Viacom warns Dish TV viewers of blackout if contract not renewed

Tue Apr 19, 2016 4:32pm EDT
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By Jessica Toonkel and Malathi Nayak

(Reuters) - Viacom Inc (VIAB.O: Quote) on Tuesday began alerting Dish Network Corp's (DISH.O: Quote) satellite TV subscribers that they might soon lose its networks, including Comedy Central, Nickelodeon and MTV, as an agreement between the companies is set to expire Wednesday night.

The threat of losing Dish hit Viacom's shares, which dropped as much as 9 percent. The companies have been in talks for several months over whether Dish would continue to carry Viacom's networks, and at what price. The lack of a new contract could lead to a blackout of Viacom programming on Dish's network of about 14 million subscribers.

Viacom has been struggling to turn around sagging ratings and many investors and analysts see the Dish contract as a major indicator of the company's progress. If Dish walks away from Viacom for good, other distributors may follow suit, analysts said.

Wall Street has been viewing the talks with Dish as the first test for Viacom Chief Executive Philippe Dauman, an attorney known for his negotiating prowess, since he replaced Sumner Redstone as executive chair in February.

Dauman has said the negotiations had been extended and that he expected an agreement with Dish next quarter.

A blackout with Dish could result in a 15 percent hit to the media company's affiliate revenue, analyst Brian Wieser of Pivotal Research Group estimated. Similarly, ad revenue for Viacom's networks could shrink by 15 percent if Dish walks away from Viacom altogether, he said.

Viacom went public with the potential blackout at midday Tuesday, stating it was "extremely disappointed that Dish has not engaged in a serious way to reach an agreement." The New York-based media company started running a crawl across the screen on all of its networks alerting Dish customers of the potential blackout.

Dish, whose shares rose 1.9 percent, fired back at Viacom.   Continued...

A Dish Network logo is seen on a satellite dish on a Brooklyn apartment building roof in New York June 4, 2015. REUTERS/Brendan McDermid/Files