David vs. Goliath Battle Brews

Small cable operators could have a battle on their hands this week as the deadline for a carriage agreement with MTV Networks parent Viacom approaches and systems in rural markets across the country are contemplating, for the first time, doing without the media giant’s popular suite of channels.

Negotiations are continuing between Viacom and the National Cable Television Cooperative, the buying consortium that represents more than 800 independent cable companies across the country. The NCTC’s current deal with Viacom expires on April 1, and co-op CEO Rich Fickle said talks are taking a decidedly different tone this go-around.

The NCTC is negotiating for about 700 members that own systems that average 1,500 customers each, for a total of about 5 million subscribers nationwide. Talks center around both the HD and standard-def feeds for about 23 Viacom channels, including MTV, Comedy Central and Nickelodeon.

The current negotiations are unique because this could be the first time the NCTC is faced with a significant blackout of programming, Fickle said in a recent interview. And unlike earlier carriage negotiations, when the parties worked out their differences during 30- to 60-day extensions of old deals, no such reprieve appears to be coming this time.

Price is the main issue — Viacom is asking for a rate hike that by some estimates is greater than 40 times the current inflation rate, a premium that is forcing small operators to make a hard choice, Fickle said.

“It may be the first time you see small operators saying, ‘I’ve got to make the choice on whether I follow the traditional path and carry all these video channels or make some tradeoffs and support growth in broadband and some other alternatives,’ ” Fickle said.

Viacom has been involved in some heated carriage disputes in the past. In 2012, the programmer went dark to DirecTV’s 20 million customers for about nine days. And though Fickle said he hopes the two sides can hammer out an agreement, his members are girding for a battle.

“We may be at the breaking point with some of these markets in deals like this,” Fickle said.

A Viacom spokesman confirmed that negotiations with NCTC continue, but declined further comment.

If the two sides can’t come to a compromise by Tuesday, the dispute could continue just as small operators are converging on Washington, D.C., for the American Cable Association’s Summit. That could throw an even brighter spotlight on the issue, ACA president and CEO Matt Polka said.

For years, reining in high programming costs has been a major issue for distributors of all sizes, and the federal government is taking notice. In the past month, Federal Communications Commission chairman Tom Wheeler has proposed eliminating coordinated retransmission-consent negotiations by television stations in the same market and is expected to take a hard line on other programming cost issues.

“They’re going to shine a light on themselves, that’s for sure,” Polka said, adding that the upcoming review of the Comcast-Time Warner Cable merger, where programming pricing and choice will be major issues, could be a factor.

“There’s definitely a lot of focus, and we think there should be a focus on this kind of behavior because smaller consumers in our members’ markets are being harmed,” Polka said.