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Viacom, Charter extend their carriage negotiations

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Viacom, Charter extend their carriage negotiations

Viacom Inc. and Charter Communications Inc. have reached a short extension that will keep the programmer’s portfolio of networks on the cable operator’s systems in the interim as the parties try to reach a carriage renewal deal.

The parties faced a contract expiration on Oct. 15 covering Viacom's 23 networks. For now, those channels remain accessible to Charter’s 16.6 million subscribers.

"Viacom has agreed to a short-term extension" while the sides "work to reach a mutually beneficial deal," a person familiar with the negotiations said.

Recently, Charter launched a microsite on its home page that said "Viacom has been overpaid for their channels over the recent years." It also asserts that "their business is suffering and they are trying to boost their bottom line at the expense of you, our customer.”

Viacom, meanwhile, began airing messaging on its networks running across systems owned by Charter, warning the cable operator's subscribers that they could lose access to MTV (US), Comedy Central (US) and BET (US), among its other channels. The crawls also urged subscribers to call Charter. Additionally, the programmer launched KeepViacom.com, with the website presenting information that it has made a series of offers that would keep the channel on the air, lower customer bills and afford them more choice.

Skinny bundles seem to be a major point of contention. A few days ago, Viacom President and CEO Bob Bakish sent a memo — a copy of which was obtained by S&P Global Market Intelligence to company employees, in which he said among the issues the programmer faces with Charter is the operator's "attempt to inhibit the creation of smaller, more innovative and less expensive packages of the networks customers want, by penalizing Viacom if it participates in new skinny bundles or OTT streaming platforms."

"This is an ultimatum that's impossible to accommodate," Bakish said.

Bakish has been advocating the launch of a low-price entertainment bundle that will give consumers an alternative to broader bundles that cost consumers more, tied in large part to expensive sports programming. According to reports, Viacom actually is expected to team with Discovery Communications Inc., Scripps Networks Interactive Inc., AMC Networks Inc. and A+E Networks on a low-price package sans sports and without ties to broadcast network affiliates.

Analysts also pointed to tiering as a primary concern in the carriage dispute. In May, Charter relocated Viacom networks, including its core channels, to a higher-priced package for new customers. During the company earnings call in August, Bakish said Charter did not have the contractual right to position the networks in the way it has.

Bakish said at the time that he did not believe legal action was the way to solve problems. He said he did not see the tiering matters being "resolved until we get to a new deal, and so this could take a little time."

The dispute comes as Viacom is looking to re-establish its bearings under Bakish, who has implemented a flagship strategy on the network side emphasizing and reallocating resources to a few core channels.

Viacom has been working toward improving domestic ad sales and indicated that MTV and BET have been scoring higher ratings. But its audience levels could be compromised if the services were to go dark for Charter's Spectrum customers for any extended period.