Twenty-six Viacom channels were dropped from DirecTV due to unsuccessful pay-TV...

advanced warning,” Viacom said Wednesday on its blog (http://xrl.us/bngh9a). DirecTV refused to engage in meaningful conversation, it said: “We proposed a fair deal that amounted to an increase of only a couple pennies per day, per subscriber and we remained willing to negotiate that deal right up to this evening’s deadline.” DirecTV said its executives reached out to Viacom this week with a new proposal, but never heard back. The satellite company “had to comply with their demand to take the channels down or face legal action,” DirecTV said in a news release (http://xrl.us/bngipw). Viacom is pushing DirecTV customers to pay more than a 30 percent increase, which equates to an extra $1 billion, it said. DirecTV said it will provide customers with replacement channels in a Mix Channel format. The DBS company has a slight edge in negotiating leverage, Canaccord Genuity analyst Thomas Eagan wrote investors. While Viacom boasts several popular cable networks, “it does not provide any sports or local broadcast channels, two programming elements that have proven highly important to viewers,” he said. UBS analysts said they expect the dispute to end within a few days or weeks, “given Viacom’s weak ratings.” The impact on DirecTV subscriber additions should be muted, UBS said. The dispute symbolizes growing tension between distributors and programmers, Credit Suisse analysts said. With subscriber growth effectively nil, “programmers have been more reliant on affiliate rate increases to sustain growth, which have come at the expense of distributors’ video gross margins,” they said. Viacom is blocking online access to major shows on its networks, which applies to any ISP customer and not just to DirecTV subscribers, an analyst said. “Viacom has taken the unusual step of temporarily removing key long-form programming from the web altogether (Daily Show, Jersey Shore, etc…),” wrote Richard Greenfield of BTIG. “Unfortunately, Viacom has not forced authentication for all online long-form content that it makes available on its websites. In turn, it cannot simply deauthorize access from a particular ISP’s domain to block access to video content the way it has threatened in past battles with distributors, such as Time Warner Cable in January 2009.” This “affects all ISP customers, not just DirecTV subscribers who have broadband,” Greenfield wrote. “While this may upset ISPs customers that do not have DirecTV, we believe the consumers most upset will be those that are trying to find a way to access Viacom content no longer available on DirecTV.” The DBS company is in a weaker negotiating position for affiliate fees than all other multichannel video programming distributors, said Greenfield. “We are quite surprised by DirecTV’s strategy to ease the pain of their subscribers from lost programming by illustrating how they can access certain programming online,” he said.