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Dish Lost, AMC Won: Analysts

Shares Up As Channels Restored 10/28/2012 8:00 PM Eastern

Shares of AMC and Dish Network soared to record highs following the $700 million settlement of AMC affiliate Voom HD’s breach-of-contract suit against the satellite giant, signaling investor relief that the four-year-old suit over a shuttered firm is over.

Dish customers ended their fourmonth national nightmare last week when their satellite provider finally reached a carriage agreement with AMC Networks, just in time for the latest airing of the channel’s latest hit, zombie series The Walking Dead.

Dish agreed to immediately restore the AMC channel to its 14 million subscribers, with IFC, WeTV and Sundance Channel set to come back on Nov. 1. The deal also included Madison Square Garden’s music channel Fuse, which had been dark to Dish customers since 2010.

Dish had dropped the AMC channels in June, in what AMC has said was retaliation for the Voom suit. Dish has denied that characterization.

Voom had sued Dish for $2.4 billion, stemming from the satellite company’s decision to cancel a 15-year carriage agreement in 2008, just two years into the deal. But in three weeks of trial testimony, it became apparent that Dish was losing ground in the case.

Some analysts were surprised that AMC, which had seemed to have a huge advantage in the court case, settled for so little. Others saw the settlement and carriage agreement as a major loss for Dish.

“Voom won, Dish lost,” BTIG Media analyst Richard Greenfield wrote in a blog post last week. He added that the carriage agreement was likely in AMC’s favor.

Sanford Bernstein cable and satellite analyst Craig Moffett also expressed surprise that AMC let Dish off the hook relatively cheaply, adding that bulkier carriage fees could have softened the blow. “An above-market step-up in the base affiliate fee and/or heightened annual escalators would be an alternate way to pay for the settlement, perhaps in a face-saving way for Dish,” Moffett wrote.

According to some reports, the carriage deal is for seven years. SNL Kagan estimated AMC’s average monthly affiliate fee per subscriber was about 26 cents prior to the deal. IFC received about 21 cents, WeTV about 12 cents, Sundance 23 cents and Fuse about 6 cents, according to Kagan.

Both AMC and Dish shares reached new 52-week highs last Monday (Oct. 22), passing the old marks of $46.69 (AMC) and $36.01 (Dish), respectively.

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