diff --git a/CHANGELOG b/CHANGELOG
--- a/CHANGELOG
+++ b/CHANGELOG
@@ -1,3 +1,9 @@
+concurrent-output (1.7.8) unstable; urgency=medium
+
+  * Update directory dep to allow 1.3.
+
+ -- Joey Hess <id@joeyh.name>  Tue, 20 Dec 2016 15:17:55 -0400
+
 concurrent-output (1.7.7) unstable; urgency=medium
 
   * Fix build on Windows.
diff --git a/System/Console/Regions.hs b/System/Console/Regions.hs
--- a/System/Console/Regions.hs
+++ b/System/Console/Regions.hs
@@ -287,7 +287,7 @@
 
 -- | Runs the action with a new console region, closing the region when
 -- the action finishes or on exception.
-withConsoleRegion :: (LiftRegion m, MonadIO m, MonadMask m) => RegionLayout -> (ConsoleRegion -> m a) -> m a
+withConsoleRegion :: (MonadIO m, MonadMask m) => RegionLayout -> (ConsoleRegion -> m a) -> m a
 withConsoleRegion ly = bracketIO (openConsoleRegion ly) (closeConsoleRegion)
 
 -- | Opens a new console region.
diff --git a/concurrent-output.cabal b/concurrent-output.cabal
--- a/concurrent-output.cabal
+++ b/concurrent-output.cabal
@@ -1,5 +1,5 @@
 Name: concurrent-output
-Version: 1.7.7
+Version: 1.7.8
 Cabal-Version: >= 1.8
 License: BSD2
 Maintainer: Joey Hess <id@joeyh.name>
@@ -35,7 +35,7 @@
     , async (>= 2.0 && < 2.2)
     , stm (>= 2.0 && < 2.5)
     , process (>= 1.1.0 && < 1.5.0)
-    , directory (>= 1.2.0 && < 1.3.0)
+    , directory (>= 1.2.0 && < 1.4.0)
     , transformers (>= 0.3.0 && < 0.6.0)
     , exceptions (>= 0.6.0 && < 0.9.0)
     , ansi-terminal (>= 0.6.0 && < 0.7.0)