Viacom Networks to Return on Suddenlink Communications

By Ezequiel Minaya Features Dow Jones Newswires

Viacom Inc.'s television networks will make at least a limited return to the lineup of Suddenlink Communications, ending a more than two-year dispute over costs to carry the media giant's channels.

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Suddenlink parent Altice USA, the U.S. arm of French mogul Patrick Drahi's Altice NV, said Thursday it reached an advertising and content distribution agreement with Viacom that would return some of the company's channels to Suddenlink customers. The companies didn't say which Viacom channels would return to Suddenlink.

The deal also involved an early renewal of Viacom channels with Altice subsidiary Optimum.

Suddenlink was the largest of a group of some 60 small cable operators that dropped Viacom in 2014, saying that the company was asking for a nearly 50% increase in so-called carriage fees. The fees are a crucial source of revenue and operate as an important profit driver for companies such as Viacom.

Suddenlink has about 1.1 million subscribers, according to a Sanford C. Bernstein & Co. report. Altice acquired the St. Louis-based cable operator in 2015.

Viacom, which owns networks such as Nickelodeon, Comedy Central and MTV, said at the time that the defections represented about two million subscribers, or about 2% of its subscriber base.

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At the time of the break between the companies, there were wider Wall Street jitters that the development was a bad sign for Viacom as it entered renewal negotiations with larger pay-TV distributors.

Viacom had played down the defection, but Chief Executive Bob Bakish has said he would pay special attention to mend frayed relations with traditional distributors.

"We are delighted to extend and strengthen our successful relationship with Altice USA, ensuring that loyal fans across the country will have access to Viacom's must-see content," said Tom Gorke, Viacom's executive vice president of content distribution at the company.

Earlier this year, Viacom said it would narrow its strategic focus to six key channel brands -- Nickelodeon, Nick Jr., MTV, Comedy Central, BET and the soon-to-be-rebranded Spike -- out of about two dozen.

Mr. Bakish has said he believes the six core brands could ultimately be the anchor of a cheap, skinny "entertainment pack" -- without sports -- that pay-TV distributors could sell for as little as $20 a month.

Todd Juenger, an analyst with Sanford C. Bernstein, questioned how much leverage Viacom will have in negotiating new agreements with larger cable operators after the Suddenlink deal.

"Now Viacom seems to have proactively agreed to a narrow distribution footprint with Altice," said Mr. Juenger in a report. "Why, then, would Comcast or DTV or any of the larger MVPD's agree to broader distribution of networks that Viacom themselves have deemed 'non-core'?"

In efforts to restore lapsed partnerships with traditional distributors, Mr. Bakish said he wants to increase the use of data-driven advertising products to help cable operators increase the value of the local advertising spots they sell.

Write to Ezequiel Minaya at ezequiel.minaya@wsj.com

(END) Dow Jones Newswires

May 25, 2017 19:06 ET (23:06 GMT)