By Mike Snider, USA TODAY
TV viewers are caught in the middle of a game of chicken between DirecTV and Viacom.
Viacom wants an increase in what the satellite TV service pays to broadcast its channels such as BET, Comedy Central, MTV, Nickelodeon, Spike and VH1. DirecTV balked at what it says would be a 30% hike and quit transmitting the channels to its 20 million subscribers.
Both companies took their case to the Internet on Wednesday. On directvpromise.com, DirecTV had pointed customers to other online sites with free and paid episodes of Viacom shows such as The Daily Show with Jon Stewart, The Colbert Report, Jersey Shore and SpongeBob SquarePants. But Viacom pulled some of the free full episodes it usually offers online because of DirecTV's tactics.
Instead, official websites for The Daily Show and others ran a video urging viewers to call DirecTV and ask it to end the standoff.
Disputes between programmers and pay-TV providers are not new. But the playing field is rapidly changing with the growth in popularity of online TV services such as Netflix and Hulu - both of which offer some Viacom programs.
In the past, programmers knew that pay-TV providers would likely pay increased fees to keep subscribers from jumping ship. But in the post-Netflix world, many subscribers are comfortable supplementing their pay-TV service with online video options.
"There are enough alternatives from a technology standpoint that (no company) is in the safe position," says Steve Ridge of research firm Frank N. Magid Associates.
The two sides are continuing to negotiate. DirecTV typically wraps up programming disputes quickly, says TVPredictions.com editor Phil Swann. "But this might be a test case ... to show the TV industry that they are really serious about trimming programming costs."
Viacom has charged DirecTV "the same bargain rate" for seven years and wants an increase that amounts to "a couple pennies per day, per subscriber," wrote Mark Jafar, Viacom's vice president for corporate communications on the company's official blog.
Viacom says that it's the top programmer on DirecTV and that Nickelodeon is the most-watched individual channel there. DirecTV counters that viewership for many of Viacom's channels is falling. Nickelodeon's second-quarter day-long viewership dropped about 26% from last year, Nielsen says.
DirecTV is making eight Encore movie channels (usually available in only higher-price subscription tiers) viewable free until July 31.