (USSB+DirecTV subs) and I think my monthly rate went up 2 times. Don’t confuse them with your local cable company.
-c
First of all, like in most disputes, there is enough blame to go around. Second, Directv is not stupid. They arent going to give away free money, but if you call them, and you are a loyal subscriber, they will compensate you (in addition to the free channels they are already providing without a call.)
As to this whole notion of “pass through the costs” its just silly BS from Directv. Every company is in business to make the maximum profit it can make. Therefore, Directv (like any company) already charges the maximum it can (to maximuze profits), so it cant pass through the costs in the long term, as it already charges what it has calculated is the most it can to maximize profits.
At the end of the day, they both are going to lose, the question is who will lose more. We’ll see…..
Anyway, to avoid this nonsense, I have basic cable and directv,
but I realize that is not economically feasible for everyone.
Direct Tv probably has more to lose because that’s who the individual customer deals with. Direct TV will lose subscribers over this mess.
Direct TV may loose subscribers, but not as many advertiser viewers as Viacom will loose.
$550 million per year loss for Viacom, so I guess it depends on the value of the percentage of DTV customers that choose to leave to determine who gets hit worst. But $550 million a year lost for Viacom sounds like a hell of a lot to me.
$550 Million is less than 10 times the Viacom CEO’s salary. So unless they have other high costs, they could pay him 10 times as much and still be a huge ripoff. As a Directv subscriber, I say good riddance.
Go to Directvpromise.com and read the messages. For every person threatening to switch to DISH or Fios there are 4 people saluting Directv for standing up to Viacom and saying no! Viacom programing across the board is crap! The kids and teens may be upset but no one is missing the regurgitated programs that air on alll Viacom channels. nor do they miss the 7 mins of commercials that air for every 3 mins of a tv show you see.
Still believe they will compromise.
Missing The Daily Show is currently the worst part, but other than that I can live without the other Viacom channels.
You can watch it online the same day. So no worries.
Fortunately, The Daily Show and Colbert are on hiatus this week.
I agree. I only watch Comedy Central. The rest of the channels are garbage.
As someone who has to have 2 of those channels for my job, it sucks. We have been with Directv for 10+years because their customer service is top notch, but we’ll have to go elsewhere, as much as I HATE to do it.
You’re aware that most of these shows can be viewed online, yeah?
go look at viacom fb page they set up about this.it has backfired 75 to 80% of the people commenting on there are siding with directv.
I recently canceled my Cable subscription entirely in favor of Hulu and Netflix. Subscription TV is a doomed model. I’m really shocked that they continue to try and hold out.
Viacom, I can tell you if I miss a couple episodes of shows I watch, Ill get hooked on something else & not come back. DTV, if youre knicking 10 channels from my packAge, u should credit my account accordingly or give me an alternate like free hbo or add channels from a higher package…THIS MAKES ME ANGRY IF Y OURE NOT PAYING VIACOM BIT I STILL AM. Also stop with the Tec Difficulties card on V channels
DirecTV won’t lose my subscription, but if they don’t provide the Viacom package, they had better reduce my monthly bill accordingly.
I’ve been a dtv subscriber for a while and I really believe they have the best bang for the buck of all the providers. Comcast is a total rip-off which is why I dropped them but kept their wen service
Anyway DTV needs to stand strong. I’ll deal without these channels just for the principle.
Viacom makes it sound like DTV dropped them when they’re the ones requesting the increase, why don’t they make that clear in their ds to see what the honest response from customers would be. Instead they mislead
I hate to say it but while I agree Viacom is taking a risk here, it is Direct TV that could loose out in the end. Joe Blow isn’t going to read the trades or potentially even know about the carriage dispute. All he is going to know is that his kids are pissed nickelodeon isn’t on…
My kids are HIGHLY upset! Its summer for God’s sake!
Yeah it’s summer, tell them to go outside and play.
Have them play outside or read a book.
The kids have the right to play, read AND watch TV! These people criticizing others’ parenting skills are rude and off topic!
Exactly, it’s SUMMER! They should be outside running around and having a good time, not glued to the idiot box watching Spongebob and Teen Mom.
Epic parenting fail right there.
The fact is many kids suprisingly watch TV and PLAY! What a concept. I can only assume you were raised with no TV in your house. Stop telling people how to live their lives. Who uses Epic Fail anyway? Only a coplete nerd is my guess.
What they’re not discussing is the ratings damage to those Viacom Channels. Less ratings = less ad revenue = less money for Viacom. DirecTV has the upper hand here. Losing 20 million homes of potential viewers is a big deal.
I am also a DirecTV sub, and I hadn’t even realised I lost those networks! I only watch about three shows on Viacom channels, and none are must-see shows. Stay strong, DirecTV, don’t fold! I don’t care to see my bill increase!!
Directv is the loser,,,as a customer, I cancelled my account today.
I also looked on their website and they still are telling new customers that the channels are available,,,,,tsk tsk tsk Directv and so long.
I’m sure they’ll miss all the Viacom plants.
Not.
Last night on MTV I watched the address from DirectTV CEO’s on a repetitive loop. Its the most I’ve watched MTV in years. And what? No LOGO? No RuPauls drag race? This is worse than 9/11.
Viacom will have disappointing ratings, Directv still has the NFL exclusive.
I think Viacom has a lot more to lose. Their key channel that people keep bringing up is Nickelodeon and the ratings have been dropping on that for some time. Besides I am sure a lot of households that have DirecTV also have Netflix, so they can watch a ton of Nickelodeon shows there. I will miss Comedy Central, but I can just watch those shows online anyway.
i have been a good customer for years and we just went through this same thing with another company and i am sick of it , i do watch several of these channels some that just had new seasons start. if it is not fixed soon i will be switchig companies.
I think Directv is doing the right thing. I have kids and they barely watch Nickeloden. If Viacom really wants this all worked out they should agree to let customers pay for the channels they actually watch.
Direct tv you are going to lose so many customers because most kids are the people who watch tv and they watch nick and also the teenagers watch comedy central you are so stupid would you rather pay 1 billions dollars or lose all of your customers
You’re the stupid one if you think DirecTV would be the one paying for this. What happens when a company’s expenses go up, genius? Answer: so do their prices. YOU pay for the increased fees, not them.
hey directv. The mix channels you are a ring, or not doing me any good because I cannot get those channels because they are not part of my package. That is just making your customers even more frustrated. If you’re knocking out 17 channels in my subscription, I expect my monthly rate to be lower. I haven’t heard anything from directv on that issue
Viacom who?
DTV should stick it to these overpaid, bloated providers. $550M is 14% of their yearly earnings! Really? BooHoo to their 30% hike!
My biggest issue is the same as others have mentioned, if I don’t have access to these channels why am I paying for them? There should be compensation from DTV – heaven forbid I don’t pay my contractually obligated bill every month.
Via who???
You’re right on the money. Screw them. Hold your ground DIRECTV!!!
In this economy, with so many unemployed and frozen salaries, Viacom wants more money? For what? Where’s the increased value in their product that deserves a price hike?
Use hulu or bit torrent for daily show and cobert report. Any other problems?
If dtv do not get these channels I will go else where those r the main channels I watch. Also,im still paying for something im not getting is BS and they only took 5$ off so yes Iam one angry customer right now.
So call customer service and have them credit your account. The internet is full of people commenting on doing this already, so quit your complaining and pick up the phone.
Where are all these rocket scientists coming from anyway? Was this story linked on Drudge or Huffpo?