Biggest loser in DirecTV-Viacom feud? Both. (+video)

The standoff between DirecTV and Viacom risks accelerating the move away from television to iPads and smart phones – and the expectation of access to content anywhere, anytime.

By , Staff writer

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    Chief Executive of Viacom Philippe Dauman speaks to reporters as he attends the Allen & Co Media Conference in Sun Valley, Idaho, on July 11.
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A war of words is raging between Viacom and DirecTV, after the satellite firm dropped 26 of the cable company’s channels from its lineup late Tuesday night.

As a result, some 20 million subscribers are without channels ranging from Comedy Central to MTV, Nickelodeon, and Spike TV. Both sides have taken to the Internet in a free-for-all blogfest, as each blames the other for the blackout.

But the corporate brawl over how much the satellite firm should pay the cable firm is, well, fussing with the deck furniture while the proverbial ship sails into ever rougher waters, say media analysts. Meanwhile, the real risk is that customers, with an ever-increasing menu of entertainment options, will simply move on. 

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As one customer recently tweeted: "Watching @Viacom and @DirecTV is like watching Titanic passengers fighting over the last salmon roll. YOUR MEDIUM IS A SINKING SHIP."

This dispute will only make the ongoing media transition move more quickly, says Fordham University media professor Paul Levinson, author of “New New Media.” Consumers don’t care where their content comes from, he says, noting that all the various new media from iPads to smart phones are working together to make access to favorite content available anywhere, anytime. “All this is doing is speeding up the convergence that is already under way,” he adds.

The two big media entities deadlocked over competing proposals late Tuesday, when according to DirecTV spokesman Robert Mercer, the satellite provider had no choice but to pull the plug. “They sent us a letter telling us we were obligated to remove the channels at midnight or face legal action,” he says via e-mail, adding that this was “after we formally asked them to keep the channels up while we negotiated past the deadline.”

Mr. Mercer says that Viacom “refused.” The company “had to comply with their demand ahead of the midnight deadline to avoid having any of the channels up past midnight, which again would have violated the terms dictated by their letter," he says. It's not as easy as flipping a switch, he adds: “The process of removing linear and VOD channels takes time."

Viacom declined to comment beyond its blog posts, in which company spokesman Mark Jafar writes, “DirecTV dropped the channels without giving Viacom advanced warning. The last time Viacom was contacted by DirecTV was at approximately 11:00 a.m on Tuesday morning.”

In its official statement, Viacom said: “We are deeply disappointed that DirecTV dropped Viacom’s channels before our midnight deadline this evening, severing our connection with its nearly 20 million subscribers nationwide. We proposed a fair deal that amounted to an increase of only a couple pennies per day, per subscriber, and we remained willing to negotiate that deal.”

Whoever is “right” in this battle, both sides lose, says David Bartlett, senior vice president of Levick Strategic Communications, a crisis management firm in Washington. “This puts the customers in the middle of a corporate fight,” he says. “This is precisely the wrong tactic.”

Customers, he adds, don’t care who is right. They care about their programming.

The biggest factor driving customer choice is convenience, says Edward Arke, associate professor of communication at Messiah College in Grantham, Pa. “Whoever can provide the most convenient way to access the programming will be the 'winner,' ” he says via e-mail.

That's why the standoff between Viacom and DirectTV carries such long-term risk to the the television industry. "With DISH and DirecTV as really the only competition to cable, depending on the length and subsequent damage Direct sustains as a result of the impasse, this has the potential to send waves throughout the market,” writes Professor Arke.

Moreover, customers can expect more, not less of this sort of disruption as the marketplace sorts itself out. From the 1920s to the '80s, there was a nice, stable model for who pays how much to whom, says Robert Thompson, founder of the Bleier Center for Television and Popular Culture at Syracuse University in Syracuse, N.Y. But with the advent of cable, then satellite, then the Internet, “the whole business model has been thrown up in the air," he adds. "Nobody knows who should pay how much and to whom. It’s going to be awhile before the smoke settles around this ship."

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