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Viacom, DirecTV Spar Over Epix

19 Jul, 2012 By: Chris Tribbey

The spat between Viacom and DirecTV has escalated — this time over fees to carry Epix.

A DirecTV release said Viacom is demanding DirecTV carry the Epix channel at a cost of more than $500 million as part of negotiations to give Viacom channels back to the satellite carrier’s customers. Viacom has denied the allegation.

“We know our customers don’t want to pay such an extreme price for an extra channel. They simply want the ones they had returned to them,” DirecTV said in a statement. “We stand ready and willing to work with Viacom to get this done and, once again, ask Viacom to do the right thing and restore these channels to our customers immediately.”

Epix is co-owned by Viacom’s Paramount Pictures, along with Lionsgate and MGM. Viacom said it has only offered various proposals to DirecTV, some including Epix, others without it, and none asking for a sum of $500 million.

“In sharp contrast to DirecTV’s public spin, it’s now clear that they have no intention of working with us to expedite a resolution and return our 26 networks to DirecTV subscribers,” Viacom countered. “Unfortunately, we have not seen any urgency from DirecTV in working constructively with us on the compromise that could have already brought back your channels.

It’s just the latest public back and forth between the two companies since Viacom channels went dark July 10 for DirecTV customers over the carriage fee dispute. Both sides have set up websites attacking the other, and both have taken their dispute public, via Facebook and in blog posts.

Shortly after its channels went dark on DirecTV, Viacom pulled many full-length episodes of its shows from a variety of channels on its websites, including for Comedy Central and MTV. DirecTV noted July 16 that some Viacom content was still available for free on Hulu, prompting Viacom to make those shows available again for free on its own sites a day later.

Derek Chang, DirecTV’s EVP of content, strategy and development, said the impasse hinges on Viacom’s demand for a 30% increase in fees, which would equate to an extra $1 billion.

“We have absolutely no problem compensating Viacom fairly, but they have now knowingly put our customers in the unreasonable position of either accepting their extravagant financial demands or losing some of their favorite TV shows,” he said. “We feel our customers should not have to pay more for these networks than the customers of any other TV provider. We reiterated this to Viacom today and have not heard back from them.”

Viacom has countered that in negotiations, DirecTV “has moved backwards significantly and created more obstacles to reaching an agreement.”

“Rather than fulfill its promise to subscribers for a quick resolution of this negotiation, it now appears that DirecTV will continue to purposefully and indefinitely deprive its subscribers of MTV, Nickelodeon, Comedy Central, BET, TV Land, VH1, Spike, CMT and 18 other Viacom channels,” the company said in a statement.

It all adds up to one big mess that equals the largest carriage dispute over Viacom channels and the most channels ever dropped by a multichannel video programing distributor, according to BTIG analyst Richard Greenfield.

He noted that after Cablevision experienced several carriage disputes with ABC, Fox and Scripps in 2010, it took time for that provider to recover. The longer DirecTV is missing Viacom content, the more trouble it might have with future negotiations, Greenfield wrote.

“The Viacom battle has lasted long enough that whoever is next up to negotiate with DirecTV should be raising their demands notably, as it will be very hard for DirecTV to keep repeating this ‘test’ of will power,” he wrote, noting that Comcast, Dish Network and Cablevision are all capitalizing on the Viacom-DirecTV dispute.

Still, Viacom, which is losing the eyeballs of DirecTV’s nearly 20 million subscribers, is also hurting, Greenfield stressed.

“It’s just a matter of who is going to blink first,” he wrote.

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