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Viacom, DirecTV and a Corporate Takeover That Makes Sense

NEW YORK ( TheStreet) --It often shocks me to realize the incredibly important role television plays in so many people's lives.

The other night, my wife and I had to deliver some perspective to our daughter.

We just so happened to be watching Nickelodeon when Viacom (VIA.B) fired salvo number one at DirecTV (DTV - Get Report). When she read the notice on the screen that DirecTV would have to remove Viacom programming, including Nickelodeon, from its channel lineup due to a contract dispute, she actually became emotional.

While we did not go completely old school on her, our response was sort of like the age-old parent line -- There are people starving in Africa and you ... !.

She seems to have already gotten over the loss of Nick. Like the fickle pre-tween that she is, she replaced Nick's iCarly with Walt Disney's (DIS) A.N.T. Farm in short order.

I'm sure the couch potatoes obsessing over the Viacom-DirecTV fight on Twitter could find something beyond Nick at Nite, MTV, Spike and BET for stimulation and fulfillment as well.

Investors should pay less attention to the outcome of this latest network/content owner versus delivery system squabble in favor of a focus on the larger issue.

Premium Content/Appointment Viewing

It took 48 days, but earlier this year Madison Square Garden (MSG) and Time Warner Cable (TWC) settled a similar fight that affected viewers most in New York State.

MSG pulled its networks -- various regional sports stations and the Fuse music television channel -- off of Time Warner Cable, leaving the cable services' subscribers without New York Knicks basketball during the Jeremy Lin "Linsanity" period and the National Hockey League during the run to the playoffs.

I'm surprised Time Warner Cable held out as long as it did. But with nearly $3 billion in cash and $20 billion in annual revenue, TWC could afford to take a stand. At day's end, however, it needs MSG and it knows it. If this thing did not get resolved subscribers would have dropped cable and headed for satellite to secure convenient access to one of the few remaining important pieces of content -- live sports.

Viacom does not have this type of leverage. Going forward, expect others to challenge the media giant in precisely the same way DirecTV has.

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