It is now day four of the Viacom/DirectTV epic battle over your wallet. After Viacom used Comedy Central’s The Daily Show as a pawn, cable came out in support of satellite.
Last Tuesday, DirectTV and Comedy Central’s parent company, media giant Viacom, reached a standstill during contract negotiations to keep Viacom’s channels in DirectTV’s channel line-up. In response to Viacom’s proposed 30% programming fee increase, DirectTV pulled all Viacom programming from their channel line-up. At stake in this elaborate messaging campaign is your wallet.
Pulling channels is a common tactic content carriers, like DirectTV, use when programming fee negotiations stall due to outrageous demands imposed by content providers like Viacom. Nor is the messaging battle new, as each side engages the viewers to support their side and force the hand of the opposition.
However, in the age of on-line petitions, free on-line content, Twitter, Facebook, and other social media avenues, new strategies have been employed. After DirectTV assured their customer base that full episodes of their favorite shows would continue to be available on the show’s website, Viacom pulled all full episodes from their channels, including Comedy Central’s most popular show, The Daily Show with Jon Stewart.
The strategy was a bold move intended to pull viewers who access the show online into the messaging fray. It proved somewhat successful in creating a Twitter buzz but ultimately the debate came back to the real issue of consumer costs.
Viacom’s justification to the viewer is that the increase is simply “pennies per day,” and, “considering the contract they signed was 7 years ago, this means they’ll be seeing a yearly increase of about 4%. Not particularly demanding at all. Especially not compared to the rate increases DirecTV has pushed on to consumers.”
DirecTV has accurately informed the customer that the increase will mean higher bills going forward. The increase demanded by Viacom is 30%, thereby generating nearly a billion dollars in new revenue for Viacom each year. If DirecTV caves to Viacom, all other content providers will follow suit when those contracts are up. This includes Fox Broadcasting’s parent company News Corporation; Disney and ABC’s parent company, Disney-ABC Cable Networks Group; along with MSNBC’s parent company, NBCUniversal Media, LLC.
In an unprecedented move, the American Cable Association has come out in support of their chief competitor, DirecTV. In a statement released by ACA President and CEO Mathew M. Polka, he highlighted the microscope content giants are coming under. Polka states, "In the past six months, we've seen an abrupt spike in the number of broadcaster- and cable programmer-initiated blackouts in lieu of amicable agreements putting the interests of consumers above all else. Without a doubt, programmers like Viacom that show only callous disregard for consumers are clearly inviting a regulatory response from Washington, D.C., where lawmakers are showing increasing interest in updating rules and laws that are seen as contributing to market malfunctions and rampant consumer harm."
One thing is clear in the battle of media titans, if DirecTV caves all other content providers will follow suit and your cable and satellite bill will go up. It also ensures that more people will cut cable/satellite out of their budget, resulting in fewer viewers for the content giants, and reduced ad revenues for all parties involved. The net result will be increased job loss as all entities try to cap costs to maintain revenue.
It’s time for Viacom to recognize their inability to plan seven years ago, embrace the new normal we all live in, adopt a ‘steady as she goes’ philosophy, and come to terms with DirecTV instead of creating a price point for Jon Stewart that is increasingly becoming out of reach for many consumers.