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Summary:

Nickelodeon has been the top-rated cable channel for 66 straight quarters. But with Nicks’ ratings in decline, and its shows spread across Netflix and other OTT outlets, the channel’s negotiating position may be softening. In the lastest carriage renewal conflict, DirecTV will find out how much.

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Another pillar of the pay TV business is showing fresh signs of vulnerability.

Viacom’s cable channels are set to be pulled off of DirecTV, effective at midnight, with the media conglomerate unable to secure acceptable carriage-fee increases from the satellite TV service.

The move would black out Nickelodeon, the No. 1-rated cable network for 66 straight quarters through the end of 2011, from DirecTV’s nearly 20 million subscribers. MTV, VH1, Comedy Central, Spike TV, TV Land and BET would also be among the 26 channels taken down.

It’s unclear who is threatening to drop who, with both Viacom and DirecTV releasing statements Monday describing the other as the aggressor. Still, that negotiations with such a powerful programmer like Viacom would reach this impasse is indicator of where the pay TV business stands.

Also read: Netflix CFO – “Really, we didn’t kill Spongebob’s ratings

“In any conversation about ‘undroppable’ cable networks, Nickelodeon has always been near the top of the list, perhaps second only to ESPN,” wrote Bernstein Research analysts Todd Juenger and Dave Beckel, in a report last month that forecast this carriage dispute.

“Undroppable” might be stretching it a bit, with other pay TV operators, including Dish Network and Time Warner Cable, also going to the wire with Viacom in carriage negotiations in recent years.

Also read: Viacom and Time Warner Cable play chicken; programmer to pull networks over fee dispute

Still, Nickelodeon’s recent steep ratings declines, which have been tied, to various degrees, to wide-scale accessibility of the network’s shows on digital platforms like Netflix, have certainly changed its negotiating position.

The fact that Nick faces more competition in terms of reaching young audiences also factors into the equation, with new channels like Disney XD and The Hub popping up in recent years. Also factoring in: the renewed spirit among multi-channel operators to fight spiraling programming cost increases.

Also read: AMC – “Dish never even talked rates with us”

For its part, DirecTV claims that Viacom is seeking 30 percent rate increases that would pass on an additional $1 billion in subscriber costs over the life of the contract. (That’s probably way too high — Bernstein Research indicated that Viacom has been getting fee increases in the “low single digits” during most of its recent carriage renewals.)

Viacom counters that its channels generate 20 percent of DirecTV’s viewership but only account for 5 percent of its programming costs.

While other factors — the ebbing of powerful MTV ratings driver The Jersey Shore, for example — may be degrading Viacom’s negotiating position, at least one analyst believes DirecTV is making a “serious mistake” by pulling Viacom’s channels (or allowing them to be pulled).

Blogged BTIG Research’s Richard Greenfield Tuesday:

“While the demographics of Viacom’s cable network viewers may be the most exposed to finding IP-based alternatives, the viewership of online programming is still dwarfed by the size and scale of Viacom’s content.”

  1. Joshua Samuel Tuesday, July 10, 2012

    I am not choosing sides or blaming either companies, because I love them both. I just wish they could get along

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  2. Viacom did not even think about what this would do to all of these kids.They have no idea what’s going on. between thsee two Company’s. All they know is that Spongebob and all of there Cartoons are gone!!! There are alot of SAD CHILDERN THIS MORNING :( I think they need to start thinking about other things and just more MONEY!!! Viacom and Direct T.V. really need to get this fixed FAST.

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  3. I’m guessing the rating decline is directly related to the horrible programming. These dodgy  slutty untalented “musicians” playing all the time mixed with adult themed soap operas directed at children like degrassi allot of parents probably don’t let their children watch this smuck, much like modern mtv… good riddance I say!

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  4. Franscene Murphy Thursday, October 4, 2012

    nickelodean was tooken off timewarner cable already

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