Ergen Sees a Path to Viacom Carriage

But Dish chief says talks have to be about more than price
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As the deadline for its carriage deal with Viacom nears, Dish Network chairman and CEO Charlie Ergen told analysts that he is more optimistic that a renewal deal can be reached, but warned that he is willing to do without the channels if the conversation is solely around price.

Viacom networks are scheduled to go dark to Dish’s 14 million customers nationwide at 11:59 p.m. tonight if a carriage renewal deal can’t be reached. Viacom began notifying Dish customers yesterday that there is a possibility they may lose access to channels like Nickelodeon, Comedy Central and VH1 if an agreements isn’t reached.

According to Dish’s 10-Q quarterly financial statement filed with the Securities and Exchange Commission Wednesday, Viacom notified Dish on March 17 that its networks would go dark on April 20 absent a new deal.

While Dish has publicly complained of Viacom’s pricing demands – they said the channels are proposing a fee increase that will amount to hundreds of millions of dollars – Ergen said the impasse isn’t just over price.

“If we can’t work together as companies on strategic things, on building value between us and it gets into just a dollars and cents issue, I’d rather spend my time with companies that are a bit more forward thinking than that and are willing to experiment with some stuff,” Ergen said.  He pointed to Disney and Fox, which each have done deals for Dish’s Sling TV over-the-top service as well as for carriage on its satellite platform.   

On a conference call with analysts to discuss first quarter results, Ergen said that a week ago, he was less optimistic that an agreement could be reached. Now, however, he believes the tone of the negotiations has changed.

“Last week I would say my impression was I didn’t see a path with Viacom,” Ergen said on the call.  “The tone on both sides has been more productive through the weekend and this week so there probably is a path to continued carriage. But it’s not done yet. The big difference is really philosophical.”

Ergen noted that linear content in general has seen a decline in ratings as they have made their content available on several different platforms, adding that he doesn’t want his customers to have to pay for the same content twice.

Ergen added that he believes that over the past seven years – when Dish signed its last renewal with Viacom – the networks were more valuable.

“I would say that seven years ago, Viacom was stronger than they are today,” Ergen said. “They are still valuable; they still have good content. In general I would say they suffer from having their product being more overly distributed than others, it’s not product that you have to watch in general live and kids has become a pretty diluted genre.”  

If Dish can’t reach a deal with Viacom, they wouldn’t be the first to drop the channels. But dropping the channels won’t come without a toll. Cable One dropped the Viacom networks in April 2014 and has since shed about 25% of its video customer base. In its defense, Cable One has said its emphasis is more on broadband than video. Suddenlink Communications dropped Viacom in September 2014 and has shed about 78,200 customers since then, about five times the 15,000 video customers it lost in the 12 months prior to dropping the channels. Whether that decline was entirely due to the absence of Viacom networks is unclear. Former Suddenlink CEO Jerry Kent has said in the past that the operator has had significant decreases in programming costs and that the decision to drop Viacom was the right one. Suddenlink was purchased by Altice in December for $9.1 billion.

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