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Is Viacom being fair demanding 22% to 36% rate increase on it's 19 channels to Time Warner cable customers?

• These 19 Viacom channels include MTV, Comedy Central, Spike TV, TV Land, and VH1. Even though ratings for these have fallen, Viacom wants a big 22% to 36% increase in the rate they get from Time Warner Cable and their subscribers, reasoning that customers spend 1/5th of their time watching Viacom channels, but Viacom's rates comprise less than 1/5th of subscribers' total cable bill. In other words, Viacom is claiming to have been undervalued so long, that the time is now to adjust their price up to where it should have been all along. This increase is THREE TIMES what Viacom previously agreed to in the rate contract they signed with Time Warner. So Viacom wants to break their contract to hold Time Warner ransom for more money, and is threatening to make all those 19 channels go dark tonight at 12:01 a.m. Jan 1, 2009, if Time Warner doesn't relent to the big increase. Does this sound really fair to you? Viacom has been known to be very aggressive negotiators and has pulled dramatic stunts like this in the past. I know this as an industry insider and corporate lender to numerous media companies. Viacom's negotiations with the big corporate banks were different than those with cable operators, but it was clear, they felt they were the 800 pound gorilla in the market and could command from vendors and others, whatever they wanted. It was their whole strategy for acquiring channels, consolidating market share, and increasing their negotiating power. There is nothing illegal with this as long as there is not TOO much industry consolidation such that it could be considered anti-competitive or nearing an oligopoly (anti-trust lawsuits would follow). Actually, I suspect one may be brewing from this latest standoff. I'm also a Time Warner subscriber and while I don't want these channels to go away, I also don't like being held ransom when Viacom wants to break it's contract and play power politics to squeeze us for more money. If they felt they were so undervalued back when they signed the original rate deal, why didn't they speak up then? A deal's a deal! It's not cable subscriber's fault that Viacom's ratings and ad revenues have dropped or that they were not as rate aggressive as they could have been when they negotiated their original deal with Time Warner. This feels much like the "Bailout Deal" for Wall Street where average taxpayers are being tapped to pay for the bad judgement of big financial companies. When is this madness and irresponsibility on the part of not-so-bright senior management going to stop? Do you support the position here of Viacom for 22% to 36% rate increases above the contracted rate increase? Or do you support Time Warner trying to hold the line for subscribers and who is the second largest cable operator in the U.S.?

• Answer:

  Business is not (nor should it be!) about being "fair"; it is a publicly-traded company's LEGAL OBLIGATION to be as profitable as possible on behalf of the stock-holders. So Viacom are REQUIRED to find the balance between maximizing income and losing customer base. If you don't like the hike, then leave; if enough customers leave, the problem solves itself...