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Arvig-Viacom dispute: Behind the decision to drop 19 channels

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Many area TV junkies who used to get daily doses of screen delight watching classic characters like Andy Griffith and his sidekick Barney Fife, popular music videos and shows, comedians ranging from Larry the Cable Guy and Jeff Foxworthy to Stephen Colbert and Jon Stewart or certain kiddy, ethnic and teen shows have had to adjust.

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By now they either found a new outlet for a fix of their favorite television friends and program content or changed their viewing habits.

As of the last day of April, 19 cable TV channels formerly provided by Arvig Communications Services for many years went “dark.”

Arvig customers learned in mid-April that Arvig “decided to remove all Viacom channels from the current lineup.”

A letter that cable customers received from Arvig Director of Video David Pratt attributed this to an “excessive price increase demanded by Viacom.”

Viacom is a cable television conglomerate that sells a bundle of television channels to cable television companies and satellite network providers like Dish TV and Direct TV.

In the case of Arvig —the only cable television provider in this area—the Viacom “bundle” included the 19 stations that went dark on April 30 and have since disappeared or have been placed by something else on the Arvig cable lineup.

Depending on the level of their cable package — One Star, Two Star or Three Star — customers of Arvig lost BET, CMT stations, Comedy Central, Logo TV, Spike, Nickelodeon stations, TV Land, and VH1 stations.

A one-question survey with four multiple-choice options was available to Arvig’s online customers only.

Pratt said 70 percent of Arvig online customers who completed the poll opted for the choice to dump Viacom and have no increase in monthly rates. Two of the choices were insignificant or indifferent and the other was keeping Viacom and paying more money monthly.

Arvig isn’t alone in dumping Viacom. For example, Mid-Rivers Communications, the lone cable television provider for eastern Montana and western North Dakota, also pulled the plug on its Viacom “bundle.”

In April, I received our monthly billing statement from Arvig, which generates bills on the first day of the month, due by the 25th day of the same month.

Customers pay in advance so that Arvig receives pay for services before services are actually rendered.

Arvig offers a variety of ways to pay the monthly bill. I pay by phone, which I did earlier this month.

On that day, I had no idea I would be writing this story when I asked the Arvig rep, “since the April 18 Dave Pratt letter refers to adjusting our rate accordingly due to loss of these (Viacom) channels, and those channels went dark on April 30, why is the adjustment not reflected in the May 1 bill?”

The answer was the same as the Pratt letter: “Your June statement will reflect these changes.”

Asking the same question, and more, and a few more, led to this from the Arvig rep: “Those customers who actually ask for the adjustment for May will get it in May as well as June.”

I said, sure I’ll take it. But if everybody knew this, wouldn’t all of the Arvig phone reps be inundated with phone requests?

We finalized paying our May bill for June services.  When the final amount did not reflect the new May credit, I was told that the June bill would reflect that credit.

And any more questions should be addressed to the “marketing” division of Arvig.  Going any further to me meant: A story is born.

During a phone interview, Arvig Marketing and Media Manager Lisa Greene confirmed that customer service-billing agents could and would credit the adjustment for May if customers called and asked for it.

Otherwise, cable customers would not receive the adjustment for loss of the Viacom stations until the June bill.

She also said Arvig had about 30,000 cable customers, but not all customers were affected by the issue with Viacom. Why? Greene transferred me to David Pratt.  Pratt returned my call the following morning.

“There are about 25,000 Arvig cable customers who lost some or all Viacom stations with their cable plan,” Pratt explained. “The average cost per customer is $2.50 per month with $3.50 being the high end for Three Star Plan customers.

“Yes, there is around an average $62,500 (in revenue) per month, but remember, we were not obligated to adjust or credit anything. We are making the adjustments beginning June 1.

“Logistically it is not possible to include the adjustment in the May billing,” he said.

Why? 

“The bigger picture is that we still have to pay licensing fees because we (Arvig) pay in arrears, after we receive the service,” Pratt continued. “We’re not trying to take advantage of the customers. The Viacom licensing cost for the month of April is still due.”

But why should that matter? Whether the customer already paid in advance before getting their Viacom service or Arvig still has to pay for the Viacom service after they already received it, why does either matter? I mean regarding the refund for May.

“Keeping or pulling Viacom was actually a $5 swing for the majority of our cable customers, and a $7 swing for the Three Star Plan customers,” Pratt answered.

Swing meaning the amount that would have been added to a cable plan immediately had Arvig agreed to renew a Viacom contract plus the adjustment amount to the same cable plan when Viacom was not renewed.

“If a customer feels they really need the $2.50 or $3.50 adjustment for May, we will credit a May adjustment to their account if they call in,” he said.

If Arvig kept Viacom:  25,000 cable customers would have had price increases at least three times in one year—two related to Viacom and one to the basic cost of cable increase that usually happens every year and was already initiated earlier this year.

This is just the beginning, according to Pratt. “Each news network has its own programming package... C-SPAN stations are independent... local TV stations have fees for re-transmission... and when contracts are renewed there is usually cost increases for programming. The Disney-ESPN-ABC contract is the next big contract. Actually just Disney-ESPN since Disney bought ABC. Regardless, it is bigger than Viacom.”

And you negotiate these contracts with all of these and more programmers every time the contracts are renewed?

“Sometimes I negotiate with a representative from a programmer, sometimes the national cable television co-op that Arvig is affiliated with does the negotiating,” said Pratt.

“It’s actually hard to call this negotiating. More often it is decision-making. They tell us the price increase, we have to decide whether to accept it or not. Those decisions are based on whether we think our customers will accept their share of the price increases.”

(Ted Fiskevold is a freelance reporter for Detroit Lakes Newspapers)

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