No blackout as Viacom and Dish Network reach new carriage deal
After a marathon night of negotiations, Dish Network and Viacom Inc. reached a new five-year agreement that guarantees carriage of Viacom’s networks, including MTV, VH1, Comedy Central, BET and Nickelodeon.
“This creative, bold and consumer-friendly approach extends a nearly 20-year-old relationship,” Dish Network Chief Executive Charlie Ergen said in a statement early Thursday.
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The agreement vanquishes a huge dark cloud hanging over Viacom. Wall Street analysts and investors have fretted for more than a year that Dish might drop the Viacom channels permanently.
But in the end, Ergen decided that his satellite TV system needed the Viacom channels to keep Dish’s customers happy and in the fold.
Negotiations for a new deal, to replace the seven-year contract that expired in late January, dragged on for months. A deadline for a new deal was set for 9 p.m. Wednesday, but that came and went without a new agreement — or the threatened blackout of Viacom’s television networks.
The two companies agreed to keep the Viacom channels available to Dish customers overnight, providing a strong clue that substantial progress was being made by the two teams holed up in Dish’s Englewood, Colo., headquarters.
“Today’s agreement ensures Viacom’s number one family of networks will continue to be available to our millions of fans on Dish and underscores the value of our programming across platforms,” Viacom Chief Executive Philippe Dauman said in the statement.
Marci Ryvicker, media analyst with Wells Fargo Securities, on Wednesday estimated that Viacom could lose as much as $700 million annually, in programming fees and advertising revenue, if Dish decided to permanently drop the channels.
“Bottom line: We think this removes a very big overhang for Viacom stock and should relieve concern over future affiliation deals,” Ryvicker wrote Thursday in a research note to investors.
Viacom stock soared 10% on news of the Dish distribution deal, trading at more than $41 a share mid-day. That marked the stock’s best performance in more than a month.
Viacom networks, including Spike and Nick Jr., also will be available on Dish Network’s Internet TV service, called Sling TV, which is targeted for consumers who do not want — or are prevented from having — a traditional satellite dish bolted to their roof.
The renewal applies to the 18 Viacom channels Dish currently carries, including CMT, TV Land and Nicktoons.
Early Wednesday, Ergen said his company was prepared to live without Viacom’s 18 TV channels, but then he added a positive note, saying that he saw “a path” to a deal and that the two sides had made some progress in their talks since last weekend.
Dish has nearly 500,000 customer homes in the Los Angeles region.
Wall Street was keenly interested in the situation because the stakes were high for both companies. The battle was expected to test whether a major pay-TV distributor, in this case Dish, was serious about dropping a group of well-known TV channels — risking customer defections.
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