AT&T and Viacom’s carriage fee dispute resolved
AT&T (T) and media giant Viacom (VIAB) have finally reached an agreement under which Viacom has renewed its distribution contract with AT&T’s DIRECTV. The parties have been undergoing a dispute related to carriage fees, wherein AT&T’s pay-TV customers would lose access to Viacom’s 23 popular stations like MTV, Comedy Central, and Nickelodeon if the companies didn’t renew their contract.
The contract expired last Friday. However, Viacom’s channels were on the air until Sunday as the companies were negotiating to bring Viacom’s channels to AT&T’s DIRECTV, U-verse, and WatchTV services. Under the previous contract, AT&T was paying about $1 billion annually to Viacom as carriage fees to make available Viacom channels to AT&T’s 24.5 million pay-TV customers.
Reason for dispute
AT&T reportedly believed that Viacom channels are not as popular now as they were earlier. AT&T further stated that Viacom hasn’t been successful in contract renewal negotiations. To this, Viacom was accusing AT&T of underpowering Viacom channels since its acquisition of Time Warner, which gave the company access to the Warner Bros Hollywood studios and HBO premium cable network.
Carriage fee disputes have been rising recently as traditional media companies are putting pressure on service providers to secure better distribution deals amid declining viewership due to cord-shaving, where customers are switching to the cheapest packages, and cord-cutting, where subscribers are migrating from traditional pay television services to streaming TV services such as Netflix (NFLX) and Amazon (AMZN).
Pay-TV companies losing subscribers
Pay-TV companies such as AT&T, Comcast (CMCSA), and Charter (CHTR) have been facing a decline in their US pay-TV subscriber base due to cord cutting. While AT&T reported a loss of 403,000 satellite TV customers in the fourth quarter, Comcast and Charter lost 19,000 and 36,000 residential video customers, respectively, in Q4 2018.