Evercore analyst Bryan Kraft believes the prolonged blackout that has left DirecTV’s 20 million subscribers without MTV, Comedy Central or Nickelodeon for a week, could lead to some industry consolidation.
In a research note out late Wednesday night, the analyst said if content providers Viacom, as well as home of ‘Breaking Bad’,AMC, which was dropped from No. 2 satellite provider Dish Network in July, get the upper hand, it raises the chances of a merger between satellite companies and cable providers.
If DirecTV and Dish comes out the winners, he said, it encourages cable TV networks to merge, but only when their valuations fall. DirecTV has pushed backed against what it claims are exorbitant increases in Viacom’s programming fees that it says it does not want to pass on to customers.
And DirecTV viewers aren’t the only ones suffering. Kraft estimates that the dispute is making Viacom lose about $14 million a week. Meanwhile DirecTV would need to lose 1.15 million subscribers before its cash flow was impacted. Kraft said that if DirecTV expects to lose more than 1.15 million subscribers, it should pay up the $3 per subscriber fee Viacom is likely seeking.
As one of the most high profile blackouts stretches into its second week, time will tell whether the spat will be the one that changes the pay TV landscape for good or whether it just causes viewers to change the channel.