DISH-CBS Fresh Contract Ends Short Programming Blackout
DISH Network Corp.’s (DISH) 14 million satellite-TV customers will now continue to enjoy CBS Corporation’s (CBS) TV channels. Both the companies have finally reached a mutually-benefiting multi-year fresh carriage contract. The agreement has brought an end to the long contract renewal dispute that had resulted in a short programming blackout in 18 local markets around the country.
Following two extensions to the contract's initial Nov 20 expiration deadline, negotiations between DISH and CBS had fallen apart. As a result, CBS had blocked the telecast of local channels of CBS-owned TV stations on DISH’s network on Dec 5, for about 12 hours starting 7 p.m. ET. The disagreement affected programming in New York, Chicago, Los Angeles, Dallas, Boston and Miami.
A conflict between television companies looking for increased payments for their programming, and cable and satellite companies having to distribute the same at elevated costs entailing higher bills for customers, resulted in the blackout.
Notably, the new agreement will permit DISH to carry CBS-owned TV stations all over the country in addition to several cable channels, including the CBS Sports Network, the Smithsonian Channel, TVGN and Showtime Networks.
Under the agreement, DISH holds fresh digital rights for various CBS programming, including video-on-demand content for Showtime. The agreement will also dismiss the pending lawsuit between the two companies that pertained to a row over services such as PrimeTime Anytime and AutoHop. DISH has agreed to stop the ad-skipping function for CBS prime-time shows for seven days following a show's initial airing on TV.
CBS is one of the most viewed channels in the country. Meanwhile, DISH has been persistently losing pay-TV customers. Thus, a failure to come to terms with CBS might have resulted in further customer churn and falling average revenue per user in the coming quarter.
Last quarter, the company had lost 12,000 pay-TV subscribers. Average monthly pay-TV subscriber churn rate in the third quarter stood at 1.67% compared with 1.66% in the prior-year period.
In Aug 2013, Time Warner Cable Inc. (TWC) had faced a month-long blackout of CBS’ network over programming contract renewal disputes with the latter. Consequently, the company lost a whopping 306,000 residential pay-TV subscribers.
In the same vein, DISH had a contract dispute with Time Warner Inc. (TWX), which resulted in the former dropping many Turner broadcasting channels including CNN and Cartoon Network. Going ahead, DISH may drop two popular cable networks – TBS and TNT – if it fails to reach an agreement with Time Warner Cable.
DISH currently has a Zacks Rank #3 (Hold).
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