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DirecTV/Viacom Dispute?

Discussion in 'DIRECTV General Discussion' started by danpeters, Jul 9, 2012.

  1. GreatPig

    GreatPig DBSTalk Club Member

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    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.
     
  2. maartena

    maartena Hall Of Fame

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    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.
     
  3. maartena

    maartena Hall Of Fame

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    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.
     
  4. fleckrj

    fleckrj Icon

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    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.
     
  5. vobguy

    vobguy Mentor

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    :lol::lol: (bolded for emphasis)
     
  6. john18

    john18 Active Member

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    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.
     
  7. Ira Lacher

    Ira Lacher Icon

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    Got this from Reuters news. Scroll down to the section called The Conversation.
     
  8. BattleScott

    BattleScott Hall Of Fame

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    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.
     
  9. bobcamp1

    bobcamp1 Icon

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    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.
     
  10. Paul Secic

    Paul Secic Hall Of Fame

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    HD?
     
  11. mitchflorida

    mitchflorida Godfather

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    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.
     
  12. Paul Secic

    Paul Secic Hall Of Fame

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    You're correct!
     
  13. rahlquist

    rahlquist Hall Of Fame

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    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.
     
  14. tulanejosh

    tulanejosh Godfather

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    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?
     
  15. maartena

    maartena Hall Of Fame

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    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.
     
  16. rahlquist

    rahlquist Hall Of Fame

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

    tulanejosh Godfather

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    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.
     
  18. tulanejosh

    tulanejosh Godfather

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

    susanandmark Godfather

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  20. HarleyD

    HarleyD Hall Of Fame

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    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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