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Viacom, Charter Nearing Impasse in Carriage Talks

Cable networks owned by Viacom Inc. could stop airing on cable systems operated by Charter Communications if the two parties can’t reach an agreement later this week, the latest sign of friction between the New York owner of Nickelodeon and Comedy Central and the large cable distributor.

Viacom is planning to run a “crawl” on its networks on Charter telling viewers the TV outlets may be disrupted if the tone of its current talks does not change, according to a person familiar with the matter. Ads talking about the negotiations are also possible, this person said. Charter reaches approximately 16.5 million subscribers. The company broadened its national footprint in May of 2016 by buying Time Warner Cable for approximately $65 billion.

“Viacom has made a series of very attractive offers to Charter that are consistent with terms we’ve recently reached with other large cable operators. Importantly, these offers would enable Charter to lower Spectrum subscribers’ bills, while also giving them more access to shows across Nickelodeon, BET, MTV, Comedy Central and other Viacom networks,” Viacom said in a statement. “Viacom is committed to developing strong, mutually beneficial relationships with our distribution partners. Despite our efforts, Charter continues to insist on unreasonable and extreme terms that are totally inconsistent with the market. While we’re making every effort to reach a new deal, Charter’s actions may force a disruption in their service.”

A spokesperson for Charter said the company declined to comment.

The two companies have been bickering for months. Charter in May moved Viacom-owned networks like Spike, MTV, VH1 and Comedy Central to a higher-priced tier.  In August, Viacom CEO Bob Bakish told investors the companies were far apart on the issue.

“They don’t have the contractual right to tier our services the way they have,” Bakish said during a conference call, while indicating he was loath to spark a legal battle about the issue. “I don’t fundamentally believe suing big customers is the way to solve problems. The better way to solve them is through engagement and exploring ways we can create value together.”

Earlier this week, Citibank analyst Jason Bazinet lowered his rating on Viacom shares to “sell,” citing the disagreement with Charter and suggesting Charter could reduce its use of Viacom networks or even drop some of them.

Viacom, for its part, finds some of Charter’s current demands onerous, according to a person familiar with the talks. Charter, this person said, wants to keep Viacom from taking part in so-called “skinny bundle” packages that would make a narrower selection of TV networks available to consumers looking to pay less for linear content.

Viacom has been working diligently on a turnaround effort for months. Since Bakish took the company’s reins in late 2016, he has instilled new leadership at MTV, set in motion a transformation the male-focused Spike cable network into a premium channel that will relaunch as Paramount Network in a few months time, and tried to bring some of the initiatives he spearheaded as Viacom’s international chief to the broader entertainment conglomerate.

Walt Disney and Altice USA recently came to terms on what could have been an equally contentious negotiation about carriage of networks like ESPN, ABC and Disney Channel.

(Above, pictured: Nickelodeon character SpongeBob Squarepants)

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