July 20, 2012 at 11:59 AM ET
DirecTV Group's 20 million U.S. subscribers are getting back "Dora the Explorer" and "The Daily Show with Jon Stewart" after the satellite TV provider reached a deal to restore Viacom Inc's networks, following a week-long blackout.
Viacom said it restored all of its cable networks, including Nickelodeon, Comedy Central, MTV and BET, which became unavailable to DirecTV customers from July 10.
The dispute arose from the fees that Viacom was demanding for its programming, which DirecTV viewed as a steep increase from their earlier deal.
The companies did not disclose the financial terms of the new contract.
But people familiar with the talks said DirecTV will pay Viacom around $600 million a year. That would be a 20 percent increase over the previous contract's $500 million a year that was publicly stated by DirecTV Chief Executive Mike White.
DirecTV previously said Viacom sought a 30 percent increase in carriage fees, equaling $1 billion over five years -- a boost that DirecTV said was not justified.
Viacom countered that its networks represented about 20 percent of all viewing on DirecTV but accounted for less than 5 percent of its programming costs.
Viacom CEO Philippe Dauman said in the memo to staff that on Thursday afternoon the two companies had made a "decisive push to hammer out a deal that we believe is fair and mutually beneficial."
The loss of 26 networks to 20 million homes for nine full days means the size, length and scope of this programming blackout was unprecedented to date in the U.S. pay-TV industry. Contentious relationships between program distributors and program makers are on the rise as the industry's growth appears to have peaked.
"The attention surrounding this unnecessary and ill-advised blackout by Viacom has accomplished one key thing: it serves notice to all media companies that bullying TV providers and their customers with blackouts won't get them a better deal," said Derek Chang, an executive vice president of DirecTV.
On July 1, AMC Networks, the company behind shows such as "Breaking Bad," "The Walking Dead" and "Mad Men," was removed from the Dish Network after the two companies failed to reach a new contract.
Similar blackouts have taken place in recent years between Cablevision and Walt Disney Co's ABC; News Corp and Cablevision; and News Corp and Dish; and Time-Warner Cable Inc and Hearst Corp.
Time Warner Cable Inc, the second largest U.S. cable provider, said late Thursday it had reached a deal with Hearst Corp after 16 broadcast stations were blacked out in 14 markets for eight to 12 days.
DirecTV and Viacom had been in talks over a new contract but could not agree on terms before the July 10 deadline.
The nine days of the blackout resulted in Viacom's channels such as Nickelodeon losing ground to competitors like The Disney Channel. DirecTV also shed some customers in the period.
The new contract will let DirecTV customers view Viacom's programming on tablets, laptops, handhelds and other personal devices.
Viacom shares were up 9 cents at $46.74 on the Nasdaq on Friday. DirecTV shares were down 6 cents at $48.89, also on the NYSE.
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