Viacom Prepares for Dish Drop

The optimism surrounding a February carriage extension with No. 2 satellite TV service provider Dish Network has apparently worn off for Viacom, which said it has started to inform the satellite TV service's customers that they could lose access to its networks, including MTV, Comedy Central and Nickelodeon.

“We are extremely disappointed that Dish has not engaged in a serious way to reach an agreement for Viacom’s number one family of cable networks, including Nickelodeon, Comedy Central, VH1, MTV, BET, Spike, TV Land and CMT,” Viacom said in a statement. “This is par for the course for Dish, which has deliberately derailed ten renewal negotiations since last year by engaging in unproductive discussions and contentious public battles.”

In a statement, Dish said it was disappointed that its previously private Viacom negotiations are now being conducted  in public.

"We regret that Viacom has chosen to involve customers in a business negotiation when time remains to reach an agreement," Dish said in the statement. "Viacom unilaterally elected to terminate an indefinite contract extension tomorrow night despite meaningful progress on a new agreement that confronts a rapidly evolving pay-TV environment. Viacom is asking hundreds of millions of dollars in increases, despite the changing landscape  that includes drastically reduced viewership of Viacom channels and wide availability of their content across multiple platforms, frustrating consumers who don't want to pay twice for the same content. Dish will continue to negotiate in good faith to reach an agreement that works for both sides."

Wall Street has been watching the Dish/Viacom negotiations closely. The programmer has already been dropped by two smaller cable operators – Cable One and Suddenlink Communications – and many believed that losing Dish’s 14 million subscribers could be a blow that would be tough to recover from.

Viacom shares plunged 8.3% ($3.24 per share) to $35.63 each on the news.

Viacom said in February that they had granted Dish a brief extension to their existing carriage deal, a move that Dish chairman Charlie Ergen called “positive.”

According to Viacom, the February extension wasn’t the last reprieve the programmer granted to Dish.

“Viacom has made every effort to negotiate a renewal for Dish subscribers, including granting multiple extensions,” Viacom said in a statement. “We have offered Dish a best-in-class deal at rates and terms as good as larger distributors, with additional services and features for their customers.  In turn, Dish has made demands that are designed to be impossible to meet in order to take our negotiations public and likely force our programming off the air.  This is a clear example of Dish’s disregard for their customers, who will be subjected to another unnecessary disruption in service.  In addition to depriving our fans of our networks and programming, Dish is further undermining their fundamentally disadvantaged business by driving their subscribers to switch to a different provider.”