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• Viacom 's Latest Cable Hit: "The Big Payout" • Time Warner Cable Partners With Viacom to Make TV Channels Available Online • Media: Viacom Loads More Ads on Channels --- As Viewership Falls at Some Networks, Firm Increases Air Time for Commercials to Maintain Revenue • UPDATE 2- Viacom profit misses, hurt by weak US cable advertising • Viacom , DirecTV reach 7-year deal GE expects big earnings growth • WSJ UPDATE: DirecTV , Viacom Reach Agreement to Restore Channels • Viacom , DirecTV in Epix tug-of-war • Viacom sees red Cable ratings bloodbath from DirecTV blackout • Viacom -DirecTV cost dispute highlights concern over pay-TV's future • DirecTV , Viacom take fight to Web • DirecTV - Viacom Dispute Turns Into Blackout Reality • WSJ BLOG/Deal Journal: News Corp . Split, the Viacom Way • Viacom to Offer $400 Million in Debt • Viacom and Time Warner Cable Reach Deal on App for Streaming Programs • Viacom Signs A New Lease To Expand In Times Sq.

Dark skies were hurling down rain outside Viacom's Times Square headquarters on a recent morning, but the atmosphere inside was bright. A smiling employee was handing soaked visitors copies of the masks made famous by the Teenage Mutant Ninja Turtles, the superheroes whose cartoons are being lavishly relaunched by the entertainment company. One worker was even humming the series theme song in the bustling lobby.

Fifty-two floors above, Viacom's dapper chief, PhilippeDauman, was equally upbeat about his company's ability to weather its own run of storms. The entertainment outfit's crown jewel, the popular children's TV network Nickelodeon, has revamped nearly its entire fall lineup to try to reclaim the No. 1 ranking it ceded to Disney this year. Seemingly endless reruns of once-big money spinners like SpongeBob SquarePants are being cut back to make way for newer fare. An aggressive overseas expansion is under way and Comedy Central hits like The Colbert Report and The Daily Show have hit a sweet spot with the elections in full swing.

Even if they missed the Ninja Turtles' debut in late September, investors should be tuning into the stock, which has some other powerful forces on its side. Most important, Viacom generates lots of cash flow -- an estimated $4.2 billion in the recently concluded fiscal year -- that has allowed it to return money to shareholders at a prodigious rate. In 2012, it bought back $2.8 billion of stock, or a tenth of its market value. It also paid out $550 million in dividends, giving the shares a 2% yield. Dauman reckons the two payouts accounted for a 14% return to shareholders in fiscal 2012.

In effect, Viacom gradually is taking itself private. Late last year, Dauman told an investor conference that he intended to return $20 billion of capital to shareholders over five years; the company was convinced that big acquisitions destroyed value and wanted to focus on organic growth. On a hypothetical basis, if you assume that Viacom (ticker: VIAB) spends three-quarters of those funds on buybacks, that would come to $15 billion. Its equity market value is just $28 billion. Granting -- again, this is theoretical -- that the stock price didn't change, the buyback would reduce Viacom's float by 53%, to $13 billion. At last week's valuation, the remaining shares would be worth more than twice their recent $54, or about $115 a share. In reality, the buyback's likely to push the shares higher, meaning fewer will be retired. Analysts agree a price of $60 to $75 would be reasonable over the next 12 months.

Dauman insists Viacom will keep gobbling up stock. "Either there will continue to be shares available for us to buy, or we'll be fighting with somebody for that last share," he says. Buying back shares It has no plans to stop. "We are committed to our buyback program . . . [it] "is accretive at higher price points than where our stock is right now, and our multiple is relatively low," says the former Shearman & Sterling partner and Viacom general counsel, who's known as a savvy deal maker. With interest rates so low -- Viacom recently issued $100 million of three-year notes with a coupon of 1.25% -- the buyback makes even greater sense. "It's close to free money. If I retire a share of stock at which I'm paying 2% [dividend] and paying 1.25% [to borrow], we come out ahead. And your earnings per share

The buyback plan obviously isn't new, but Viacom's valuation, with the supply of shares dropping steadily, remains compelling. The stock has risen 19% so far this year (it's up 30% since becoming a public entity in its current form in 2006). But the 2012 performance is dramatically less than Viacom's peers' average rise of 31%. At 54 last week, it trades at just 11.2 times forward earnings, well below the market's 13.5 multiple and a discount to the media group's 14. That's cheap, particularly in light of its 12.5 historical multiple and the possibility for new revenue streams.

It wouldn't be the first time that Viacom was taken private -- that's what media mogul Sumner Redstone, now 90, did when he bought the company in 1987, with Dauman as his lawyer. The original company was split into Viacom and CBS in 2006. Redstone, Viacom's chairman, controls the majority of the voting A shares (only the B shares are being bought back), which means he is the biggest beneficiary of the dividends. As supply outstanding falls, his economic interest in the company rises; the higher earnings per share should also bolster the value of his holdings.

Reducing the supply of stock and paying a healthy dividend are great for shareholders, but the resuscitation of Nickelodeon is a needed catalyst. About 43% of all cable viewers watch Nick each month, and it's said to account for as much as a third of Viacom's cash flow, or earnings before interest, taxes, depreciation, and am-ortization (Ebitda). That's why the last year was so disappointing. Ratings fell by nearly a third as kids' viewing staples like iCarly and Victorious began to show their age at about the same time children decided they couldn't absorb any more SpongeBob repeats. Revenue fell an estimated 6.2% in fiscal 2012, to $14 billion; earnings are projected to be $4.19 a share, up 11% from last year.

The turnaround is an important test for Dauman, too, who's been viewed mostly as a cost- cutter and deal maker, rather than a nurturer of creative talent like his predecessor Tom Freston.

This quarter -- a critical one -- there will be a 70% increase in original shows coming on air. "That reinvigorates the brand at Nick," says Brett Harriss, who follows Viacom for shareholder Gabelli & Co. Ratings have stabilized a bit and, if they improve, advertising should follow. Advertising accounts for half of Viacom's cable-network revenue.

Other Viacom networks haven't had the same problems. Though the hugely successful run of Jersey Shore comes to an end this year, its producer, MTV, has lots of promising reality and scripted shows, including the teen comedy Awkward and the new sitcom The Inbetweeners. Comedy Central continues to ride the success of Jon Stewart and Steven Colbert.

Affiliate fees, a big chunk of revenue that comes from local cable companies, show no sign of weakening. After a high-profile battle last summer that resulted in a blackout of Viacom channels, DirecTV agreed to pay fees that were initially 20% higher than previously. Says Dauman: "We've given the guidance of high single-digit or low double-digit growth [in affiliate fees]. If you go back over the six years since I've been CEO, we've in fact had compound growth of 11%. I look forward to a good year."

At Paramount Studios, which accounts for 35% of Viacom's revenue, the film slate includes the sequel G.I. Joe: Retaliation, and a new franchise, entitled Jack Reacher, that opens in December, with Tom Cruise.

Viacom still has loads of room to grow outside the U.S. Despite weakness in Europe, Dauman is optimistic about viewership and advertising. The newly launched, ad-supported Paramount Channel is expected to be profitable this year. Nickelodeon and Nick Jr. are hugely popular. Expect new versions of Jersey Shore, including one catering to French viewers that rolls out this year. Geordie Shore, Britain's own adaptation, is one of the most popular cable shows in that country. The DirecTV deal also gives Viacom exposure in Latin

And solid cash flow should continue to help investors. Estimates put Ebitda at $4.3 billion, up from $4.2 billion, as profit climbs 14%, to $4.78 a share in 2013.

As a result, there's a "ridiculously high probability" that Viacom will extend its generous dividend and buyback programs, says analyst Brian Wieser of Pivotal Research. One big fan is Jerry Senser, CEO of Institutional Capital: "That double-digit cash return is extremely attractive to shareholders compared to what you can get in the fixed-income market." Warren Buffett, who took a stake this year, is also on board.

Redstone's age and health raise a number of questions. What happens to the payouts if he passes away? The billionaire has tied up his stake in trusts for his grandchildren. (Dauman is a trustee.) His presumed successor, Dauman points out that his own employment contract runs through 2016 and that people have been wondering about Redstone's longevity for 20 years: "He's still standing."

Viacom's assets would be attractive to any number of buyers. Often mentioned are rivals Time Warner (TWX), Comcast (CMCSA), and Barron's parent, News Corp. (NWSA). Microsoft (MSFT), Apple (AAPL), and Google (GOOG) are also on the hunt for content. Gabelli pegs Viacom's private-market value at $86 a share.

But a change in control isn't necessary for investors to extract value. "The public float will grow smaller and smaller," says Rich Greenfield, an analyst at BTIG. This year, Dauman promises, buybacks will total at least $2.5 billion, or 9% of the company's current market value. It could be a good time for investors to step in from the rain and warm up with a nice dividend and steady return of their capital.

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Time Warner Cable Inc. (TWC) has partnered with Viacom Inc. (VIA, VIAB) to allow Time Warner's customers to access full-length episodes from Viacom operated television channels like Comedy Central, Nickelodeon and VH1 on demand on the Web.

Time Warner customers can currently watch Viacom networks live via the TWC TV offering. With the new feature, they can now log in to Viacom authenticated channel websites with their cable IDs.

While many current and past television shows are available online, media companies have been moving to put more of them behind a wall that reserves them for people who have a pay-TV subscription. The initiative is usually referred to as "TV Everywhere." The premise is that existing subscribers can go online, click on the show they want to see, provide verification of their status as a pay-TV customer, and enjoy. Non-subscribers would be blocked. The result is that online video remains an adjunct, not an alternative, to cable, satellite and fiber video services.

Like many of its peers, Time Warner Cable, the second-largest U.S. cable television provider behind Comcast Corp. (CMCSA, CMCSK), has been losing subscribers in its core video businesses as a maturing pay-television market in the U.S. and fresh competition results in consistent customer defections, although the rate of losses has largely slowed in recent quarters. As a result, cable distributors are focusing more on expanding their broadband cable and business services units, where they see higher profit margins because those units don't face the high programming costs associated with the video operations.

The company recent issued a stern warning to television programmers, arguing against "huge price increases," as a handful of new disputes over programming costs have forced new rounds of blackouts for many channels on Time Warner Cable and others.

And cable TV channel operator Viacom has also been struggling, as it sees its top-line pressured in recent quarters as the U.S. television-advertising market has shown signs of softness. Last month, Viacom said its fiscal third-quarter earnings fell 7% as it saw revenue from its media networks and filmed entertainment segments slump.

Viacom's shares edged up five cents in recent trading to $50.90, while Time Warner's shares climbed 65 cents to $91.47.

Write to Saabira Chaudhuri at [email protected]

Corrections & Amplifications

This headline was corrected at 12:09 p.m. EDT because it omitted the word "Cable" from Time Warner company's name.

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Page 5 of 31 © 2012 Factiva, Inc. All rights reserved. "Time Warner Partners With Viacom to Make TV Channels Available Online," at 11:21 a.m. EDT, omitted the word "Cable" in the headline. Time Warner Cable partnered with Viacom.

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Fewer people have been tuning into some of Viacom Inc.'s cable channels over the past year, so the company has turned to a timeworn but controversial method of maintaining ad revenue: adding more commercials.

According to data from TV-research firm Nielsen, the media conglomerate's Nickelodeon and Comedy Central networks boosted the amount of ad time they aired in the first half of 2012 by 9% from a year earlier, to a combined 1,901 hours. That followed a 7% rise in all of 2011 and a 4% rise in 2010, Nielsen found.

As viewership drops at some of Viacom's channels, what the company receives for a typical commercial spot can decrease. Increasing the amount of commercial time allows Viacom to make up some of the impact of the sharp ratings declines.

Viacom's U.S. ad revenue fell 7% in the June quarter from a year earlier, after rising 1% in the March quarter. But that compared with a 29% drop in viewership at Nickelodeon, one of the company's biggest channels, in the first half of the year, according to a report by Barclays Capital, based on Nielsen data. Other Viacom channels, including Comedy Central, have also lost viewers, but by a much smaller degree.

Viacom acknowledges that it has increased the load of ads, describing it as a short-term strategy. "We see this increased commercial load as a temporary situation that we will address as ratings improve," a company spokeswoman said. Viacom Chief Executive Philippe Dauman said earlier this month Nickelodeon was "beginning to show momentum."

Media buyers, however, warn that adding more commercials can alienate both viewers and advertisers. They say that consumers have a certain amount of tolerance for advertisements, but don't like commercial breaks that run on too long. And if the amount of clutter reaches a certain level, commercials won't resonate as well with viewers.

"It is disappointing that Viacom networks continue to shore up their ratings underperformance by adding incremental clutter to an already crowded commercial environment," said Jason Kanefsky, executive vice president of strategic investments at MPG, an ad-buying firm owned by Havas SA. "This strategy seems disconnected with their clients' needs," he said.

Even before the latest increases, Viacom's channels were known to generally have heavier loads of commercials than many rivals, ad buyers say. The precise amount varies by channels. One buyer estimates that the average number of prime-time commercial minutes per hour ranges from 12 minutes and 30 seconds at MTV to 16 minutes and eight seconds at Nick at Nite. Nickelodeon, which aims at children, has a lower ad load, with nine minutes and 26 seconds, the buyer estimated.

Viacom didn't disclose how many commercials it runs during its shows.

Page 7 of 31 © 2012 Factiva, Inc. All rights reserved. In contrast, Walt Disney Co.'s ESPN plays nine minutes and 27 seconds of commercials per hous and Discovery Communications Inc.'s Discovery Channel plays 10 minutes and 59 seconds, the person said. Discovery and ESPN declined to comment.

One media buyer said the increase in the ad clutter has caused his firm to cut back on what it spends on some Viacom networks. "Nick at Nite has been devalued because of underperforming ratings and it's been compounded by them increasing the ad clutter," the ad buyer added.

Viacom isn't the first network to add more commercials when ratings softened. "It's a common tool," says Brian Wieser, a media analyst at Pivotal Research Group. "But you can't keep making up for shortfalls in ratings by adding to your commercial load. It's a nice tool to manage short-term problems."

Another media buyer said that Viacom's move to increase the ad load is a "double-edge sword," since increasing the length of ad breaks usually results in ratings falling as viewers are more inclined to leave a show that is overcluttered with ads.

Thanks to the growing availability of Internet video, viewers may be more likely to switch off their televisions if they grow impatient with commercials. Older seasons of some Viacom programs like Nickelodeon's popular cartoon "SpongeBob SquarePants" can be watched commercial-free on Netflix Inc. Analysts have questioned whether that has contributed to Nickelodeon's ratings declines.

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* Earnings of 97 cents per share miss analysts' view by 3 cents

* U.S. cable advertising revenue falls 7 percent

* Revenue at Paramount film studio down 29 percent

(Adds Viacom CEO quotes, share movement, details)

By Yinka Adegoke

Aug 3 (Reuters) - Viacom Inc reported a lower-than-expected quarterly profit on Friday, hurt by weak advertising sales at its U.S. cable networks and a poor showing at the box office for its movies.

Revenue fell more sharply than expected as ratings declines at flagship networks MTV, BET and Comedy Central hurt Viacom's wider business.

Chief Executive Officer Philippe Dauman acknowledged "cyclical ratings softness" at the networks, which he said would be reinventing themselves with a slew of new shows and movies.

Dauman said he expected ratings to improve through the next fiscal year as Viacom is already seeing some improvements in the current quarter.

"As I said, it takes a while to create new programming, shoot it, cast it, do all those things," Dauman said. "The shows are going to be released over the next several months, and we expect to see a positive impact."

A bruising nine-day programming blackout of Viacom networks on DirecTV Group during a contract dispute will cut 1.5 percent from the current quarter's advertising revenue, the company said.

But it expects overall carriage fees to grow at high single- to low double-digit percentage rates for the fiscal year.

Dauman said Viacom had negotiated a significantly higher than 20 percent increase in its new DirecTV deal. The company also priced in higher annual increases than the previous agreement over the course of the new seven-year deal, he added.

"They did a decent job of explaining away what looked at first blush like an awful quarter, but the guidance was positive, particularly around the DirecTV increase," said Edward Jones analyst Robin Diedrich.

Viacom shares rose less than 1 percent, underperforming the market and media rivals, which were boosted by a stronger-than-expected U.S. jobs report. The Standard & Poor's

U.S. advertising revenue fell 7 percent at the cable networks, which the company said had suffered because popular event shows like the BET Awards did not air during the quarter.

Analysts had expected ratings declines at flagship children's cable network Nickelodeon and MTV.

Some analysts have linked the lower ratings to the availability of Nickelodeon programming on digital on-demand services such as Netflix Inc, but Dauman has put the blame primarily on changes in the Nielsen ratings system.

Revenue at the Paramount film studio fell 29 percent as three movies released during the quarter -- "Madagascar 3," "The Dictator" and "Titanic 3D" -- failed to perform as well as the year-earlier schedule of four pictures, including "Kung Fu Panda 2" and "Thor."

Viacom, which is controlled by veteran media mogul Sumner Redstone, reported earnings of $523 million for the third quarter ended on June 30, down from $574 million a year earlier.

Excluding special items, earnings were 97 cents per share, 3 cents below the analysts' average forecast, according to Thomson Reuters I/B/E/S.

Total revenue was down 14 percent at $3.24 billion.

Viacom shares rose 0.8 percent to $46.20 in morning Nasdaq trading.

(Reporting by Yinka Adegoke in New York; Editing by Gerald E. McCormick and John Wallace)

VIACOM-RESULTS/ (UPDATE 2) | ABN | E | RBN | FMA | FWE | ABX | BNX | FUN | U | RNP | DNP | PCO

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Viacom will get more than $600 million a year from DirecTV in programming fees under their new seven-year agreement, up at least 20 percent from the previous terms, a person with direct knowledge of the matter said.

Viacom, owner of the MTV and Nickelodeon networks, announced a new agreement with DirecTV on Friday morning without giving terms. The person familiar with the payments spoke on the condition of anonymity because the information isn't public. Before the accord was reached, DirecTV said that Viacom was demanding a 30 percent increase, amounting to more than $1 billion in additional costs over the course of the contract.

"They're both winners here," said Amy Yong, an analyst at Macquarie Capital USA in New York. "DirecTV got a deal that was less that Viacom wanted, so on the margin, that's a win for DirecTV. But it's also a win for Viacom because they get more money."

The deal ended a 10-day blackout for the satellite-TV service's 20 million U.S. viewers, with all 26 Viacom networks returning to DirecTV. The agreement doesn't require DirecTV to carry the movie channel Epix - a source of contention during negotiations. DirecTV had said Viacom was insisting that the satellite provider pay more than $500 million for Epix, which Viacom denied. The satellite provider also cited shrinking Viacom ratings during the dispute. Viacom has said its programs amount to 20 percent of DirecTV's audience.

Carl Folta, a spokesman for New York-based Viacom, declined to comment on the terms, as did Robert Mercer, a spokesman for El Segundo, Calif.-based DirecTV.

General Electric's shift back to its manufacturing roots is paying off.

The conglomerate founded by light bulb inventor Thomas Edison has pumped billions of dollars into new energy-related businesses during the past few years while selling its stake in NBC, commercial real estate and other businesses. The move has softened the blow from the recession, and it expects double-digit earnings growth this year.

GE said Friday that net income fell 16 percent in the second quarter, mainly due to lingering charges from financing companies that were sold off four years ago. Its energy infrastructure business, meanwhile, reported double-digit growth in the period, and profits surged for its transportation business. The company's quarterly results topped Wall Street expectations.

GE is wading through "a still volatile global economy," chief executive Jeff Immelt said. But profits of its core businesses are growing, and "we ended the quarter with a record backlog."

Shares rose 7 cents, or 0.4 percent, to close at $19.87.

Page 11 of 31 © 2012 Factiva, Inc. All rights reserved. l The raft of gloomy economic news may be starting to hurt U.S. auto sales. Industry analysts and dealers said this week that sales during the first half of July slowed a bit from the robust pace in June. But they still were expected to be better than July 2011. For the first half of the year, sales of cars and trucks ran at an annual rate of 14.3 million, the best pace in five years. The only hiccup came in May, when sales slipped to 13.8 million as the stock market plunged. Buyers returned in June to drive sales back up to a 14.1 million rate. l Canada's economic growth is at risk of falling behind the United States next year for the first time since 2006, as exports slow and spending by companies and consumers cools. A lower-than-forecast increase in consumer prices reported Friday by Statistics Canada adds to evidence of a slowdown. Bank of Canada Governor Mark Carney this week lowered his growth projection for the world's 10th-largest economy this year to 2.1 percent from 2.4 percent. l Chipotle Mexican Grill shares lost more than 20 percent of their value Friday after the upscale burrito chain said sales growth slowed in the latest quarter. Denver-based Chipotle, which set itself apart by using organic produce and antibiotic-free meats when possible, has been one of the restaurant industry's high flyers. Chipotle stock lost $86.88 to $316.98. l United Airlines is raising fares within the United States by up to $10 per round trip, the industry's first attempt at boosting prices in three months. United said Friday that it raised prices by between $4 and $10 per round trip. l A federal judge dismissed human-trafficking charges Friday against executives and business associates of Global Horizons Manpower, a Los Angeles labor recruiting firm accused of exploiting hundreds of farm workers from Thailand by putting them into debt, confiscating their passports and threatening to deport them. l 8:30 a.m.: Treasury Department issues daily bond rate reports. l 11 a.m.: The Center for Strategic and International Studies holds a discussion, "Update on U.S. Trade Enforcement," focusing on China, India, Indonesia, Brazil and Argentina.

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After a nine-day blackout of Viacom Inc. (VIA, VIAB) channels on DirecTV Group Inc.'s (DTV) satellite systems, the companies reached a long-term deal early Friday morning to restore the channels, which include Nickelodeon, Comedy Central and MTV.

The companies didn't disclose financial terms of the agreement. DirecTV had previously said that Viacom was asking for a 30% increase in fees, though Viacom said it was just asking for a fair deal. DirecTV was able to negotiate a lower increase than what Viacom had asked for, according to a person familiar with the situation. The deal has a seven-year term.

The two sides were negotiating all of Thursday night into the early hours of Friday morning, according to a person familiar with the matter, because both sides were anxious to get a deal done. Viacom's channels had suffered sharp ratings declines during the dispute while DirecTV saw some subscriber defections.

"Viacom is extremely pleased to bring its programming back to DirecTV subscribers, and thanks, everyone affected by the disruption, for their patience and understanding during this challenging period," Viacom said in a statement Friday morning.

"The attention surrounding this unnecessary and ill-advised blackout by Viacom has accomplished one key thing: It serves notice to all media companies that bullying TV providers and their customers with blackouts won't get them a better deal," said Derek Chang, executive vice president of content strategy and development for DirecTV, in a statement. "It's high time programmers ended these anticonsumer blackouts once and for all and prove our industry is about enabling people to connect to their favorite programs rather than denying them access."

As part of the deal, DirecTV negotiated expansive rights to carry Viacom programming online through a platform that requires its subscribers to sign in to watch--part of an industrywide effort called TV Everywhere.

The new agreement does not require DirecTV to carry the Epix movie channel, DirecTV said in a statement this morning. DirecTV had said this week that Viacom's demand that the channel, which Viacom partly owns, be included in DirecTV's lineup was impeding progress toward a deal. Viacom had countered at the time that it had offered DirecTV deals with and without Epix.

Under the deal, DirecTV has an option to carry Epix under prenegotiated terms, according to another person familiar with the situation.

Also late Thursday night, Time Warner Cable Inc. (TWC) came to an agreement with Hearst Corp. to carry 15 broadcast stations affiliated with broadcast networks like ABC, NBC and CBS in 12 markets, where the programming had been blacked out since early last week in a dispute over fees.

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It's an Epix battle.

Negotiations between DirecTV and Viacom in the 8-day-old carriage fee dispute are going backward - and appear nowhere near a resolution - even while Viacom is losing ratings and ad dollars.

Meanwhile, rivals have started making a grab for DirecTV's subscribers.

Just hours after DirecTV said talks were progressing, Viacom countered by saying talks had broken down.

DirecTV claimed last night it was being forced to carry Epix as part of the Viacom bundle. The premium movie channel is owned by Viacom's Paramount, Lionsgate and MGM, and is not currently on DirecTV.

Epix has struggled to gain broad traditional carriage while striking plenty of deals for over- the-top distribution via streaming services such as Netflix and Xbox Live.

Viacom counters that it's not forcing anything on DirecTV. Rather, it said, it is discussing lots of potential combinations for Epix carriage including incentives and packaging inside and outside of the TV bundle.

Interestingly, Viacom's stock rose in yesterday's session, closing at $49.80, up 1.5 percent, in a positive market. DirecTV fell only slightly, to $48.60, down 0.4 percent.

James Dix, senior analyst at Wedbush, told The Post, "Viacom is the stock that won't sink. They got downgraded, and it bounced right off; most of the negative expectations are already in there."

Separately, rivals have been trying to make hay with the DirecTV-Viacom standoff - the biggest blackout in years. DirecTV is the No. 2 pay-TV provider behind Comcast. Viacom, with 26 channels, is one of the largest programmers in cable.

Comcast, Cablevision and Dish are all trying to lure disgruntled DirecTV customers.

But not all of the moves are working smoothly.

Dish's Facebook page carries a montage of Viacom stars - from Snooki to Jon Stewart - in an attempt to lure DirecTV customers.

But Dish's own customers yesterday hit back. One poster noted, "DirecTV will install Friday just in time for AMC's "Breaking Bad." Ouch!

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There's a new crisis in Bikini Bottom.

Ratings for Viacom-owned Nickelodeon and other cable channels are sinking fast in a blackout that has kept DirecTV's 20 million customers from watching episodes of "SpongeBob Squarepants," "Dora the Explorer" and other popular shows.

Viacom's networks, including MTV, BET and Comedy Central, have lost an estimated 2 million viewers in just the first week of the fee dispute with the nation's largest satellite-TV provider.

Kiddie cash cow Nickelodeon was already reeling from a troubling 20-percent ratings decline - possibly due to competition from Netflix - before the fight broke out with DirecTV.

Now, it looks like the denizens of Bikini Bottom are collateral damage. Nick's total viewers in primetime dropped 38.5 percent to 1.2 million in just the first week of the blackout, according to Nielsen .

"To me the headline difference at Nickelodeon is going to look huge," said analyst Todd Juenger of Bernstein Research.

Beyond Nickelodeon, other Viacom channels took a major hit. BET fell 23 percent in total viewers, Spike fell 28.9 percent and VH1 Classic was down 54.1 percent. Comedy Central fell just 1.1 percent, while MTV managed a 4.2 percent uptick.

"We anticipated an impact in the ratings," a Viacom spokesman said. "This is not what we want."

The cable spat is not only upsetting customers - it's roiling advertisers. Viacom could be on the hook for millions of dollars in so-called make-goods to compensate advertisers if the dispute isn't resolved soon. Marketers are already making calls about how Viacom will meet its ratings guarantees, sources told The Post.

"This just points out the popularity of Viacom with DirecTV viewers, how much of a hit are they taking," said Brad Adgate, research chief for ad-buying shop Horizon Media. "You can't sustain this loss going forward."

DirecTV is also losing out as customers go elsewhere in search of SpongeBob. "Some customers have left us but the numbers are very low," a DirecTV spokesman said. "For the first time ever, a huge number are voicing support for us. They know we're trying to keep costs low."

In place of Viacom channels, DirecTV is running a split screen of all rival kids offerings so

DirecTV will also bear a cost of staffing call centers and losing subscribers. "It is a lose-lose- lose for Viacom, for DirecTV and for viewers," Horizon's Adgate said.

While the two parties are in talks, they have made little progress since Viacom channels went dark, according to sources.

Viacom is asking for what it calls market rates and a new five-year deal with DirecTV to carry its 26 networks, including HD versions. Its previous seven-year deal expired on July 11.

DirecTV contends Viacom wants to charge $1 billion over that period, a 30 percent increase.

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Crushed! Viacom stars like SpongeBob and Dora the Explorer are having the stuffing knocked out of them in the DirecTV carriage war. Here's how Viacom-owned cable ratings have fared since the blackout:

MTV: + 4.2%

Nick: -39%

VH1: -54%

Spike: -29%

Comedy Central: -1.1% [email protected]

Dora the Explorer; SpongeBob. [Post photo composite]

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The programming-cost dispute between DirecTV and one of the nation's largest programmers, responsible for the Nickelodeon, MTV, and Comedy Central channels, showed no sign of abating on Thursday as a top DirecTV executive said in an interview that Viacom Inc.'s proposed 30 percent hike was part of an industry epidemic.

DirecTV, the nation's second-largest pay-TV operator with 20 million subscribers, dropped more than a dozen Viacom channels late Tuesday when the two companies seemed wide apart on new contract terms.

The public flap highlights the deepening concern among pay-TV executives that monthly bills are reaching unsustainable levels for consumers, who could abandon traditional pay- TV companies for cheaper online video options. Programmers say they are seeking higher remuneration for what they consider valuable entertainment. A Viacom spokesman did not return phone calls Thursday.

A fear for DirecTV would be that people will abandon DirecTV because of the loss of Viacom channels, whose popular programs include SpongeBob SquarePants, South Park, and the Daily Show. The Wall Street Journal has reported that Viacom channels account for 20 percent of viewing on DirecTV but less than 5 percent of the satellite-TV operator's programming costs.

Derek Chang, DirecTV's executive vice president of content strategy, said on Thursday that there had been no impact on DirecTV's business and that he believed subscribers would be patient because of the economic stakes. The nation's largest pay-TV operator is Comcast Corp., with about 22 million subscribers. Comcast could benefit in the dispute if DirecTV subscribers seek alternate pay-TV operators that are still distributing Viacom channels.

Viacom was seeking an immediate 30 percent hike in programming costs as the ratings in many of its channels have declined, Chang said, noting that DirecTV currently pays Viacom more than $500 million a year for content. Viacom's proposed contract would add about $1 billion in programming costs over five years, DirecTV officials have said.

The No. 1 priority is to get the channels on fair economic terms for our customers, Chang said. If it couldn't get Viacom's bundle of channels on those terms, Chang said, DirecTV would be willing to offer Viacom channels to its customers on a-la-carte basis, which would allow customer to select those Viacom channels they would like to purchase. Such a model would likely work against the programmer because people are not likely to buy the bundle of Viacom channels they now receive as part of their TV package.

Chang described Viacom's proposal as part of an industry epidemic in which programmers have been seeking outsized increases.

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TV viewers are caught in the middle of a game of chicken between DirecTV and Viacom.

Viacom wants an increase in what the satellite TV service pays to broadcast its channels such as BET, Comedy Central, MTV, Nickelodeon, Spike and VH1. DirecTV balked at what it says would be a 30% hike and quit transmitting the channels to its 20 million subscribers.

Both companies took their case to the Internet on Wednesday. On directvpromise.com, DirecTV had pointed customers to other online sites with free and paid episodes of Viacom shows such as The Daily Show with Jon Stewart, The Colbert Report, Jersey Shore and SpongeBob SquarePants. But Viacom pulled some of the free full episodes it usually offers online because of DirecTV's tactics.

Instead, official websites for The Daily Show and others ran a video urging viewers to call DirecTV and ask it to end the standoff.

Disputes between programmers and pay-TV providers are not new. But the playing field is rapidly changing with the growth in popularity of online TV services such as Netflix and Hulu -- both of which offer some Viacom programs.

In the past, programmers knew that pay-TV providers would likely pay increased fees to keep subscribers from jumping ship. But in the post-Netflix world, many subscribers are comfortable supplementing their pay-TV service with online video options.

"There are enough alternatives from a technology standpoint that (no company) is in the safe position," says Steve Ridge of research firm Frank N. Magid Associates.

The two sides are continuing to negotiate. DirecTV typically wraps up programming disputes quickly, says TVPredictions.com editor Phil Swann. "But this might be a test case to show the TV industry that they are really serious about trimming programming costs."

Viacom has charged DirecTV "the same bargain rate" for seven years and wants an increase that amounts to "a couple pennies per day, per subscriber," wrote Mark Jafar, Viacom's vice president for corporate communications on the company's official blog.

Viacom says that it's the top programmer on DirecTV and that Nickelodeon is the most- watched individual channel there. DirecTV counters that viewership for many of Viacom's channels is falling. Nickelodeon's second-quarter day-long viewership dropped about 26% from last year, Nielsen says.

DirecTV is making eight Encore movie channels (usually available in only higher-price subscription tiers) viewable free until July 31.

7:10 p.m. Updated

DirecTV customers went without Nickelodeon, MTV, VH1, Comedy Central and a dozen other cable channels owned by Viacom on Wednesday at the start of an unusually widespread channel blackout that drew complaints from would-be viewers across the United States.

The two companies blamed each other for the blackout, which began around midnight as a result of a dispute over a new carriage contract for the Viacom-owned channels. About 20 million households are affected, representing one-fifth of all the nation's subscribers to cable or satellite television service.

DirecTV had recommended that its customers watch Viacom-owned shows via the Internet during the TV blackout, but Viacom took action to make that more difficult Wednesday afternoon - not just for DirecTV customers, but for all Internet users. The company took episodes of ''The Daily Show,'' ''The Colbert Report'' and some other popular shows off its Web sites.

Representatives for the two companies held discussions on Wednesday, but it is unclear when the channels will be restored. Michael Nathanson, a media analyst for Nomura, said in a note to investors that he and his colleagues would not be surprised if the blackout lasted one to four weeks. However, he said, ''we expect Viacom to ultimately receive a significant step-up'' in the amount of money it receives from DirecTV for the right to carry its channels.

That's what the two companies are feuding over: the amount of money DirecTV will pay for Nickelodeon, MTV and other staples. Such negotiations usually take place in private and are resolved without any interruptions in programming. But this one spilled into public view.

''We proposed a fair deal that amounted to an increase of only a couple pennies per day, per subscriber, and we remained willing to negotiate that deal right up to this evening's deadline,'' Viacom said in a statement shortly after Nickelodeon and other channels disappeared from DirecTV's lineup. ''However, DirecTV refused to engage in meaningful conversation. We are hopeful that DirecTV will work with us toward a resolution and stop denying its subscribers access to the networks they watch most.''

DirecTV, in a competing statement, asserted that it tried hard to get Viacom to continue to negotiate, but ''never heard back'' from the company.

''We have been very willing to get a deal done, but Viacom is pushing DirecTV customers to

Page 23 of 31 © 2012 Factiva, Inc. All rights reserved. pay more than a 30 percent increase, which equates to an extra $1 billion, despite the fact that the ratings for many of their main networks have plummeted and much of Viacom's programming can be seen for free online,'' a DirecTV executive vice president, Derek Chang, said in the statement.

Viacom countered the financial claims by noting that its last contract with DirecTV was signed seven years ago.

On Wednesday, Viacom and DirecTV continued to try to rally support for arguments. Viacom posted an image on Facebook of the Nickelodeon character SpongeBob SquarePants with the words, ''Who lives in a pineapple under the sea? I don't know. I have DirecTV.'' But many customers seemed to direct their anger at both companies. ''Believe me,'' wrote one such customer on Facebook, Lynn Foster, ''we're blaming both of you.''

This is a more complete version of the story than the one that appeared in print.

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(This story has been posted on The Wall Street Journal Online's Deal Journal blog at http://blogs.wsj.com/deals.)

By David Benoit

Were News Corp. to split its empire in two, a possibility it confirmed Tuesday, the media giant would be following in the footsteps of several other corporate-splitoffs and more directly the path of media giant Viacom.

In 2005, Viacom announced its plan to split its CBS television and Infinity radio units from the rest of its operations, including MTV and Paramount films, in a move that would unwind a merger completed in 2000.

News Corp. is considering a similar plan in which its television and film operations would be separated from its print publishing unit, the company confirmed after a Wall Street Journal report.

News Corp. owns Dow Jones & Co., publisher of The Wall Street Journal.

The Journal article said the idea under consideration is similar to the split of Viacom.

Viacom is controlled by media mogul Sumner Redstone, who had built the company and whose family has played a key role controlling it. That is not unlike the current News Corp., headed by Rupert Murdoch.

The Viacom split left Redstone as chairman of both Viacom and the spun-out CBS unit.

It divided the faster-growing Viacom cable channels, which were expected to garner a higher stock valuation, from what was seen as the more mature broadcast radio and TV businesses, expected to pay a higher dividend.

And while Viacom's split was seen as an attempt to boost the stock, as News Corp.'s would be, it was also seen as a way to create leadership positions for two key Redstone lieutenants: Tom Freston and Leslie Moonves, who became CEO's of the two split companies.

The day the plan was reported by WSJ in 2005, the stock rose nearly 8% to $37. (News Corp. shares have also gotten a spark, up 6.2% to $21.33 in recent trading.)

-- News Corp Shares Highest Since 2007 Dow Jones Acquisition

-- News Corp. Split Looks Good to Shareholders

-- News Corp. Investors Should Vote Against 13 Directors, ISS Says

-- Lazard Capital Likes Dow-S&P Index Deal

-- DJIA and S&P 500 May Team Up: A History

As Redstone told WSJ at the time of the Viacom split: "Sometimes divorce is better than marriage."

The Viacom and CBS companies officially started trading as separate companies at the start of 2006. The new CBS stock opened officially at $25.60 and since then has risen 23% into Tuesday. Viacom has risen almost 12% since then. Over that same period, the S&P 500 has risen 21%.

A more recent spinoff where the controlling stakeholder has kept both companies is Sears Holdings Corp.'s shedding of its Orchard Supply Hardware Stores Cop. at the start of this year, a deal meant to help spur Sears's battered stock. Sears' Chairman Edward Lampert kept controlling stakes in both retailers.

Sears shares this year are up 65%, the second-best performing stock in the S&P 500. Orchard Supply, which is very thinly traded, is up 2.4%, below the S&P 500's 4.5% gain for the year.

-For continuously updated news from The Wall Street Journal, see WSJ.com at http://wsj.com.

[ 06-26-12 1243ET ]

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Viacom Inc. (VIAB, VIA) unveiled plans to offer $400 million in notes to raise funds for general corporate purposes.

The media company has agreed to sell $300 million in aggregate principal of 3.125% notes due 2022, and $100 million in aggregate principal in a reopening of its 1.25% senior notes due 2015. The sale is expected to close June 14.

The company plans to use proceeds to pay down debt and repurchase shares.

The operator of cable television channels like Nickelodeon and MTV has posted slowing revenue growth in recent quarters as the U.S. television-advertising market has shown signs of softness.

Last month, Viacom reported its fiscal second-quarter earnings jumped 56% as reduced expenses helped buffer the media company against sluggish growth in advertising revenue.

Class B shares were up 0.1% to $47.44 after hours. The stock is up 4.3% since the start of the year.

Write to Nathalie Tadena at [email protected] [ 06-07-12 1834ET ]

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Time Warner Cable subscribers will soon have another way to stream "The Daily Show With Jon Stewart" and "Jersey Shore" on iPads.

The breakthrough comes as a result of a settlement between Time Warner Cable and Viacom, which owns cable channels like Comedy Central, Nickelodeon, MTV and others. For months there had been a heated dispute over whether the cable company should have access to Viacom programs through its TWCable TV app.

On Wednesday, Viacom said that the companies had agreed "to resolve their pending litigations" and that "all of Viacom's programming will now be available to Time Warner Cable subscribers for in-home viewing via Internet protocol-enabled devices such as iPads."

The statement, released through Viacom's blog, added that "neither side is conceding its original legal position or will have further comment."

The TWCable TV app, released just over a year ago, set off a wave of protest from media companies - including Viacom, Scripps Networks, Fox Cable Networks and Discovery Communications - which said the cable company did not have legal rights to stream shows via its own app.

In its suit filed in Federal District Court in Manhattan, Viacom claimed copyright violation and likened the TWCable TV app to "unlicensed distribution of Viacom's programming." In August, Viacom settled a similar lawsuit with the Cablevision Systems Corporation over its iPad app.

Cable and satellite distributors have raced to come up with their own apps that offer subscribers shows inside and outside the home on multiple devices. But those efforts lead to complicated disputes with media companies, which argue they deserve additional compensation. The companies also say that making content too widely available will cut into licensing profits to third-party streaming services. Many Viacom shows are available on the channels' individual Web sites and through Web streaming services like Netflix and Hulu.

Time Warner Cable has more than 14 million customers and is the second-largest cable company in the United States after Comcast.

Viacom programming will be rolled out on Time Warner Cable's app in the next several weeks, the companies said.

An earlier version of this article misstated the status of Viacom's lawsuit against Cablevision Systems Corporation. It was settled last August; it is not pending.

* Time Warner Cable and Viacom Seek Ruling on iPad App

* Sean Combs to Start a Music Channel Called Revolt

* Viacom Makes Streaming Content Deal With Amazon

* At 'Upfronts' for Children's TV, It's Viacom vs. Surging Disney

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Viacom Inc., the entertainment conglomerate that owns MTV, Comedy Central, Nickelodeon and Paramount Pictures, is expanding its presence in Times Square with one of the largest leases signed in New York City.

The company signed a deal this week that would let it stamp its name on the 54-story skyscraper that it occupies at 1515 Broadway, between 44th and 45th Streets, and ultimately to take over all of the space in the tower.

The deal was noteworthy for its size and its timing. The Midtown Manhattan office market has been in the doldrums for months as the vacancy rate has risen -- a reflection, in part, of economic uncertainty and layoffs by financial companies.

It also closes widespread speculation in the real estate industry that Viacom, which has made its corporate home in Times Square for two decades, might move downtown to the World Financial Center or the World Trade Center when its lease expired in 2015.

After first threatening to relocate in 2008, Viacom renewed its lease for five years. This year, it began another search.

Now, Viacom is committing to take over the entire building as old tenants move out, increasing its space to 1.6 million square feet from 1.4 million.

''New York City is the undisputed media capital of the world and a vibrant source of inspiration for Viacom's innovative and creative employees,'' the company's chief executive, Philippe Dauman, said in a statement released on Wednesday.

The deal is a victory for SL Green Realty Corporation, which owns 1515 Broadway. Independent of the lease, the company also refinanced the tower for $775 million based on having doubled the net income since it bought the building 10 years ago.

''It is an enormously positive transaction for the city,'' said Marc Holliday, chief executive of SL Green, ''when a company like Viacom makes a long-term commitment to maintain its headquarters right in the heart of Times Square.''

With Viacom now out of the market, developers are focusing on media and technology companies like Time Warner, rather than financial companies, as a possible anchor tenant for a new office tower they are all eager to build, whether it is in Midtown, downtown or on the Far West Side.

Last year, Jeffrey L. Bewkes, the chief executive of Time Warner, expressed his desire to consolidate the company's operations, which include HBO, Time Inc., Warner Brothers and CNN, in new quarters by 2017. He described the company's current headquarters at the

Earlier this month, Time Warner's real estate broker, Studley, asked roughly a dozen developers to submit preliminary proposals for from one million to three million square feet of office space. The developer Larry Silverstein submitted information about the towers he is building at the World Trade Center, while Brookfield proposed either the World Financial Center downtown, or, better yet, the company's large development site across Ninth Avenue from the Farley Post Office.

Alloy Development, in a partnership with Boston Properties, threw its West Side site, between 35th and 36th Streets, into the mix. And separately, Boston Properties, in partnership with Related Companies and Extell Development, offered an office site on Eighth Avenue at 45th Street. Extell also submitted plans for a tower on 11th Avenue, opposite the Jacob K. Javits Convention Center.

Related, which built the Time Warner Center, has also proposed building a new headquarters for Time Warner at the southwest corner of 33rd Street and 10th Avenue, as part of its 26-acre Hudson Yards project. Related has told city officials that it plans to start work on a new headquarters for Coach in October on a site nearby.

But Time Warner is moving slowly. It is expected to review the preliminary proposals and narrow the list before asking for formal proposals. Developers say a final decision may not come until the end of the year.

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