Viacom warns customers its channels may stop airing on DirecTV

By Helen Coster

(Reuters) - Viacom Inc said on Tuesday it had begun warning DirecTV's 24 million subscribers its channels could stop being shown on the AT&T Inc-owned satellite TV service if it fails to reach a new contract by midnight March 22.

Viacom, the owner of MTV, Nickelodeon, BET, and Comedy Central, accused AT&T of abusing its powers after buying Time Warner Inc, which owns the Warner Bros Hollywood studios and HBO premium cable network.

Amid a wave of media consolidation, these types of conflicts have increased in frequency. In November AT&T-owned HBO stopped being carried on Dish's satellite television service after failing to reach a new deal and has not returned to the service. AT&T's DirecTV is a satellite TV rival to Dish.

In the current round of negotiations, Viacom balked at new deal terms that restricted its ability to strike deals with other digital distributors or launch new direct to consumer streaming services, said one source briefed on the negotiations.

AT&T has also insisted on terms that would benefit AT&T's advanced advertising business at the expense of its competitors, according to the source.

An AT&T spokesman could not immediately be reached for comment.

"Having recently acquired Time Warner, AT&T appears intent on using its new market power to prioritize its own content at the expense of consumers, who are growing increasingly dissatisfied with paying more for less," Bob Bakish, chief executive officer of Viacom, said in an internal memo seen by Reuters.

Viacom said it has reached new distribution deals with Altice USA Inc, Charter Communications Inc and Comcast Corp.

(Reporting by Helen Coster; Editing by Kenneth Li, Leslie Adler and Tom Brown)