Negotiations about how much money needs to change hands between MTV, Nickelodeon and Comedy Central owner Viacom and Direct TV and U-verse cable owner AT&T to keep the channels on the air have stretched beyond a deadline set by both companies. The threat AT&T has held over Viacom management is that it will pull the channels and rile consumers who will lose out on their favorite shows. However, for the time being, while the deadline of midnight Friday has passed, the channels are still live.
In the contract which just expired, AT&T paid Viacom approximately $1 billion a year to carry Viacom channels. AT&T believes its Direct TV and U-verse systems have enough other content and channels to keep its customers loyal even if MTV, Nickelodeon and Comedy Central are kicked off the system. At least that is what AT&T management hopes will be the case if there is no new contract. Viacom management has pushed the position that content on its channels is so important to viewers that Direct TV and AT&T U-verse subscribers will cancel if they lose access to the programs. MTV management can make the case that it has carried music videos from the most popular rock bands of all time.
According to Deadline Hollywood, the two AT&T systems have nearly 25 million subscribers, so the telecom company’s leverage with Viacom is substantial. Viacom’s networks are popular among satellite and cable TV subscribers, and this is its leverage. The Nickelodeon network, in particular, is among the most watched networks on cable and satellite networks.
The reasons for the bruising negotiations are not new. Cable and satellite TV companies needed popular programs to build subscriber bases. As they added hundreds of channels of sports, entertainment and news, each individual channel became less critical, or at least this became the reasoning. The channels that still hold sway over cable and satellite TV are the most watched. These are Fox News, ESPN, CNN and Hallmark, based on rating data. The further down the rating ladder a channel is, the weaker its case that it is needed as anchor content to hold paid subscribers.
Variety reports that each side has begun to compromise and a deal could be reached today. However, there is enough money involved that this is by no means certain. MTV, Nickelodeon and Comedy Central could still go off the air.