Dish Network CEO Sees Path to Reach Carriage Deal With Viacom -- 2nd Update
April 20 2016 - 4:12PM
Dow Jones News
By Nathalie Tadena and Joshua Jamerson
Dish Network Corp. Chief Executive Charlie Ergen said he sees a
potential path to reaching a new carriage deal with Viacom Inc. but
is prepared to move on if the two companies can't come to terms on
price.
Dish's contract to carry Viacom's channels is set to expire at
11:59 p.m. ET Wednesday, meaning channels including Nickelodeon,
Comedy Central and MTV could go off the air for Dish's 13.9 million
customers if no deal is struck. Viacom this week said discussions
had broken down and accused Dish of making unreasonable
demands.
"Last week I didn't see a path with Viacom," Mr. Ergen, who is
also chairman, said on Dish's earnings call on Wednesday. But the
tone was more productive through the weekend, he said. "There
actually probably is a path to continue carriage. But it's not done
yet. And obviously the devil's in the details."
Mr. Ergen said he would like to reach a deal with Viacom, if
possible. But, "we're prepared to move on as Suddenlink and others
have done without the content," he said.
Viacom on Tuesday began running a crawl on its channels for Dish
customers informing them of the contentious state of
negotiations.
"Consumers have spoken loudly and clearly," Viacom said in a
statement Wednesday. "Over the past 24 hours, hundreds of thousands
of concerned subscribers have reached out to implore Dish to
negotiate reasonable terms with Viacom for continued carriage of
our networks. Based on year-to-date Nielsen data, our networks
represent nearly one fifth of cable viewership on Dish, which gives
Dish enormous incentive to renew our agreement. As a long-standing
partner, we are hopeful that we can work together to reach a
deal."
The discussions have been a hot topic for Wall Street investors
amid fears of escalating cord-cutting and because the monthly fees
from pay-TV providers are a key source of revenue for media
companies. Suddenlink Communications was among the cable operators
that dropped Viacom's networks in 2014.
Dish is known for being a fierce negotiator in carriage
negotiations, leading to multiple blackouts over the years. The
latest battle comes as Dish's subscriber base declines.
On Wednesday, Dish said it added roughly 657,000 paid
subscribers during the period ended March 31, compared with about
723,000 in the year-ago quarter. Net subscribers declined 23,000 in
the first quarter, compared with a 35,000 gain last year.
The company closed the first quarter with roughly 13.9 million
pay-TV subscribers, compared with 14 million at the end of the 2015
first quarter. Dish includes subscriptions to its Sling TV
streaming service in its total pay-TV metrics.
The streaming service was launched last year as a skinny bundle
of select channels, providing a cheaper option for consumers who
want some live TV but who don't have traditional pay-TV
subscriptions.
The original basic version of Sling TV includes channels from
Walt Disney Co. such as ESPN, but only allows one stream at a time.
Last week, Dish unveiled a new version of Sling TV that includes
channels from 21st Century Fox and allows three simultaneous
streams on different devices.
On Wednesday, Dish executives said the company is talking to
Disney about potentially joining the multi-stream option, but the
companies haven't yet come to an agreement. That would also drive
up the price, executives said.
Sling TV CEO Roger Lynch said the strategy will remain to have a
single-stream service and a multi-stream service to target
different segments of the market.
Dish was able to post surprise profit growth in the first
quarter, helped by sharply lower interest expenses, even as revenue
grew less than expected.
Overall, the company reported profit of $389.3 million, or 84
cents a share, up from $351.5 million, or 76 cents, a year ago.
Revenue increased to $3.79 billion from $3.72 billion in the
prior-year period.
Analysts polled by Thomson Reuters had anticipated 62 cents a
share on $3.8 billion in revenue.
Dish added 5,000 net broadband subscribers in the first quarter,
bringing its total broadband base to about 628,000.
The company reported its interest expense nearly evaporated in
the latest quarter, to $667,000 from $156.3 million in the
year-earlier quarter. Meanwhile, operating expenses edged down
0.4%.
The company's stock, which is down 32% from a year ago, was flat
at $47.40 in late afternoon trading.
Write to Nathalie Tadena at nathalie.tadena@wsj.com and Joshua
Jamerson at joshua.jamerson@wsj.com
(END) Dow Jones Newswires
April 20, 2016 15:57 ET (19:57 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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