Viacom, DirecTV Face Off in Sun Valley
The day after Viacom pulled 17 channels from DirecTV, the two companies’ chief executives are spending the week hobnobbing in Sun Valley at an annual conference for media and tech moguls.
As they float between panels on Iran/Israel relations and cloud technology, the two execs are still working toward hammering out a carriage deal for Viacom content – albeit unsuccessfully.
In an interview Wednesday, DirecTV CEO Mike White said they remain “very far apart” on price, with Viacom’s choice to request an additional $1 billion over five years outside the realm of possibility.
“That’s something our customers can’t afford,” White said. He estimated that the company has incurred increased content costs that are double what has been passed onto DirecTV customers.
The offer represents a roughly 30 percent increase over the current deal, under which DirecTV paid Viacom about $500 million annually. White said he made an offer Tuesday to Viacom that represented what he observed would have allowed for “double-digit rate increases,” but Viacom rejected.
Earlier in the day, Viacom’s Philippe Dauman – currently the world’s highest-paid chief executive – expressed frustration at the length of the negotiations, and DirecTV’s unwillingness to accept the higher price.
“In the seven years since we last negotiated a DirecTV deal, we have successfully and peacefully concluded affiliate agreements with every single other distributor in the United States,” Dauman told CNBC.
While analysts agree Viacom may have more negotiating leverage, the cost to the company – whose channels include Nickelodeon, MTV, VH1 and Comedy Central – of not renegotiating a deal would be steep. Evercore analyst Alan Gould wrote that, were Viacom dark on DirecTV for an entire year, it would strip Viacom of $300 million, or $0.63 a share.
But there’s still hope: White said he and Dauman spoke three times on Monday, and have continued to talk throughout the conference – though much of the nitty-gritty negotiating is taking place behind the high-stakes scenes of Sun Valley.
Will a deal happen soon? At least White remains optimistic.
-By CNBC's Kayla Tausche