Viacom Blackout Continues as Small Cable Company Takes Stand in Retrans Fight

5:06 PM PST 04/02/2014 by Alex Ben Block
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Cable One blacks out MTV, Comedy Central and other channels, while Viacom charges it has not negotiated in good faith.

More than 800 small market and rural cable system operators closed a retransmission consent deal with Viacom on Tuesday, but one has refused to accept the terms offered -- which it claims is a 100 percent increase over the last contract. Now Cable One has come out blasting Viacom and other content providers whose demands it says are “spiraling out of control.”

“Our total programming costs are up 50 percent in just four years,” says Cable One CEO Tom Might in a statement Wednesday, “while total viewing is exactly flat.”

Phoenix-based Cable One, with 730,000 subscribers in 19 states, was the only member of the National Cable Television Cooperative (which represents small and rural operators) to black out Viacom channels including Comedy Central, MTV, Spike and Nickelodeon just after midnight  Tuesday. Might said in interviews that he took down those channels at the request of Viacom, but a spokesman for Viacom insists they never asked for the channels to go dark.

“Cable One claims that its customers support this blackout,” a Viacom spokesman said in a Wednesday statement, “but one need look no further than Cable One’s own Facebook or Twitter page to see that this is simply not true.”

Might blasted Viacom and others that supply content to cable: “Just six large companies own 90 percent of the programming sold through cable companies in the United States: Disney/ABC, Fox, Viacom, Turner, NBC/Universal and Discovery and they represent the majority of our 50 percent increase. Broadcast retransmission demands make up the rest.

“Total programming fee growth at Cable One has gone from $1 to $2 a year per subscriber to $4 to $5 a year,” adds Might. “As a result, an increasing number of lower income consumers are being priced out of the video subscription marketplace each year.”

Might, who says the higher costs are costing cable providers subscribers, also took direct aim at Viacom, with whom all negotiations have come to a crashing halt. "To make matters worse," says Might, “several of these programming groups, including Viacom, have substantially less viewership than they did when we last negotiated, yet they still ask for enormous increases at renewal time. Their only logic is that they want ‘their fair share.’ This is leading to a Tragedy of the Commons that no one wants to own and no one can stop.”

Viacom for its part thinks Cable One is just negotiating. Its spokesman points out that Turner programs were off those systems for 25 days last fall in a previous dispute: “Cable One refused to engage with Viacom productively throughout our entire NCTC negotiation, choosing instead to delay conversations and push falsehoods on the press.”

Might says that small cable companies are up against the wall.

“Technological disruption is…racing through programmer and distributor business models, while this pricing tragedy plays out,” says Might. “The content that cable companies are paying ever more for is now often free out on the Internet. Coping simultaneously with spiraling content costs and escalating technologic disruption is something even a company the size of Time Warner Cable could not manage.”

Cable One is the successor to Post-Newsweek Cable and is now owned by Graham Holdings Company. Graham was the family name of the company that owned The Washington Post and Newsweek for years.

For now Cable One subscribers in Alabama, Kansas, Louisiana, Minnesota, New Mexico, Oregon, Texas, Tennessee and elsewhere are not getting the Viacom channels. Instead, Cable One is placing eight other channels on the basic tier, most of which were already available on a higher tier. The channels being upgraded are BBC America, Sprout, Investigation Discovery, National Geographic, Hallmark, TV One and Sundance.

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