DirecTV vs. Viacom: Why subscribers should support DirecTV

DirecTV vs. Viacom: Why subscribers should support DirecTV

If you have DirecTV service, don’t expect to watch any MTV or Nickelodeon today. Nor Comedy Central, 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 or Spike HD – because DirecTV pulled all Viacom-owned channels after the two companies failed to come to an agreement on licensing fees.

The spat between the two companies boils down to money, of course. But the reality of this corporate battle is far more interesting than a mere quibble over dollars and cents; it gets to the heart of all that is wrong with traditional television service.

Battle breakdown

Here are the basics of the situation: DirecTV pays Viacom boatloads of cash every year to carry Viacom’s channels — all 26 of them. This time, Viacom wants DirecTV to pay more for the channels – about $1 billion more. DirecTV doesn’t want to pay this. Instead, DirecTV wants to pick and choose which Viacom channels it carries, and leave the rest behind.

“We have been very willing to get a deal done, but Viacom is pushing DirecTV customers to pay more than a 30 percent increase, which equates to an extra $1 billion, despite the fact that the ratings for many of their main networks have plummeted and much of Viacom’s programming can be seen for free online,” said Derek Chang, DirecTV executive vice president of Content, Strategy and Development, in a statement. “Viacom sent us a letter last night that outlined our obligations to remove the channels by midnight or face legal action just as they were falsely telling viewers DirecTV was responsible. Let’s be clear, Viacom took these channels away from DirecTV viewers.”

Viacom claimed in a blog post that the whole thing is DirecTV’s fault, that it offered the satellite television provider a “fair deal,” but that DirecTV “refused to engage in meaningful conversation.”

The dispute highlights the growing discontent between television content providers (like Viacom) and television service providers (like DirecTV). Content providers want to stick to the status quo model of “bundling,” which requires TV service providers to carry a set package of channels. However, TV service providers want to be able to pick and choose which channels to offer, which would allow them to compete more easily with video streaming services like Netflix by charging less for TV service.

Dollars and business sense

Companies like Viacom make money in three ways: advertising revenue on their channels, sales and licensing fees from merchandise based on the shows and movies they create, and fees paid by cable and satellite companies like DirecTV. The more channels a company like Viacom has, the more money it can make. But launching a new channel is only a successful endeavor if it can get the shows on that channel in front of as many eyes as possible, which boosts ratings and increases the amount of money it can generate from ads and merchandising. To do this, companies like Viacom force providers like DirecTV into carrying new or lesser-known channels with the hopes of increasing viewership on those channels, thus boosting revenue. 

So from Viacom’s point of view, allowing TV distributors to pick channels a la carte makes no sense – it has invested billions of dollars to create shows and channels. If TV distributors don’t carry these channels, the shows will go unwatched, and Viacom will lose massive amounts of money. 

DirecTV, on the other hand, sees that customers aren’t watching particular channels — or are watching shows from these channels online. So it doesn’t want to pay to carry them. Paying less for channels people don’t watch would, theoretically, result in lower subscription costs for customers. This is good for DirecTV, since it is now competing with options like Netflix, which charges just $8 a month for service while DirecTV charges a minimum of about $30 or $40 for service. Sure, you get a lot more from DirecTV for that money, but more and more people are finding that video streaming services are a better deal. And that means DirecTV needs to find a way to cut costs so it can cut the price of access for customers. Better prices means more customers, which in turn means more money for DirecTV.

Conclusion

Of course, even if DirecTV got its way in this whole Viacom debacle, it wouldn’t mean that customers would also have the luxury of choosing channels a la carte – which is where the television industry should ultimately go. Still, allowing such a deal between TV content providers and TV service providers is the first brick that must fall before the whole, outdated wall that is the television industry’s business model can crumble, and then be rebuilt for the Internet Age. None of this is to say that DirecTV is fighting for you, the customer — it’s not. DirecTV wants to make as much money as possible; that’s its only mission. In this case, however, it just so happens that what is good for DirecTV is, ultimately, good for TV viewers.

So if you turn on your television today and find “SpongeBob SquarePants,” or “The Colbert Report” missing, resist the urge to lash out at DirecTV – it’s trying to save you (and itself) money. Viacom wants to keep things the way they have always been: bad, wasteful, and expensive.

[Image courtesy of Ambrophoto/Shutterstock]

The views expressed here are solely those of the author and do not reflect the beliefs of Digital Trends.

Home Theater

Cord-cutting has grown by 48 percent in 8 years, according to Nielsen

People are continuing to ditch cable but not all cord-cutters are the same. In fact, there are two distinct groups within the cord-cutting universe, with a very small, yet growing third group that's worth paying attention to.
Home Theater

Looking to cut cable? Here’s everything you need to know about Pluto TV

Pluto TV offers plenty of entertainment in a fashion similar to live internet TV services, only at no cost — you don’t even need to register. Too good to be true? Here’s everything you need to know.
Home Theater

Cutting the cord? Let us help you find the best service for live TV streaming

There's a long list of live TV streaming services available to help you cut the cord and replace your traditional TV subscription. Each is different in important ways, and this guide will help you find the best one for you.
Home Theater

New TV? Here's where to go to watch the best 4K content available

Searching for content for your new 4K UHD TV? Look no further. We have every major source of the best 4K content, along with the cost, hardware requirements, and features that make each service worth a look.
Home Theater

Set your ears free with the best completely wireless earbuds

If you can't stand the tangle of cords, or you're just excited about completely wireless earbuds, you're going to need some help separating the wheat from the chaff. Our list serves up the best true wireless earbuds around.
Home Theater

Spotify adds simplified Car View mode for Android users

What was once just a test is now a reality: Spotify is rolling out a new, simplified in-car user interface for all Android users called Car View, which automatically engages when the app detects a car Bluetooth connection.
Features

Netflix’s latest price increase heralds the end of streaming’s golden age

Netflix’s recent price rise is just the latest in a string of signs that streaming’s golden age is nearly over. As more services enter the fray, content will be further partitioned, signaling the end of streaming’s good old days.
Home Theater

How much are the initials ‘LV’ worth? $700 if you put them on your earphones

If you're looking for truly wireless earbuds that make as much of a statement about the state of your finances as they do about your high-tech street cred, Louis Vuitton's Horizon earbuds fit the $995 bill.
Home Theater

What’s new on Amazon Prime Video (February 2019)

Amazon Prime Video adds new titles each month that are available for free to all Prime members. Check out our list to find all the content hitting Amazon Prime Video in January and February, from new original series to classic films.
Home Theater

What are HDMI ARC and eARC? Here’s how they can simplify your home theater

HDMI ARC is one of the coolest TV features at your disposal. But if you're like most folks, you have no idea how it works, if you even know what it is at all. Here's our primer on HDMI ARC, as well as the next generation technology, eARC.
Home Theater

Want to mirror your smartphone or tablet onto your TV? Here's how

A vast arsenal of devices exists to allow sending anything on your mobile device to your TV. Our in-depth guide shows you how to mirror content from your smartphone or tablet to the big screen from virtually any device available.
Deals

Need a smart speaker? Amazon knocks $50 off Sonos Beam soundbar with Alexa

If you're looking to add some oomph to your home audio setup, then through February 3, the Alexa-enabled Sonos Beam is on sale for $50 off, bringing this excellent smart sound bar down to just $349 on Amazon.
Home Theater

Walmart abandons its plans for a streaming Netflix killer

Rumored plans for a Walmart owned, Vudu-labeled Netflix streaming killer have been shelved according to a new report from CNBC. The billions it would have needed to invest in order to compete apparently gave the mega retailer cold feet.
Home Theater

Dolby’s secret recording studio app may soon exit stealth mode

In secret testing since June, Dolby's stealth recording and social network app may soon be ready to make an appearance. Dolby 234 blends unique noise-canceling tech with Instagram-like audio filters.