Viacom Resolves Contract Dispute With EchoStar

EchoStar Communications Inc. and Viacom Inc. late Wednesday settled a contract dispute that left millions of Dish Network satellite TV customers without access to CBS, MTV, Nickelodeon and a handful of other channels in one of the biggest blackouts in recent memory.

EchoStar, the nation’s second-largest satellite TV provider, pulled the signals of the Viacom channels when talks broke down before the two sides could reach an agreement to renew their distribution contract by Monday’s midnight deadline.

About 1.6 million Dish Network subscribers in 16 major cities, including Los Angeles, were unable to tune in to CBS, the most widely watched network in the nation. Dish’s entire customer base of 10 million nationwide went without Viacom’s cable channels, which include some of the most popular in the country. In addition to CBS, MTV and Nickelodeon, Viacom owns Black Entertainment Network, Comedy Central, TV Land and VH1, among others.

An estimated 410,000 Dish customers were affected in the Los Angeles area, according to Centris, a Santa Monica-based research firm.

Terms of the new agreement were not disclosed. But the companies said EchoStar would distribute Viacom’s Nick Toons children’s channel, a network that the satellite carrier on Tuesday had refused to carry, calling it “obscure.” EchoStar also had balked at the price increase Viacom had demanded.

The contract negotiations had become so bitter between the companies that Englewood, Colo.-based EchoStar filed an antitrust lawsuit against Viacom in January, alleging that the New York-based entertainment giant was using the popularity of CBS, home of “Survivor” and next week’s NCAA “March Madness” basketball tournament, to force it to carry less popular channels such as Nick Toons.

All litigation is settled as part of the new agreement.

EchoStar was offering to reimburse customers between $1 and $2 a month for the outage.

In 2000, Time Warner Inc. removed ABC from its cable systems in New York and six other cities while haggling with Walt Disney Co. over how much to pay for its cable channels. In January 2003, 400,000 Cox Communications customers lost the Fox network for a week in a dispute over whether the cable company should also carry two Fox cable channels.

Viacom shares fell 98 cents to $38.24 in New York Stock Exchange trading and EchoStar fell 16 cents to $34.12 on Nasdaq.