Turner Networks Go Dark in Dish Carriage Dispute

Most of Turner Broadcasting's networks were blacked out in Dish Network homes early this morning as the carriage agreement between the two companies expired.

The two sides pointed fingers at who was responsible for pulling all of Turner's channels except for the highest rated ones, TNT and TBS.

"Despite our best efforts, we were unable to reach an agreement with Dish Network, and they have unilaterally decided to pull CNN, Cartoon Network, Adult Swim, truTV, TCM, HLN, CNN en Espanol and Boomerang off the air upon the expiration of our current deal," Turner said in a statement.

"Turner has worked diligently for months to come to a fair agreement including multiple extensions and compromises, and it's unfortunate that Dish is once again operating in a disruptive manner that takes away networks and programming from their customers. We are hopeful our counterparts will return to the negotiating table, and we'll get a deal completed," the Turner statement added.

"The two companies have been unable to negotiate the terms of a renewed distribution agreement, and Turner refused to extend the overall agreement," Dish said in its statement.

On its website, Dish said Turner is “making unreasonable financial demands.”

"In the past year, Dish has successfully renewed agreements with many large content providers," said Warren Schlichting, Dish senior VP of programming. "As a result, we are confident that we have offered a deal to Turner that reflects an appropriate value for our customers."

"Dish has had a productive relationship with Turner Networks for many years," said Schlichting. "We regret the service disruption to our customers, and remain committed to reaching an agreement that promptly returns this content to Dish programming lineup."

Turner's parent Time Warner has been banking on increases in Turner's sub fees for a big chunk of its earnings growth.

Last week at its investor's day, Turner CEO John Martin said he was confident that the company could deliver high single digit to low double digit fee growth over the next four to five years.

Analyst Marci Ryvicker of Wells Fargo said that TNT and TBS, the networks still available on Dish, generate about 97% of Turner's affiliate fee revenue on Dish.

Turner's fees from Dish total about $1.57 per sub per month or $265 million annually. She says the blackout would cost Turner about 4 cents a share, or 1% of earnings.

Ryvicker believes that the two sides will negotiate during the blackout and will come to an agreement eventually. "Bottom line: This blackout doesn't appear to be a game changer for either Time Warner or Dish. Much of Time Warner's affiliate growth rests with its key TNT and TBS networks, and we don't expect the loss of the [blacked out] networks to impact Dish's sub trends (either gross adds or churn)," she said.

Jon Lafayette

Jon has been business editor of Broadcasting+Cable since 2010. He focuses on revenue-generating activities, including advertising and distribution, as well as executive intrigue and merger and acquisition activity. Just about any story is fair game, if a dollar sign can make its way into the article. Before B+C, Jon covered the industry for TVWeek, Cable World, Electronic Media, Advertising Age and The New York Post. A native New Yorker, Jon is hiding in plain sight in the suburbs of Chicago.