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Cable Technology Feature Article

July 17, 2012

DirecTV CEO Hints at A La Carte Pricing as Solution to Viacom Dispute

By David Delony, Contributing Writer

DirecTV's ongoing dispute with Viacom (News - Alert) over the price of its channels may build a case for a la carte pricing of channels on cable and satellite networks.

Viewers who are missing channels like MTV and Comedy Central may take solace in the fact that DirecTV (News - Alert) might be making the case for letting them subscribe to only the channels they actually want to watch. Viacom's channels have gone dark on DirectTV for over a week as the two companies renegotiate a deal to put the channels back on the satellite carrier.

DirecTV CEO, Mike White delivered a message to viewers affected by the channel blackout in a YouTube (News - Alert) video.

“Unfortunately, Viacom has decided to take their channels away from our customers,” White said. “It’s a temporary and regrettable tactic to try to force you to pay substantially more for all their networks — even the ones you don’t watch or care about. We think that’s unreasonable. At the very least, we think Viacom should give you the choice to pay for only those channels you watch, but so far they’ve refused. Viacom continues to insist on an all-or-nothing approach.”

The issue with the channels is how much DirecTV is paying for them. White said in the video that Viacom wanted to raise the prices it was charging DirecTV for its channels by 30 percent, which the company would have to pass on to subscribers in the form of higher monthly bills. White reassured viewers that the channel blackout would be temporary.

Ryan Lawler, writing for TechCrunch, noticed more than a simple dispute between the two companies in White's message. White appeared to be arguing against the standard practice of media companies bundling up channels and offering them to cable and satellite companies as “all-or-nothing” packages.

“Taken at face value, what White is asking for is the ability to let consumers pick and choose which networks they want to pay for, and which they don’t,” Lawler wrote. “And if that’s really what this fight is about, it could mean a major shakeup for the pay TV industry if the satellite company gets its way. That’s because a la carte — if actually implemented — could blow up the pay TV industry as we know it.”

Time Warner (News - Alert) Cable has experimented with the concept with its Essentials package, which lets subscribers choose exactly the channels they want.

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Edited by Brooke Neuman

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