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Viacom Needs to Learn Math

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I am a customer of Direct TV and yesterday while flipping the channels I saw this video showing the CEO of Direct TV stating they were losing Viacom stations at midnight due to a "contract dispute". I would be annoyed if Viacom had any good stations(they don't) but still I was curious about the issue. I decided to do some research and found this on Deadline:

Derek Chang, the satellite company’s EVP Content, Strategy and Development, says that Viacom ”sent us a letter last night that outlined our obligations to remove the channels by midnight or face legal action just as they were falsely telling viewers DirecTV was responsible. Let’s be clear, Viacom took these channels away from DirecTV viewers.” But Viacom says “DirecTV dropped the channels without giving Viacom advanced warning.” They last spoke at 11 AM on Tuesday, the company says. The big issue is price: DirecTV says that Viacom is demanding 30% more for its channels — equal to about $1B.

But the real interesting part is this:

It isn’t justified, Chang says, due to “the fact that the ratings for many of their main networks have plummeted and much of Viacom’s programming can be seen for free online.”

Viacom I'm sorry but Direct TV is completely right. There are substantially less subscribers with cable TV which means less viewers for the medium as a whole. Also, Viacom with the smaller pie is quickly losing their slice of it:

The blackout also comes as Viacom has seen its ratings decline recently for top shows like Nickelodeon’s “SpongeBob SquarePants” and MTV’s “Jersey Shore.”

They are losing eyeballs to their competitors (Specifically Disney)  in a market with less customers and yet they want a substantial 30% increase in what Direct TV pays for it. This would be similar to KMart raising its prices on Jordache Jeans when they are sitting on a huge surplus of them.  Simple supply and demand folks.

TV is dying a slow death, but if Viacom tries to gouge its partners for short term gains the consequence will be an increased cost for cable TV.  Cost will drive people away from the medium and cause a continued loss of eyeballs which in turn will negatively effect advertising revenue and their bottom line.

Viacom, if you don't get your act straight in 10 years you may be filing for chapter 11, and no amount of Jersey Shore spinoffs will be able to save you.