Viacom, Disney Chiefs Defend Pay TV Model

Two senior chief executives of media companies defended the current pay TV distribution model -- believing that a la carte programming would not benefit consumers, nor that any legislation would come to pass.

"When you sit down to explain to regulators about what would happen in so-called a la carte world, it’s not good for consumers," said Philippe Dauman, president/chief executive officer of Viacom, at the Goldman Sachs Annual Communacopia Conference. At the same conference, Robert Iger, chief executive officer/chairman of Walt Disney, agreed the current pay TV system is "a really good bargain...  I think the consumer is getting a good deal."

While it may seem like the right move for traditional media companies, Dauman says it always isn’t the case that media companies get exactly what they should.

For example, he says, while Viacom channels make up 20% of viewership, programming fees paid Viacom are in the single-digit percentages, in terms of the share of overall TV carriage fees. He said entertainment channels, in general, get less than sports networks.

A lot of the deal making for big media company’s array of networks comes in “packaging," which can offer discounts to TV distributors. Dauman said: "We do have distributors who will pay higher rate for fewer channels, but most find it a better buy to have a broader array and take the discount."

The "a la carte" issue is getting some high visibility. In recent weeks, a number of Congressmen, including one bill from Sen. John McCain (R-AZ), has proposed legislation that would require cable distributors and other TV distributors to offer consumers the right to purchase only the channels they watch.

But Dauman believes the free market would prevail. "I would expect that everything that would unfold would be done in a commercial marketplace, not in regulation."



1 comment about "Viacom, Disney Chiefs Defend Pay TV Model".
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  1. James Smith from J. R. Smith Group, September 25, 2013 at 11:52 p.m.

    It's interesting...even old people understand the math. Focus group member Chuck, in his 70s said "Yah, I get all those channels I never watch, and I know I'm payin' for them too. How can they get away with chargin' me for things I don't use? I don't like it."

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