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Published on July 19, 2012 by in Columns

It happens all the time.

However, it’s less common for behind-the-scenes contract negotiations to spill across the front pages of newspapers and business journals across America.  The ongoing contract renegotiations between DirecTV and entertainment giant Viacom have turned ugly—with both sides attempting to win customer allegiance in a white-hot PR war.

Viacom DirecTV Dispute

When negotiations broke down, the PR war began to heat up. And it escalated quickly.

For more than a week now, DirecTV subscribers have gone without Viacom’s 26 channels, including Nickelodeon, MTV, VH1 and Comedy Central.  According to press releases issued by both sides following one of the largest blackouts in television history, Viacom was asking for a modest rate increase, “that amounted to an increase of only a couple pennies per day, per subscriber.”  DirecTV fired back, claiming that there was nothing modest about Viacom’s proposal, calling it “more than a 30 percent increase, which equates to an extra $1 billion.”

DirecTV was also quick to point out that many of Viacom’s higher-rated shows are available to stream freely on the Internet.  Viacom responded by removing all of their streaming episodes from network websites.  DirecTV responded, in turn, by saying, “Viacom is now not only holding DirecTV customers hostage, but all online viewers as well.”  Early this week, Viacom began streaming new episodes of “The Daily Show” and “The Colbert Report.”  A spokesman for Viacom said, “You will remember that we never said we were taking all our full length episodes down, just slimming down on our offerings.”

Needless to say, it got ugly.  Shortly after the blackout ensued, Viacom posted a Facebook photo showing Spongebob Squarepants, with the words, “Who lives in a pineapple under the sea?  I don’t know.  I have DirecTV.”  If the response to Viacom’s snarky photo are any gauge of public opinion, DirecTV is winning the PR battle.  Most commenters seem to believe that the satellite provider is trying to protect its customers against a rate increase.  And they seem to view Viacom as greedy.

SpongeBob DirecTV

Shortly after the blackout ensued, Viacom posted this on the company’s Facebook page. Almost no one was amused.

But who’s right?  Well, as a DirecTV subscriber myself, I can’t say that Viacom has convinced me to side with them—for higher rates—and against my best interests.  But my larger problem is with the entire structure, and this may be where DirecTV is capable of winning more hearts, and more customers.

My current satellite package has about 120 channels.  You know how many of those I watch with any regularity at all?  Two.  That’s right, two.  And I would bet that you probably don’t watch more than five or ten channels in any given month.  So why are we paying $80 or more for so little programming?  It’s the archaic and obscene business model we’ve been forced to accept.

Paul Tassi, a contributor at Forbes.com, wrote a brilliant analysis of this flawed system last week.  He points out that the way we are charged for television is nothing at all like, well, anything else we buy.  “You want a newly released book?  You buy one.  A video game?  You buy one.  A movie?  You buy one.  A TV show?  Now hold on a second…”  He goes on to compare the current TV subscription model to wanting a book, and being forced “to buy every bestseller at Barnes and Noble,” or “making someone buy a movie ticket to every show in a theater, despite only wanting to see one feature.”  And he’s exactly right.  Please explain to me why I’m paying for Nick, Jr. or QVC.  Or the other 116 channels I never watch.

Mike White, the CEO of DirecTV, said a peculiar thing in a video statement about the dispute.  “At the very least, we think Viacom should give you the choice to pay for only those channels you watch, but so far they’ve refused.”  Is he really suggesting a-la-carte programming?  Would DirecTV be open to such a thing?

I think that’s where we’re headed.  But I think it would be naïve to believe that this dispute will be the impetus for it.

Originally printed in “Pulse,” 07/19/2012.
© Damien Willis, 2012.  All rights reserved.

 
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