Viacom, Charter agree to network deal for basic package - source

By Jessica Toonkel

REUTERS - Viacom Inc and Charter Communications have agreed to a deal that would see eight of Viacom's networks included in the least expensive package of Charter's Spectrum cable service, a source told Reuters on Wednesday.

Under the deal, which has not been finalized, five of Viacom's six flagship networks - MTV, Nickelodeon, Comedy Central, Paramount Network and BET - would be in Spectrum's basic package for U.S. households, according to the source, who wished to remain anonymous because the discussions are confidential.

The other three channels included would be VH1, TV Land and CMT.

Having its most popular networks in the least expensive cable bundle on Spectrum means more audience and revenue for Viacom, which like its peers, is struggling to keep viewers as people increasingly watch shows on smartphones and tablets.

Viacom's other networks, including flagship channel Nick Jr, would feature in the more expensive Spectrum packages.

Viacom declined to comment. A Charter spokeswoman did not return a request for comment.

Charter and Viacom agreed in principle on Tuesday night to the deal, which would see Viacom's networks remaining accessible to 16.6 million households.

Viacom chief executive Bob Bakish, who took on the role last year, has made improving relations with distributors a key part of his turnaround strategy for the company.

Six of the largest U.S. pay-TV providers lost a total of 723,000 subscribers during the second quarter.

Of that total, Charter reported 90,000 subscriber losses.

An agreement between the two companies would be "mutually beneficial," wrote Evercore ISI in a note on Sunday.

Having Viacom content helps Charter add video subscribers at a time of increasing competition from virtual streaming services like Hulu and DirecTV Now, while Viacom is still heavily dependent on cable and satellite companies for distribution, according to Evercore ISI.

(Reporting By Jessica Toonkel; Editing by Chizu Nomiyama and Rosalba O'Brien)