Viacom Strategy: More for Less?

Philippe Dauman and Les Moonves have both captured trade press recently with statements that their respective companies (Viacom / MTV Networks and CBS, Inc) continue to grow affiliate fees and retransmission consent revenues. Perhaps most interesting is Dauman’s comments made at Nomura Securities U.S. Media Summit conference in New York this week in which he is quoted as unapologetically saying that the increases in revenues to large media companies like his own will have the effect of squeezing smaller independent networks out of the game, while smaller networks affiliates with larger entities will continue to survive. Likewise, Moonves has said that as retransmission consent revenues for CBS and other broadcasters rise, smaller players will likely face extinction.

While Dauman may be right to thump his chest at a financially focused media summit, publically bragging about growth while suppressing independent voices might not play well inside the beltway. A groundswell of small cable operators and independent cable networks has formed in the last few years to focus lawmakers on just these issues; the increases in retransmission consent payments and the leverage used by large programming conglomerates to tie carriage of marginal “emerging” networks to that of larger, more established and popular services. Dauman effectively confirmed what groups like the American Cable Association (ACA) and the small independent networks have been talking about for the past few years; forced tying in order to drive smaller independent voices out of the market is a core strategy for companies like MTV Networks. It’s curious that Dauman asserts that there is no interest on the distributors’ part for new independent nets, but there seems to be room for equally uninteresting programming services that large companies like his thrust on the market.

Curiously, the FCC has basically sat on the sidelines during recent retransmission consent and programming spats. They’ve consistently focused on the issue of whether parties are negotiating in good faith and have purposefully refused to get involved in the rate setting aspect of the negotiations – insisting that retrans rates are better set in the market. Now the head of MTV Networks has all but said that they will force carriage of more new networks (while at the same time making content available on the internet – but that’s a different entry) tying them to flagship brands, and the head of CBS said that he will continue to push for increased retrans fees while at the same time squeezing independents out of the market, and everyone’s OK with it. One would think that this would be a bipartisan issue, uniting those on the left concerned with protecting independent voices and those on the right concerned with the dominance of the so called “mainstream media”. I would suggest that the next time cable operators are called to testify on rate increases (as is almost certain to happen during the reelection cycle) that Misters Dauman and Moonves be invited to the party too.