Viacom is playing hardball as it negotiates carriage fees with cable operators all across the country, in some cases demanding rate increases variously described as being more than 100 percent and as being 40 times the rate of inflation.
By one estimate, there are nearly 700 small cable operators, representing roughly 5 million customers, in confrontations with Viacom. Some companies that have never experienced a programming blackout are within days of experiencing their first.
Among the service providers complaining in just the past two days are Cable One, GCI, North State, HTC Digital Cable, and Consolidated Cable TV, who all stand to lose access to anywhere from 15 to 26 Viacom networks, which include Comedy Central, Spike and Nickelodeon.
The National Cable Television Cooperative (NCTC) is negotiating on behalf of many of these small cable providers.
The details of carriage agreements are typically kept between the two parties in negotiations, but Cable One offered some specifics about what Viacom is asking. Cable One president and CEO Tom Might said Viacom is asking for a rate increase greater than 100 percent, “even though viewing is down on 12 of their 15 networks since 2010 – some by more than 30 percent.”
He said Cable One has asked Viacom to either reduce its rates or allow it to drop some of their less popular networks to reduce the total cost.
“So far, they have refused both reasonable requests. In any other business, when there is less demand, the price goes down, not up,” Might noted.
Three Alaskan providers, KPU, GCI and MTA, are attempting to stand together in their negotiations. “We’ve unified to fight for Alaskans and to work toward a fair, long-term agreement that keeps prices stable for our customers,” said Paul Landes, GCI senior vice president. “Viacom wants a rate increase that is 40 times that of the rate of inflation. Alaska pay TV providers, along with 700 small to mid-sized operators nationally, are saying ‘no’ to Viacom’s take all 26 channels or nothing demands.”
“If Viacom removes their channels on Monday night, this will be the first time a programmer has done this since North State began offering TV,” according to the Oregon company.
Mike Hagg, CEO of HTC Digital Cable, said, “We want our customers to know that fees from all the programming networks we carry account for the bulk of monthly cable bills. Imagine pulling up to the gas pump and finding gas has gone from $3.50 a gallon to $6.00 – overnight. That’s the scale of some of these large increases.” That exact sentiment was expressed by several other small cable companies.