Published on March 25, 2019, by AdAge
Viacom resolved its contract dispute with AT&T Inc. staving off a blackout that would have kept millions of pay-TV customers from seeing cable channels such as Nickelodeon and MTV.
AT&T had reportedly been pushing to have Viacom utilize its Xandr ad product as part of the carriage agreement.
The move ends a high-stakes standoff between the largest pay-TV company and a programming giant that owns the No. 1 kids’ network and other top channels. Tensions have increased in the age of cord cutting, with satellite and cable providers trying to squeeze more money from a shrinking pool of subscribers.
AT&T, which owns the DirecTV and U-verse TV services, has seen both sides of these contract disputes. Last year, it acquired Time Warner Inc. for $85 billion, giving it networks such as HBO and Cinemax. Not long after, Dish Network Corp. pulled those channels from its lineup following failed contract negotiations.
Viacom had lobbied viewers to put pressure on AT&T. The media company began activating a “crawl” message on its networks, alerting customers of the conflict and urging them to contact the pay-TV provider. AT&T has about 24.5 million customers.
Viacom, which also owns Comedy Central and BET, previously said it made a series of offers to AT&T that allow the company to lower customers’ bills. The New York-based media company accused AT&T of using its new market position, as owner of Time Warner, to favor its own content.
“AT&T continues to insist on unreasonable and extreme terms that are totally inconsistent with the market,” Viacom Chief Executive Officer Bob Bakish said in a memo to employees last week. “Having recently acquired Time Warner, AT&T appears intent on using its new market power to prioritize its own content at the expense of consumers, who are growing increasingly dissatisfied with paying more for less.”
AT&T, in its response, called Viacom “a serial bad actor” in negotiations with pay-TV companies.
“The facts speak for themselves: several of Viacom’s channels are no longer popular,” AT&T said in an email. “Viacom’s channels in total have lost about 40 percent of their audience in the past six years.”
The war of words was typical of such carriage disputes, which often get publicly heated before resulting in last-minute deals.
Viacom shares rose as much as 8 percent, the most since Aug. 9, to $27.36 in New York trading Monday. Investors had feared AT&T had the upper hand, sending Viacom down nearly 10 percent in the week leading up to the potential channel outage. AT&T shares fell 0.3 percent Monday.
~Bloomberg News with Ad Age
