Competitors Feeding Off of DirecTV-Viacom Dispute

11:45 AM PDT 7/18/2012 by Paul Bond

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"If you're a DirecTV customer, there's something you should know," a radio ad from Comcast targeting subscribers begins.

Competitors are using DirecTV’s carriage dispute with Viacom to their advantage in multiple ways, and causing lasting damage to the satellite-TV service, BTIG Research analyst Richard Greenfield said Wednesday.

DirecTV CEO: Companies Remain 'Pretty Far Apart' in Viacom Carriage Talks

Viacom Restores 'Daily Show' and 'Colbert' to Web but Fight With DirecTV Continues

“The Viacom battle has lasted long enough that whoever is next up to negotiate with DirecTV should be raising their demands notably, as it will be very hard for DirecTV to keep repeating this ‘test’ of will power,” Greenfield wrote.

The analyst also noted that “vultures” were emerging, citing a 60-second radio commercial from Comcast that targets DirecTV subscribers.

“If you’re a DirecTV customer, there’s something you should know,” the ad begins. “On July 10, DirecTV lost 26 popular Viacom channels, including Nickelodeon, MTV, SpikeTV, VH1, Comedy Central, BET and many more. That means you’re now missing out on all your favorite TV shows.”

Greenfield also cited Cablevision as a vulture because the cabler is buying Internet search terms related to the dispute. Greenfield's blog post, for example, includes a screen shot of the Google search ad: “Direct dropped MTV, Nick, CC & BET. Get Them Back With Optimum!”

Dish Network is also a vulture, according to the analyst, because it has altered its Facebook page to focus heavily on Viacom programming, with pictures of SpongeBob, Dora the Explorer, Jon Stewart and Stephen Colbert.

Nevertheless, unless the dispute drags on, Greenfield doesn’t think that DirecTV will lose a lot of existing customers – especially since those who complain are being compensated with discounts as high as $200 over the next six months.

“DirecTV’s far bigger problem will be new gross connects as we believe it will be very challenging to sign up new subs with so many channels missing,“ he wrote.

Viacom is in pain, too, of course, no longer being paid for 20 million DirecTV subscribers. But DirecTV risks more long-term damage, Greenfield posits.

“Whenever Viacom’s channels are restored, Viacom returns to normal (beyond lost revenues during the dispute), whereas DirecTV’s subs are simply gone to competitors, which would appear far harder to recapture given DirecTV’s lack of a broadband offering,” he writes.