Contract talks are continuing between DirecTV and Viacom, owner of 17 channels dropped from the satellite provider last night.
"We're making slow progress," Derek Chang, DirecTV's executive vice-president of content, strategy and development told deadline.com Wednesday.
Chang reportedly told the website he has not decided whether or not customers might be entitled to a discount or rebate in return for losing Viacom's 17 channels if the contract talks continue for some length of time.
"We're going to do what we can to keep them happy," Chang told the website. "How we deal with that specifically will depend on what happens here."
Money is the issue.
According to Chang, Viacom wants a 30 percent increase in carriage fees for the channels in the first year of a multi-year contact with "annual escalators well in excess of normal inflators," reported the website. Contracts normally run from five to 10 years, he reportedly said, adding Viacom has "certainly rejected more than a double-digit increase" but gave no more details.
Viacom disagrees. It is reportedly declaring DirecTV's offer lower than any other distributor. But Chang added, "they won’t even tell us what their lowest rates are and have a conversation on that."
According to Wall Street analysts, it is estimated that under the previous deal, DirecTV was paying approximately $2.25 a month for each DirecTV household that receives Viacom's multiple channels, reported the website.
Chang has previously said DirecTV is "not going to allow our customers to be discriminated against." That "you can't absorb a 30% plus increases for your customers without significantly starting to increase their bills…. Once that starts to happen, it's a bad spiral."
This dispute may mean the satellite provider will fight back with a drive to offer channels individually instead of in packages, said deadline.com.
"If programmers are asking for rates that are significantly higher than they’ve been, and they believe that's what those channels are worth, at some point you have to say, 'Well then, let the customers pick the ones they want.'" Chang told the website. In general, programmers want any contractual agreement to include carriage of all their channels instead of letting subscribers pick and choose.
Programmers reject that idea because "they want their cake and they want to eat it too," he reportedly said.
"They want to try to push significant rate increases but then demand that you put the product in front of every customer. And that's a tough proposition because not every customer watches every channel."
He said the ratings for channels including Nickelodeon are way down.
"I don't know how you reconcile 20 to 30 percent declines in ratings with 30 percent increases in rates, other than the fact that there's some symmetry going both ways," he reportedly said.
Both sides have taken the fight to their public with the websites directvpromise.com and whendirectvdrops.com. The debate also continues on Twitter with DirecTV promoted the hashtags #DIRECTVhasmyback and Viacom encouraging its subscribers to call the TV provider.
The channels dropped from DirecTV 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.
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