Viacom Accuses Charter of Stifling the Creation of Cheap TV Packages

  • Cable carrier ‘penalizing Viacom if it participates’: Bakish
  • MTV owner has been in talks for sports-free video bundles

MTV owner Viacom Inc., locked in a contract standoff with Charter Communications Inc. over pay-TV rights, accused the No. 2 U.S. cable provider of trying to block the creation of new low-priced video options.

“Among the issues we face is Charter’s attempt to inhibit the creation of smaller, more innovative and less expensive packages of the networks customers want, by penalizing Viacom if it participates in new skinny bundles or OTT streaming platforms,” Chief Executive Officer Bob Bakish said in a memo to employees that was obtained by Bloomberg News. He was referring to services that go over-the-top, carried over internet connections instead of cable lines.

New York-based Viacom and other entertainment companies are racing to offer new options for viewers who are canceling or paring back their $85-a-month pay-TV subscriptions and embracing services like Netflix Inc.’s $11 video plan. That’s putting them at odds with traditional providers like Charter that want to stem defections.

The two companies are currently negotiating terms of a new agreement that will let Stamford, Connecticut-based Charter carry Viacom networks like MTV, Nickelodeon and Comedy Central. Bakish said in his memo he’s offered Charter terms that would cost less and boost the audience for some channels.

Charter declined to comment.

Rising Tensions

Tensions between the companies began to build in May when Charter bundled Viacom’s programming into a higher-priced pay-TV package for new customers, threatening the subscriber fees and ad sales for the company’s channels.

Viacom escalated the drama Wednesday night when it began warning Charter customers they may lose channels when the companies’ current contract expires this weekend.

One way Bakish is trying to fight the squeeze is by creating new online services for consumers who don’t want sports. Viacom, joined by cable programmers including Discovery Communications Inc. and AMC Networks Inc., has explored offering entertainment-only packages over the internet with four to six pay-TV providers, Bloomberg reported in April.

In May, Viacom reached a new multiyear programming deal with Altice USA that gave the cable provider rights to offer its content on TVs, mobile phones and tablets.

— With assistance by Scott Moritz

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