Will Viacom CEO Philippe Dauman be the guy who’ll bust pay TV’s lucrative business model — and give consumers a price break? Hard to believe. But Bloomberg says his company’s MTV, Univision, and Scripps Networks are talking to Dish Network about a plan that could do just that. The satellite company wants to offer at least some of their TV services as live Internet streams, selling them in a package that would cost less than pay TV providers charge for their bundles that include pricey networks such as ESPN, TNT, and Disney Channel. “The effort would mark the biggest attempt to create an online service with live cable channels,” Bloomberg says citing information from “five people familiar with the plan.”
If Viacom and the others play ball, then it could be a startling defection from the programming pack. Viacom and its rivals including Disney, Time Warner, News Corp, NBCUniversal, and Discovery have become hugely profitable under the current system that requires cable and satellite customers to pay for channels that they don’t watch. That could implode if lots of consumers cut the cord and depend instead on free, over-the-air TV transmissions and relatively inexpensive Internet services such as Netflix. A low-priced Dish offering presumably would make it easier for pay TV subscribers to opt out of the current arrangement.
Investors also would have plenty of questions about Viacom’s direction if it helps consumers to make an end-run around traditional pay TV. Like most programming execs, Dauman has told investors that profits will grow as Viacom raises the prices that it charges distributors when carriage contracts come up for renewal — the way it did recently in Viacom’s 10-day showdown with DirecTV. Dauman said last week that price increases are justified because companies including Viacom are investing in new programming. “It grows the overall business and grows both sides’ profitability and I expect that to continue,” he said. But pay TV providers likely would dig in their heels and fight substantial price increases if Viacom helps Dish to give consumers a low-priced alternative.