DirecTV vs. Viacom dispute: A step closer to dealing?

According to reports, the two companies are going back to the drawing board to try and restore service to satellite television subscribers.

As previously reported on ZDNet, Viacom pulled the plug without warning on 26 DirecTV television channels --- including MTV, Comedy Central, and Nickelodeon --- leaving customers high and dry without the channels they had originally paid for on July 10.


Satellite-TV provider DirecTV, the largest in the U.S., lost 17 standard definition and nine high-definition after negotiations failed, resulting in an expired contract.

DirecTV claimed Viacom was looking for a 30 percent increase in royalty rates to renew its subscriptions, which would result in approximately $1 billion in additional costs. DirecTV claimed this was too high, and so a portion of DirectTV services were cut off earlier this month.

However, Bloomberg reports that discussions between the two sides continue -- perhaps spurred on by the ire of enraged consumers -- and so there may be hope for channel restoration.

In a phone interview, DirecTV’s executive vice president of content, strategy and development Derek Chang told Bloomberg:

"There’s been progress. We've been getting closer. We would love to be done with this thing, but we have to do it in a way that we can protect our customers."

In addition to the alleged hike in rates, DirecTV has forecast that its programming expenses will rise by almost 10 percent over the course of the year. If the California-based satellite service did not comply with dropping the networks, then Viacom had threatened to sue the company, according to Chang.

Viacom countered the disputed royalty fees, stating that its fee rate accounts for less than 5 percent of DirecTV's programming expenses. Both companies took to online campaigns as the battle continued; DirecTV with its "DirecTV Promise" -- calling the rate increase "unreasonable and exorbitant".

In reprisal, Viacom struck back with its "When DirecTV Drops" campaign; publishing several blog posts that explained in detail how DirecTV "dropped Viacom’s channels before our midnight deadline."

Viacom said it had "proposed a fair deal that amounted to an increase of only a couple pennies per day, per subscriber," and that "DirecTV refused to engage in meaningful conversation."

As the talks continue, some television show episodes no longer available on the pulled networks are being released online; including "The Daily Show" and "The Colbert Report". New York-based Viacom said the move was intended to be "helpful to our fans with DirecTV."

In response, Chang said:

"We’re happy Viacom has put programming back on the Internet because it allows our viewers to watch those shows. But clearly we want to get the programming back on TV at a reasonable price."

DirecTV supplies satellite television services to over 20 million U.S. subscribers.

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