After a ten-day blackout of Viacom-owned cable networks on DirecTV, the sides finally announced this morning that they have come to an agreement. It may be a while before it is absolutely clear what the real impact of this standoff was. During the blackout, there were measurable elements that fluctuated but the real ramifications could be much more than ratings or stock prices. It wasn’t surprising that Viacom took the position that they were in the driver’s seat or that DirecTV engaged in a publicity campaign to ensure that its viewers believed that the negotiating stance was there for the consumer. What was enlightening was the general ho-hum response by the general public and the nod to what the future holds – both in entertainment outlets and negotiating tactics – as the multitude of choices in channels and consumption platforms is not just a cliché but a reality.
First off, what I found interesting is that the DirecTV subscribers are not in Viacom’s wheelhouse demo. From a non-scientific analysis, it would seem that the majority of the people who are paying for DirecTV are not the ones who are the target for much of Viacom’s offerings. The assumption is that the kids are interested in the Nickelodeon and MTV channels and they aren’t paying the bills. But that’s obviously not entirely true as the bigger issue for Viacom is that there are so many ways to consume the content. They went so far as to remove the online episodes of the grown-up or bill-payer shows (such as Jon Stewart’s Daily Show), only to make those available days later. But, there’s not much new product in the summer to drive demand or viewership. My kid loves a Nick Jr. show, but there were enough episodes in the DVR that she had no idea there was a blackout - let alone have any clue what it means.
Besides the opportunities that consumers have to find content elsewhere – (DirecTV has a whole array of extras that allows viewers to watch content through YouTube and similar online outlets on the TV) how can the sold advertising be allowed to not be shown? The quick-response viewership decline that Deadline pointed out – “Live, full day ratings in the target demos for its channels were down 27% in the week that ended July vs the same week last year – the previous week, before the loss of DirecTV, they were -14%” – only tells half the story. If advertisers are able to, they’ll capture how much of an effect the loss in advertising had on their actual sales. Perhaps the biggest losers are studios who are trying to promote their films to the key movie-going demo watching Viacom’s channels. But, again, the timing is bad – I don’t know that the demand for the next Batman film is lessened because DirecTV viewers couldn’t see the spots on a few of the many more outlets they access regularly.
The worst by-product of this for Viacom, and perhaps even DirecTV, is that the absence of something provides an opportunity for people to find alternatives. The timing of DirecTV’s addition of Disney Jr during the blackout opened up eyes to the possibility of an alternative for any child who couldn’t get their Nick Jr fix. If the loss was to something outside of the media environment, can anyone be so sure that they will come back?
I’ve been in Paris during a strike by the Metro and museum workers. My feet killed me from so much walking and I ate very well as an alternative to museums, but there is no doubt I would be returning once the trains were running. Disruption in access to a few channels leads to much less discomfort than the loss of transportation. Viacom and other content providers and carriers should keep that in mind as they threaten tactics like this in the future.
The hardball tactic is fine from a negotiation standpoint – with its true business value debated. But, the risk to the ultimate bottom line of consumer’s interest is a different story that nobody can ill-afford to take lightly. Because, if you’re not around, there’s no certainty that anyone will really care.