Viacom and AT&T Negotiate to Avert Major Programming Blackout

By Benjamin Mullin and Drew FitzGerald 

Viacom Inc. and AT&T Inc. were continuing negotiations to avert a programming blackout that would leave more than 24 million pay-TV customers without channels like MTV, Comedy Central and Nickelodeon, after their earlier contract expired at midnight Friday.

The negotiations are over carriage of Viacom's networks on AT&T's DirecTV, U-verse and WatchTV services. As of Sunday, Viacom's channels were still on the air as the parties continued to talk.

Such programming-carriage disputes happen periodically in cable and satellite TV and sometimes are resolved quickly. The fights are intensifying as cable-TV cord-cutting picks up momentum, pressuring pay-TV providers to cut their spending on content and prune the number of networks they offer.

If the standoff leads to a blackout, it would deal a significant blow to Viacom at a moment when the media company is working to regain the ground it lost over several years of ratings declines at many of its cable channels and turmoil in its upper ranks.

AT&T, meanwhile, risks alienating customers who will have to go without shows like MTV's "Jersey Shore Family Vacation" and Nickelodeon's "Double Dare." AT&T's DirecTV is already hemorrhaging subscribers, losing 1.2 million satellite-TV customers in 2018.

Price is at the heart of the dispute between AT&T and Viacom. The companies have discussed terms that would result in Viacom's carriage revenue being reduced, but they disagree on how sharp the cut should be, according to people familiar with the matter.

Over the years, cable-TV network owners have typically sought substantial annual increases in per-subscriber fees, so the contours of the talks show how much has changed in the industry and highlight Viacom's weakened position.

Earlier this week, Viacom began notifying customers of a potential outage, putting a "crawl" on its cable channels and enlisting network stars like "Daily Show" host Trevor Noah to urge subscribers to complain to DirecTV. Its talent also made a big push on social media.

Over the weekend, those campaigns were halted as people close to the talks expressed optimism a deal was within reach.

In the run-up to the contract expiration date, Viacom accused AT&T of pushing for unreasonable terms and leveraging its newfound programming clout to win more favorable terms. AT&T last year acquired Time Warner Inc., parent of Warner Bros. and cable networks such as HBO, TBS and CNN.

A spokesman for AT&T last week said that many of Viacom's channels are no longer popular and called the company a "serial bad actor" in carriage negotiations.

Beyond price, another issue in the talks is AT&T's push for Viacom to use advanced TV advertising products from Xandr, the telecom and media behemoth's advertising group, people familiar with the matter say.

--Alexandra Bruell contributed to this article.

Write to Benjamin Mullin at [e-mail] and Drew FitzGerald at [e-mail]

(END) Dow Jones Newswires

March 24, 2019 12:50 ET (16:50 GMT)

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