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Time Warner and Dish Avert Blackout by Extending Deadline

Time Warner Inc (TWX) and Dish Network Corp. (DISH) have decided to extend carriage agreement of TBS and TNT, averting a blackout. The contract for TNT and TBS was supposed to expire this December. Moreover, the companies signed a short-term agreement that restored all the Turner Broadcasting channels dropped a month ago owing to a contract dispute.

Turner Broadcasting channels including CNN, HLN, Cartoon Network, Adult Swim, and Turner Classic Movies have been restored. All these accords are meant to aid the ongoing negotiations between the warring companies.

In October, Dish Network dropped Turner channels as both could not reach a solution over the previous contract. Time Warner’s demand for a sizeable hike in fees for CNN was vehemently opposed by Dish CEO, Charlie Ergen, who commented that CNN is no more the attractive pick it was once as viewership continues to dwindle.

Time Warner-Dish Network dispute is by no means irrelevant to either of the parties or to the subscribers. Subscribers have taken to social media to express their anger as Dish Network unceremoniously blacked out popular channels such as CNN, Cartoon Network and Turner Classic Movies.

If the parties fail to achieve a consensus, Time Warner stand to loose a chunk of its revenues as Dish Network blacks out its channels. This would thwart the company‘s overhauling efforts, especially after rejecting Twenty-first Century Fox, Inc.’s (FOXA) CEO Rupert Murdoch’s $80 billion offer earlier this year, citing that the company is better off as a standalone entity. The company has been on a cost cutting-spree and has announced layoffs across all divisions.

And for Dish Network, if the talks fail, it might bring down programming costs but most likely at the expense of viewers. Dish Network has been persistently losing pay-TV customers. Last quarter, the company 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 quarter.

Pay TV landscape is changing drastically as streaming services find more takers than the traditional television broadcast. Moreover, with programming and distributions fees on the rise, contract negotiations between the cable operators and content companies have gone bitter. Apart from Time Warner, Dish Network is currently having carriage agreements disputes with CBS Corporation (CBS) and Comcast Corporation.

Last Friday, Dish network and CBS Corporation extended their contract deadline by 5 days, averting a blackout of the latter’s TV channel for Dish Network’s 14 million satellite-TV customers.

Currently, Time Warner is a Zacks Rank #2 (Buy) stock.

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