Dish Network and the Walt Disney Co. said they reached a short-term extension on their deal, which was set to expire Sept. 30 — averting a blackout of the Mouse House’s cable and broadcast networks with the operator, for now.
Details regarding the extension were not announced, and the companies declined to answer questions about the discussions.
The interim deal allows Dish to continue carriage of cable networks including ESPN, Disney Channel and ABC Family, as well as ABC-owned stations in eight markets: New York, Los Angeles, Chicago, Philadelphia, San Francisco, Houston, Raleigh-Durham, N.C., and Fresno, Calif.
The current agreement between the two companies dates back to 2005.
The prospect of an extended blackout of Disney-owned TV networks on Dish — which has about 14 million U.S. subscribers — comes after more than 3 million Time Warner Cable customers lost access to CBS local stations in New York, L.A., Dallas and other smaller markets as well as Showtime for most of August before the companies reached a deal.
Dish chairman Charlie Ergen, on a conference call with analysts in August, suggested that a pay TV provider could find a viable business without Disney’s crown jewel cable property — ESPN.
“Disney’s not going to go out of business without the Dish Network and vice versa,” Ergen said on the call. “If you take a really long-term view of it, somebody sometime may decide that sports isn’t something they have to have. And therefore, they can have a materially lower price for customers. And while they’ll lose customers initially, they will gain customers long term.”
According to filings in a Dish lawsuit against ESPN, under the 2005 pact the satcaster initially paid $3.26 per subscriber per month for ESPN, increasing 5%-7% annually.
ESPN is certainly seeking a much higher per-sub fee from Dish, particularly with the network’s $15 billion NFL rights deal for “Monday Night Football” kicking in with the 2014-15 football season. In 2012, ESPN earned average monthly fees of $5.71 per subscriber for ESPN and ESPN2 combined, according to SNL Kagan.
In addition, ESPN is negotiating for Dish to add the WatchESPN service for mobile and PC access to live events, which also would kick up the pricetag, and Disney and ABC have similar “TV Everywhere” services that would boost per-subscriber rates to Dish.
On the call with Wall Street analysts, Ergen said Dish hoped to reach a deal but would walk away if it had to. “We’ll work first and foremost to find a deal with Disney that makes sense for our customers,” he said. “If we get that deal, we’ll do it. If we don’t get that deal, we’ll part ways — simple as that.”