DirecTV and Viacom made peace Friday after a nine-day-long blackout of Nickelodeon, MTV, Comedy Central and other cable channels.
DirecTV, which distributes TV to about 20 million households, said in a statement that the channels were restored before dawn Friday. Viacom affirmed that the two sides had reached a new agreement and said little else.
The two companies had been battling over how much DirecTV should pay for a bundle of Viacom's cable channels. The disagreements played out in public when DirecTV's rights to carry the channels expired, triggering the blackout.
The terms of Viacom's new deal with DirecTV were not disclosed, but DirecTV said it was a “long-term agreement.”
Viacom's channels had previously received roughly $500 million a year from DirecTV. Given DirecTV's public statements that it spends $10 billion a year on programming, Viacom asserted that it represented only 5 percent of the company's programming costs.
With the new deal, Viacom will represent at least 6 percent of DirecTV's programming costs, implying a gain of at least $100 million, to $600 million or more a year. DirecTV had previously said that Viacom was demanding more than $1 billion over the length of the contract, which lasted for seven years. It is unknown how long the new agreement will last.
Michael Nathanson, a media industry analyst for Nomura, said in a note to investors that he believed the new deal is consistent with Viacom's “prior guidance for affiliate fee growth of high-single to low-double-digit growth.”
He added, “This deal reinforces the power of Viacom's networks and brands, especially in the face of weak short-term ratings.”
Nickelodeon has suffered from ratings declines in the past nine months, and those declines were aggravated by the blackout this month.
The new agreement includes new digital programming rights so that subscribers can view Viacom shows on computers, phones and other devices. The fact that Viacom freely distributes some shows on the Internet already was a point of contention in the dispute with DirecTV. (Some distributors say that the Internet streaming of shows undermines their business model.)
Another point of contention involves Epix, a movie and entertainment service co-owned by Viacom. DirecTV had asserted that Viacom insisted it start to carry Epix at a cost of more than $500 million. Viacom disputed DirecTV's characterization of that negotiation. Regardless, on Friday, DirecTV noted in its news release that carriage of Epix “is not required” by the new deal; Viacom noted that carriage of Epix is “an option” in the new deal.
Viacom said in a short statement that it is “extremely pleased to bring its programming back to DirecTV subscribers, and thanks everyone affected by the disruption for their patience and understanding during this challenging period.”
DirecTV went a little further.
“The attention surrounding this unnecessary and ill-advised blackout by Viacom has accomplished one key thing: it serves notice to all media companies that bullying TV providers and their customers with blackouts won't get them a better deal,” Derek Chang, an executive vice president at DirecTV, said in a news release. “It's high time programmers ended these anti-consumer blackouts once and for all and prove our industry is about enabling people to connect to their favorite programs rather than denying them access.”