Dish drops Viacom shows in fee dispute
Published by Florida Times-Union on March 10, 2004.
Local Dish Network subscribers looking for Jon Stewart's take on the news or SpongeBob Squarepants' latest antics have been confronted with a blank screen since early Tuesday.
The cable channels owned by Viacom International Inc. were pulled from EchoStar Communications Corp.'s satellite network after payment negotiations between the two companies broke down over the weekend.
About 78,000 Jacksonville viewers are affected by the dispute, including some EchoStar customers who are now looking to switch to other providers.
The channels the satellite company is not carrying include MTV, BET, Nick at Nite and Showtime. Three other Viacom channels -- Spike TV, TV Land and CMT -- are broadcast under a different agreement and will continue to be shown.
In some markets, although not Jacksonville, Dish subscribers will also lose broadcasts of the local CBS station, which might put pressure on the situation as the 1.6 million Dish subscribers in New York, Los Angeles, Miami-Fort Lauderdale and 13 other markets have to face a lockout of the upcoming March Madness college basketball tournament.
Dish Network is the smallest player in the local pay TV marketplace, holding on to just less than 9 percent of the households in the greater Jacksonville area, according to Scarborough Research Corp., a consumer market research company. Cable subscribers make up the bulk of the market, with 64.7 percent, while DirecTV has 12.1 percent of the 880,000-adult metropolitan area.
"Viacom is holding the public airwaves hostage, trying to extract concessions and higher rates on programming," EchoStar Chairman Charles Ergen said in a statement.
Viacom, though, said the satellite company had turned down a deal that was comparable to that signed by other satellite and cable companies.
"They haven't been able to negotiate," said spokeswoman Susan Duffy. "We had a fully negotiated deal in January, until EchoStar reneged. We had a deal, then they put in another big request."
At issue is a price increase that Littleton, Colo.-based EchoStar said amounts to 40 percent over the life of the contract, adding up to "hundreds of millions of dollars in fees," while Viacom said the increase is only six cents a month.
EchoStar's numbers are "malarkey," Viacom officials said. Viacom's numbers are "inaccurate," EchoStar retorted.
Negotiations also stalled over which programming EchoStar would carry, with Viacom asking the company to add NickToons to its lineup.
EchoStar's position is "ludicrous," Mark Rosenthal, president and chief operating officer of MTV Networks, said during a news conference.
"Comcast and DirecTV and Cox and Adelphia are not exactly pushover companies," Rosenthal said. "We've been able to reach a reasonable deal with every other one of those companies. It's possible that it's not us, that the problem is EchoStar."
The satellite company is just trying to reach the best deal for its customers, though, EchoStar spokesman Steve Caulk said. "We're working as hard as we can to get their programming back for them," he said. "It depends a lot on Viacom's willingness to negotiate."
It's an open question as to which company will be more wounded by the programming absence: Viacom has advertisers loath to lose the estimated 9 million Dish subscribers, while EchoStar has to be concerned that viewers will switch providers rather than miss favorite programs.
"It's bad for both companies," said Rob Sanderson, an American Technology Research analyst who covers both EchoStar and Viacom. "We'll see who blinks first. I think the ball is definitely in Viacom's court."
The impact on EchoStar was clear Tuesday afternoon, with Jacksonville customers checking out other ways of getting access to favorite channels. Mark Randolph, sales manager at Direct Satellite on Baymeadows Road, said people had been calling all day, while officials with Comcast said they've seen a slight uptick in satellite customers switching to cable.
Jeff Mooneyhan, at Hollywood Satellite TV, was switching Dish Network customers to DirecTV free, saying it was the only way to be fair to his customers.
"Some people only had it for six months, some for three or four years, and now they want to switch," he said. "What can we do?"