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DirecTV/Viacom Dispute?


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#1676 OFFLINE   tulanejosh

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Posted 13 July 2012 - 09:46 AM

It is not hyperbolic to say that even though you send your check in, all services experience disruption. Sending your check does not guarentee 100%service all the time.

.


I dont think electric water and gas are a fair comparison. Yes they can experience disruption - but the water company disruption is because a pipe broke, not because they decided that the owner of the lake was asking for too much money. The electricity goes out because a tree fell on a line, not because the power company is having a disagreement with the coal mine over the cost of fuel.

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#1677 OFFLINE   fleckrj

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Posted 13 July 2012 - 09:49 AM

I'm not actually insulting anyone's math skills. I'm calling someone on manipulating numbers and calling it a hard fact, when it's anything but. Wildly different thing.

In the end, throwing around numbers like "30% percent increase" and "a billion dollars" and "subsidizing the 80% who don't watch Viacom at all" is simply misleading B.S.

Would DirecTV gain as much traction with the general public saying, "Viacom wants us to pay them about 80 cents more per month per subscriber, which amounts to about $10/year for you?" Doubtful. While some people may very well fight to the death over that $10 year over year, most would be more in the "you took away my channels for that?!?" camp. (And, for the record, I firmly believe that DirecTV AND Viacom are equally complicit in the removal of those channels.)

Heck, when DirecTV does their annual increase--and they will, regardless of economy, inflation and how these negations go--I guarantee it will be a lot more than $1/month per customer. And the general consensus here will undoubtably be that it's very, very fair and that DirecTV had no choice. No one is going to bite at an inflammatory headline that says "DirecTV demands their customers pay $1 billion more A MONTH for same product!!!" Even if you can do the math (20 million customers with an average increase of $5/month) to make that argument.

And, by the way, I have never once argued that DirecTV should "just pay whatever to maintain my consumer lifestyle" (whatever that means, if you're a DirecTV, or any other pay TV subscriber, you are, by definition, a consumer), just that these tactics are customer unfriendly.



And that and a $5.50 will buy you a cup of coffee at Starbucks. This forum represents a minuscule percentage of all DirecTV customers and is way, WAY skewed from the average consumer's point of view.

As for viewing preferences ... If someone wants to watch a 24-hour/day marathon of the Real Housewives of Des Moines seven days a week, while I'd prefer to gauge my eyes without a soup spoon, good on them! I could care less. Your likes/dislikes have just as much value and/or ridiculouslness as mine.


The point you are missing is that if DirecTV agrees to pay Viacom 30% more (because after all, it is only 3 cents per subscriber per day), then when Disney, Hearst, Scripts, Discovery, Turner, Rainbow, Comcast, NBC Universal, et. al. all come up for renewal, they are also going to want at least a 30% increase, because that is what DirecTV gave to Viacom.

If it was only Viacom, you are correct, it is only $10.96 per year per subscriber, but when all of the other providers contracts end, it will end up being 30% of the total bill. Only if DiercTV can keep each individual contract to a 3% to 5% increase, would it be reasonable to expect that your bill will only go up by 3% to 5%.

#1678 OFFLINE   zimm7778

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Posted 13 July 2012 - 09:53 AM

Number one, I am not championing anything, I said it was an interesting article. Nothing more and nothing less. Secondly, you would be surprised how many people do not know that...many people think the cost would actually go down if they only paid for a few channels. It's shocking how many people believe this.

Third, go back and read my posts to say why it won't work or if you go down that path of unbundling you will lose choices. This is reality. Viacom offers 17 channels on the backs of 4 or 5 successful ones. This is no different than any other major media company...I should know, I have worked for a few in my lifetime before going to D*. I'm not championing anything, just putting the factual realties out there for those interested. I've worked for both sides, the article I found interesting. Nothing more, nothing less.


Oh no, in the short term it'd skyrocket but in the long term it would be affordable. I don't know if you saw my example and I may off on numbers so forgive me. Take ESPN. A la carte they work out a deal with you for 5 years that winds up with their channel being $10 a month for that alone. Well, a lot of people, even larger numbers than those probably think, will not order because they are going to feel that's entirely too much for 1 channel. ESPN is going to lose revenue from you and advertisers because less viewers less $$. Now they can either try to ride it out, and think raising the price the next agreement will solve it even though raising it will only drive more people away, or they can be smart renegotiate for a smaller price so more subscribe. As I also said this might end the billions being paid to sports leagues too which in turn could mean local teams in many markets will wind up back on local TV because the bids will be lower. That's just one example. I'm not stupid (not that I am saying you think I am) I know that these program providers while they may tell everyone you can't live without me know deep down many can. That's why they don't want their channels moved to higher packages. The higher the package, the fewer customers they get paid for and the veil is off to everyone just how "valuable" they really are which will make future negotiations with others much more painful for them. Yes, I know people would leave and go somewhere else which is why everyone would need to start this model at around the same time. It might take a year or few for all the agreements to be dealt with when current ones ran out but if everyone decided to do this or politicians get involved and force it then ENFORCE IT. I think things would in a few years be way, way different.

Seriously, I like you and I appreciate your info and love Directv. But if the bill keeps getting higher like it has been I'm not gonna be able to justify keeping it. That's not your fault but something other than "we are trying to hold down costs" has to be done or no one is going to be able to afford it. Again, it's not you and I mean no offense.

#1679 OFFLINE   susanandmark

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Posted 13 July 2012 - 09:55 AM

The point you are missing is that if DirecTV agrees to pay Viacom 30% more (because after all, it is only 3 cents per subscriber per day), then when Disney, Hearst, Scripts, Discovery, Turner, Rainbow, Comcast, NBC Universal, et. al. all come up for renewal, they are also going to want at least a 30% increase, because that is what DirecTV gave to Viacom.

If it was only Viacom, you are correct, it is only $10.96 per year per subscriber, but when all of the other providers contracts end, it will end up being 30% of the total bill. Only if DiercTV can keep each individual contract to a 3% to 5% increase, would it be reasonable to expect that your bill will only go up by 3% to 5%.


The point YOU'RE missing is that DirecTV will raise our rates as high as their extensive market research says consumers will bear (with an acceptable level of complaining and "churn") at the moment they announce it. They will do that regardless of the outcome of this, or any other, negotiation.

That's how businesses work. Do you think Apple just magically landed on the $499 iPad price point? No. They did bucket loads of research into how much consumers would pay for such a device and how much it would cost them to build it and, when the numbers worked for maximum profit, they built it. If their market research told them customers would pay only $499 but it would cost them $450 to build each one, I guarantee you the project would have been scrapped, or at the least delayed until the numbers were better. (Some argue this is exactly what occurred.) They would not have put out a $699 iPad just because.

If, after release, their cost for a certain component then drops from 10 cents per piece, to 5 cents, that just means their profit increases. Yay for them. If a certain component has a shortage, etc. and suddenly rises in cost from 10 cents to 15 cents, they don't raise the price of the iPad to cover it--because they know they are already charging the maximum amount the market will bear. Their profit margins just shrink. That, by the way, is why Apple, one of the most successful companies on the planet, is notorious for locking up entire supply chains of key components, literally buying (or pre-ordering) every single one on earth ... To prevent even the CHANCE of shrinking profit margins. (And they have, bar none, the highest profit margins per unit in tech AND an incredibly high customer satisfaction rate.)

This negotiation is 98% about DirecTV's profit margins and 2% about the amount of those eventual, and inevitable, cost increases to customers.

Edited by susanandmark, 13 July 2012 - 10:07 AM.


#1680 OFFLINE   BlackCoffee

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Posted 13 July 2012 - 09:57 AM

I dont think electric water and gas are a fair comparison. Yes they can experience disruption - but the water company disruption is because a pipe broke, not because they decided that the owner of the lake was asking for too much money. The electricity goes out because a tree fell on a line, not because the power company is having a disagreement with the coal mine over the cost of fuel.


I think you misunderstood my point on electric water and gas. I was saying that, for a non-essential service like entertainment, should we hold them to a higher standard of no service interruptions. Clearly they indicate there will be interruptions, people understand there are interruptions with essential services, so why is it not reasonable to assume that a contract dispute will lead to problems.

How about the old days when broadcast networks, fighting to survive, would not provide, put up restrictions, or just plain stonewalled DTV providing their programs. I remember writing Congress on those disruptions. Didn't blame DTV, I went to the source of the problem.

#1681 OFFLINE   GreatPig

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Posted 13 July 2012 - 10:00 AM

The point YOU'RE missing is that DirecTV will raise our rates as high as their extensive market research says consumers will bear (with an acceptable level of complaining and "churn") at the moment they announce it. They will do that regardless of this, or any other, negotiation. This negotiation is 98% about DirecTV's profit margins and 2% about the amount of those eventual, and inevitable, cost increases to customers.


All businesses are going to charge as much as the market will bear. That's Business 101 and it is why Viacom wants more. Both sides are doing the same thing. It is risk vs reward.

#1682 OFFLINE   maartena

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Posted 13 July 2012 - 10:00 AM

The point you are missing is that if DirecTV agrees to pay Viacom 30% more (because after all, it is only 3 cents per subscriber per day), then when Disney, Hearst, Scripts, Discovery, Turner, Rainbow, Comcast, NBC Universal, et. al. all come up for renewal, they are also going to want at least a 30% increase, because that is what DirecTV gave to Viacom.

If it was only Viacom, you are correct, it is only $10.96 per year per subscriber, but when all of the other providers contracts end, it will end up being 30% of the total bill. Only if DiercTV can keep each individual contract to a 3% to 5% increase, would it be reasonable to expect that your bill will only go up by 3% to 5%.


Exactly. Susan doesn't quite realize how these kinds of negotiations affect the market. DirecTV will renegotiate with Discovery Networks at the end of the year, and there is a good chance (I can't find anything definite on this, but based on a 2003 dispute) that Disney signed a 10 year contract that is due 2013.... and with those two behemots coming up, you know they are watching this closely.

And indeed, if they start demanding 30%, and DirecTV pays a 30% increase of fees to Viacom, Discovery Networks (which is also about 15 channels) and Disney (who owns another 15 or so), we are starting to talk about a big chunk of channels costing 30% more. And 30% is just a number, there have been a few locals asking for 300, and 600% increases.

If DirecTV just rolls over and pays every time a carriage dispute comes along, I would estimate our bills would be about 50% higher than they are now.

We all know they are going to pay a higher price than before. But I would much rather DirecTV take the channels offline for a month and get that number down to 15% more instead of 30% more. Comparing the salaries and bonuses of DirecTV and Viacom it becomes clear to me that Viacom just wants to stuff their CEO's pockets, and while the DirecTV CEO makes a pretty penny at about 6 million a year, he is well below many other CEO's, and not receiving bonuses to the extreme. So any extra money saved here will not go to Mike White buying an island somewhere, but will actually flow back in to the company, which means better technologies, more research, more channels going to HD eventually, and POTENTIALLY not as high of an increase of the price next year. Either way, it is a LOT better for us than just simply rolling over and succumb to media company demands.
[Disclaimer] The definition of "soon" is based solely on DirecTV's interpretation of the word, and all similarities with dictionary definitions of the word "soon" are purely coincidental and should not be interpreted as a time frame that will come to pass within a reasonable amount of time.

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#1683 OFFLINE   maartena

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Posted 13 July 2012 - 10:04 AM

The point YOU'RE missing is that DirecTV will raise our rates as high as their extensive market research says consumers will bear (with an acceptable level of complaining and "churn") at the moment they announce it. They will do that regardless of this, or any other, negotiation. This negotiation is 98% about DirecTV's profit margins and 2% about the amount of those eventual, and inevitable, cost increases to customers.


There is more than raising rates. As I said, it has become pretty clear by now that any more profit that DirecTV makes isn't lining the pockets of its CEO like it does with Viacom, so even though DirecTV might raise the rates as high as their market research will say the customers can handle, saving more money on contracts like these means that there is more money to go around to develop new technologies, offer customers better retention deals, offer customers cheaper equipment, upgrade HD/encryption/encoding technology, etc, etc.

In the end.... regardless of the standard raise of pricing come February, a lower negotiated price is going to be better for us customers.
[Disclaimer] The definition of "soon" is based solely on DirecTV's interpretation of the word, and all similarities with dictionary definitions of the word "soon" are purely coincidental and should not be interpreted as a time frame that will come to pass within a reasonable amount of time.

I am the Stig.

#1684 OFFLINE   fleckrj

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Posted 13 July 2012 - 10:06 AM

It's all about money. D* could just absorb or partially absorb the price increase, after all they've been very profitable and this isn't going to ruin them by any means. Then it wouldn't affect your bill at all.

But D*'s not going to do that. They'll raise their price regardless of the settlement. And the price increase will be whatever the new agreement is with another 20% on top of that. And they'll blame it *ALL* on Viacom. Viacom may have the majority of the dirty tricks so far, but D* has yet to play their dirtiest trick.


You are correct that DirecTV is not going to absorb the cost. They cannot do that. If they were privately owned, they might be able to absorb the cost, but unfortunately, the primary responsibility of the board of directors of a publicly held company (i.e., a company that issues stock) is to the shareholder - not to the customer. The only leverage the customer has is that at some price point, enough customers will leave that it will adversly affect the shareholder. Until it reaches that point, no publicly held company is going to absorb any cost.

#1685 OFFLINE   vobguy

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Posted 13 July 2012 - 10:22 AM

My favorite thing is how Viacom has gotten the actors on their channels to use their own Twitter feeds to tweet about how Directv is wrong and they want their show back. Plus I think they are paying other "stars" to tweet about it.
Khloe Kasdansians (sp?) tweeted how expensive Directv was and she wanted all her channels she pays for. I bet she couldnt even tell you how much her Directv bill is per month.

:lol::lol: (bolded for emphasis)

#1686 OFFLINE   john18

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Posted 13 July 2012 - 10:40 AM

Interesting article


http://www.forbes.co...rtner=yahoofeed


I, for one, hopes that D* doesn't cave in. Why? Because caving continues to set a bad precedent and D* still has expensive infrastructure to pay off and if the net bill to customers gets too high then they will leave and further cut the number of subscribers that help pay for that infrastructure. The same argument goes for that other DBS provider.

Edited by john18, 13 July 2012 - 10:47 AM.


#1687 OFFLINE   Ira Lacher

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Posted 13 July 2012 - 10:41 AM

Got this from Reuters news. Scroll down to the section called The Conversation.
-- Ira

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#1688 OFFLINE   BattleScott

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Posted 13 July 2012 - 10:53 AM

The future is direct IP access to content (either free or subscription) and it is only the providers standing in the way of that. The sooner they are driven out of the picture, the better off we consumers will be.
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#1689 OFFLINE   bobcamp1

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Posted 13 July 2012 - 10:57 AM

Exactly. Susan doesn't quite realize how these kinds of negotiations affect the market. DirecTV will renegotiate with Discovery Networks at the end of the year, and there is a good chance (I can't find anything definite on this, but based on a 2003 dispute) that Disney signed a 10 year contract that is due 2013.... and with those two behemots coming up, you know they are watching this closely.

And indeed, if they start demanding 30%, and DirecTV pays a 30% increase of fees to Viacom, Discovery Networks (which is also about 15 channels) and Disney (who owns another 15 or so), we are starting to talk about a big chunk of channels costing 30% more. And 30% is just a number, there have been a few locals asking for 300, and 600% increases.

If DirecTV just rolls over and pays every time a carriage dispute comes along, I would estimate our bills would be about 50% higher than they are now.


The bills wouldn't be 50% higher. You didn't understand part of it. People are only going to pay so much for their cable bill, then they're going to start cutting services and channels. Neither party wants that. There's a cap as to how much D* and Viacom can charge.

D* gives feedback to the content providers as to how much people will pay for their channels. This feedback is tainted with built-in profit for D*, so Viacom doesn't believe the numbers that D* gives them. So there is a game to find out what the numbers really are.

Also, each content provider wants to charge as much as possible. They don't care how much the other guys get. They know the pie is only so big, but they want the biggest slice for themselves.

I think in the past the pie could get bigger, but in the past two years we've reached that point where people are starting to cut services to keep their bills down. The pie cannot get bigger anymore. I expect most contract negotiations to look like this in the future.

As far as "holding out", nothing is preventing them from coming up with a short term solution while a long term deal is reached. But greed is making both sides use their customers/viewers as leverage in their negotiations. Between pulling the channels, those silly advertising stunts on both sides, and the numbers spin on both sides, people are feeling used and abused. And they don't like it.

#1690 OFFLINE   Paul Secic

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Posted 13 July 2012 - 10:57 AM

Haven't looked if this was posted yet (my connection is slow so I'm lucky to get this post done).

This is the latest from DTV on their Facebook page:


HD?

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#1691 OFFLINE   mitchflorida

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Posted 13 July 2012 - 11:02 AM

People don't mind paying for cable channels that they watch. I would pay $2.00 a month for TCM alone. It is just constantly being forced to pay for channels that we never watch. And that for the most part is Viacom. This never ending gimmick of "bundling" the lousy channels with the good ones and making us pay for the whole mess of them is getting tiresome. I would put ESPN in that category too, but I think there would be a civil war if ESPN was cut off. Viacom just doesn't have that kind of leverage, as they are starting to realize.

#1692 OFFLINE   Paul Secic

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Posted 13 July 2012 - 11:04 AM

ESPN is not a subsidiary of ABC, or visa versa, Disney owns both.


You're correct!

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#1693 OFFLINE   rahlquist

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Posted 13 July 2012 - 11:10 AM

Viacom then tells Directv to jam it. Then what?

People have no idea how carriage contracts work. :nono2:


True, I don't have that level of insight, closest I ever came was my company was owned by the same parent company who owned TWC up till a few years back.

That said there is the simple fact that Viacom just lost HOW MANY eyes watching commercials on their networks? And just how much does that devalue that commercial airtime and their networks? Are they willing to write that off forever? I highly doubt that. Every minute they are off air with D* is another minute that their commercials become immediately less valuable and over the long haul hurts them as a advertising entity.

#1694 OFFLINE   tulanejosh

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Posted 13 July 2012 - 11:13 AM

True, I don't have that level of insight, closest I ever came was my company was owned by the same parent company who owned TWC up till a few years back.

That said there is the simple fact that Viacom just lost HOW MANY eyes watching commercials on their networks? And just how much does that devalue that commercial airtime and their networks? Are they willing to write that off forever? I highly doubt that. Every minute they are off air with D* is another minute that their commercials become immediately less valuable and over the long haul hurts them as a advertising entity.



There are two sides to that coin - Directv just lost HOW MANY channels that everyone else offers and still charges HOW MUCH more than other providers? How long do people continue to pay more for less?

#1695 OFFLINE   maartena

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Posted 13 July 2012 - 11:13 AM

The future is direct IP access to content (either free or subscription) and it is only the providers standing in the way of that. The sooner they are driven out of the picture, the better off we consumers will be.


I think content over IP will be an additional service, to add on to existing television service, but won't replace it any time soon. For starters, 30% of the United States can't get more than about a 3 Mbps connection through DSL, and it doesn't look like there are much initiatives to change that. About 10% of the United States live so rural, it would cost a fortune to wire up those small towns for any type of decent internet connection.

You can't push a single HD stream through that, let alone turning on 2 or 3 TV's in your house. Those people will always have a satellite service of some sort. Right now DirecTV has 20 million customers, Dish about 14 Million. Given the average of 2.1 persons per household, one could conclude that about 70 million Americans receive their television through a satellite dish, either because they choose to (which is most) or because they have no other alternative.

I don't believe this is going to change.

What I do believe will happen is that DirecTV and Dish at some point (and I do believe Dish already does something along these lines with some form of international channel package) will ADD IPTV services to their boxes, for those that have a capable internet connection. This way, DirecTV could actually deliver sub channels to each market, international (news) channels, independent channels, internet-only channels, etc, etc.... and place them on a channel number on your receiver, where it will just tune in to a internet supplied stream when you hit that channel instead of a satellite feed.

I, for one, would be quite happy with a selection of international news channels (e.g. BBC, Al Jazeera, RT, etc, etc) provided via IP, so they show up on my receivers without having to use a separate device to tune in to them.

I believe that DirecTV and Dish will transform in to a hybrid service. With the upcoming 4kHD technology, for which DirecTV says they will be ready, and first Quad/Ultra/4k (however you want to call it) HD services launching around 2016, IPTV is going to have a bit of a harder time, as for a clear 4kHD picture, CURRENTLY a 160 Mbps connection is required, but with advances in encoding/compression, they can probably knock that down to about 40-50 Mbps, which is not the type of connection most Americans will have, not in 2016, not even in 2020. (Of course the internet connection might be there, but will it be able to deliver more than 1 stream? And it will certainly not be there for everyone in the U.S.) So there is future in satellites for quite some time. But DirecTV will probably at some point start to offer IPTV services over the internet as a "add on" package, for channels not worth carrying on satellites.

We'll see how this develops.
[Disclaimer] The definition of "soon" is based solely on DirecTV's interpretation of the word, and all similarities with dictionary definitions of the word "soon" are purely coincidental and should not be interpreted as a time frame that will come to pass within a reasonable amount of time.

I am the Stig.

#1696 OFFLINE   rahlquist

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Posted 13 July 2012 - 11:15 AM

There are two sides to that coin - Directv just lost HOW MANY channels that everyone else offers and still charges HOW MUCH more than other providers? How long do people continue to pay more for less?


Well lets face it my original suggestion is very self serving, I would rather see my bill go down than Viacom back ;)

#1697 OFFLINE   tulanejosh

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Posted 13 July 2012 - 11:16 AM

People don't mind paying for cable channels that they watch. I would pay $2.00 a month for TCM alone. It is just constantly being forced to pay for channels that we never watch. And that for the most part is Viacom. This never ending gimmick of "bundling" the lousy channels with the good ones and making us pay for the whole mess of them is getting tiresome. I would put ESPN in that category too, but I think there would be a civil war if ESPN was cut off. Viacom just doesn't have that kind of leverage, as they are starting to realize.


Viacom has more leverage than you realize. They used to just get their revenue from advertisers and distrubuters. Now - they have amazon, netflix, hulu, itunes, etc in addition to advertiser and distributers. They're not as much in need of directv money as they once were. Meanwhile - directv still only has about 20MM customers from which to make money - customers which as of right now they charge the same money for less service to.

#1698 OFFLINE   tulanejosh

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Posted 13 July 2012 - 11:17 AM

Well lets face it my original suggestion is very self serving, I would rather see my bill go down than Viacom back ;)


You'll be waiting a long time. D* isn't going to lower your bill one way or another.

#1699 OFFLINE   susanandmark

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Posted 13 July 2012 - 11:22 AM

I can't believe how much time I wasted posting in this thread (time suck extraordinare), I should have just copied this and replaced the name "Tribune" with "Viacom," same childish ploy, different month.

http://www.dbstalk.c...076#post2988076

#1700 OFFLINE   HarleyD

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Posted 13 July 2012 - 11:28 AM

Obviously if the cost per subscriber to keep Viacom went up by $10.96 per annum, we would see a rate increase at the beginning of 2013 of no less than $10.96...just to break even on the cost of continuing the existing content. If you factor in other increases in DirecTV's CODB I would guess a $15 hike would be a more realistinc expectation.

With the wailing and gnashing of the teeth that goes on around here when we get the normal $3 annual increase I can only imagine the pandemic apoplexy that would accompany a $15 rate increase. Armageddon would ensue.
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