Viacom, DirecTV standoff indicative of greater shift underway in pay TV industry

A lot of Americans love The Daily Show. But those Americans are typically watching Nickelodeon.

And yet they pay for both Comedy Central and Nick — at least if they’re subscribing to traditional pay cable or satellite television. 

Last week, DirecTV blacked out 19 channels owned by Viacom, including Comedy Central, Nickelodeon and MTV. To anyone with Internet access, this could have been only a minor inconvenience, with DirecTV directing its subscribers to watch the shows online.

Viacom hit back by blocking all online streaming of its shows — for all subscribers from every cable and satellite company.

The whole disagreement is over money, and how much Viacom can charge DirecTV — and by extension, you — to receive a bundle of its channels — whether you watch them, Comedy Central, or not, the Centric Channel.

But Brian Stelter, who runs The New York Times’ Media Decoder Blog, thinks we could finally be heading toward à la carte programming. He says the emergence of online video services like Hulu and even show and network websites that allow same-day or next-day streaming of popular shows, some free and some for a cost, has changed the conversation around subscriptions.

“Programmers don’t feel they can go completely online yet, but they see it as an option that is emerging,” Steler said. “For now, they see it as an option they can use as leverage in these negotiations.”

Viacom and DirecTV are approaching the end of their first week of impasse. For its part, DirecTV has slammed Viacom for giving away its content online, where people can see it even without subscribing to a pay-TV provider.

But the real crux of the disagreement is the skyrocketing fees programmers provide and the increasing number of channels they offer — or require companies to pick up in order to get their more popular offerings.

“For a long time, the programmers were able just to tack on more and more channels, because of the amount of control they had and because viewers are passive. They like to flip around with hundreds of channels,” Stelter said. “If we could choose to only have 50 or 60 or 70 of those channels, maybe many people would, especially in an Internet age where we’re used to getting a customized package of what we want.”

But that’s not the business model, at least at the moment. However the most recent fights between distributors, like Comcast and Time Warner and DirecTV, there has been movement toward purchasing just a selection of the channels a produce carries.

“That doesn’t mean they’re necessarily going to unbundle it for consumers, but it means they’re starting to chip away at the existing business model,” Stelter said. “In the same way that we’ve seen the Internet help to chip away at the books business model and the newspaper business model.”

Stelter says this foretells the creation of a product, web-based, that offers true choice in programming. Want a channel? Pay for it. Don’t want its sister channel? Leave it off.

“It gives you a smaller bundle, a cheaper bundle,” Stelter said. “That’s the kind of disruptive possibility we can see for the first time.”

AMC and Dish Network are in the midst of their own dispute, though this has less to do with price and more to do with a larger dispute between the two companies, though the two sides don’t really even agree on what they’re fighting over.

Dish says it wants to drop AMC Networks’ IFC and We channels, which AMC won’t allow if the distributor wants to keep AMC and its Walking Dead, Breaking Bad and Mad Men series. AMC says Dish is upset over an unrelated lawsuit between the two parties.

If it’s the first problem, things could get better if a la carte programming does eventually arrive. But don’t expect that any time soon. It may be years still for a product like Stelter is imagining to be embraced by the producers and to be brought to market.