Suddenlink is a small cable operator (about a million subs) in the south and southwest. But it’s the scene of just the latest skirmish in the ongoing wars between content providers and distributors, a war that in the new digital world continues to go better for the content owners.
In this case, according to Suddenlink, Viacom (NASDAQ:VIA), wants a 20% hike in overall payments from Suddenlink to continue to allow Suddenlink to carry all the Viacom networks, a rather large group that includes Nickelodeon, MTV, TV Land, Comedy Central, Spike TV, VH1 and CMT, Logo, Palladia HD, Nick Jr., TeenNick, NickToons, Nick2, MTV Hits, MTV2, MTV Jams, Tr3s, VH1 Classic, VH1 Soul, and CMT Pure Country.
On its website, Suddenlink told it’s subscribers:
“Unfortunately, despite a challenging economic environment, Viacom wants a more than 20% overall increase in what they are paid, which includes significant payment for a new network with R-rated programming that our customers have not requested and may not want.”
“In the unusual event these negotiations are unsuccessful and Viacom removes its channels, we reiterate our pledge to reduce customer prices by the cost of the affected channels for whatever length of time they are unavailable,” Suddenlink added.
What Viacom is offering to offset the sting of the large increase, is the addition of yet another movie network from Viacom, Epix.
Suddenlink has until midnight, Dec. 31, to agree or lose all the Viacom Networks for its customers.
The Viacom position is consistent with many content providers now feeling the growing power they have in a world where the ultimate viewer now has more and more choices to get that content. Not only are they pushing for a huge price increase, they are demanding more real estate with the addition of a new network on the system. Gone are the days that the distributor owned a market in a government sanctioned monopoly and had enormous control over whether or not the content provider could even serve a particular market.
While cable companies still do provide multiple services that consumers want and need, and are scrambling to diversify their businesses, the content providers are now pushing hard in every single negotiation and for the most part are getting improved deals.
To be sure, the cable companies are also negotiating for the consumer in these negotiations. Any price increases are likely to be passed on directly to the consumer.
The consumer is also shouting for more choice over WHAT channels he or she pays for, rather than the present situation where the consumer is paying for many channels because they are on “tiers”, i.e. grouped as a single buy with several other networks. That is not something the cable operators want. They prefer tiers, which give them power to divide up fees.
No matter what happens, the one sure bet is that the consumer will be paying more for the content. The ultimate question, which centers around whether or not the consumer is getting any more for his or her money, will be harder to answer.