Dish Network CEO Charlie Ergen said he has hope that a deal can be worked out with Viacom to avoid a blackout of 18 channels on the satcaster’s platform at midnight ET. But he also sounded firm in his resolve to hold the line on the pricetag for a new contract and to push for more flexibility for adding Viacom channels to Dish’s skinny-bundle Sling streaming service.
“I don’t know whether we will get to a deal. I do see a path now that I didn’t see last week,” Ergen said Wednesday during a conference call to discuss the company’s first-earnings. The subject of tonight’s Viacom contract deadline and the progress of Sling dominated the questioning by Wall Street analysts.
Ergen noted in his remarks that viewership of Viacom’s largest channels, like the rest of the cable landscape, is down and that some smaller cable operators such as Suddenlink have dropped Viacom channels entirely. However, Viacom was quick to point out that Suddenlink and others faced accelerated subscriber losses after dropping Viacom.
“We’re prepared to move on as Suddenlink and others have done with out the content,” Ergen said. “Last week I would say my impression was I didn’t see a path with Viacom. I think the tone on both sides has been more productive through the weekend and this week. There actually probably is a path to continue carriage. It’s not done yet — obviously the devil’s in the details.”
Viacom’s stock was hammered with an 8% drop on Tuesday after the company warned that its channels may go dark on Dish’s sat-TV platform which has about 13.8 million subscribers. On Wednesday, shares regained some ground, rising as much as 3% in early trading. Dish shares were up slightly as earnings beat expectations but subscriber declines for the core sat-TV business raised concerns.
Bernstein and Co. analyst Todd Juenger has crunched the numbers on what the Dish loss would mean to Viacom’s bottom line. He sketched out a grim scenario in a research note Wednesday, projecting that Viacom shares could fall to $16-$24 and that the loss of revenue would force cost-cutting and other moves. “It’s certainly much easier for us to believe that Dish would be OK without Viacom, but Viacom would not be OK without Dish,” Juenger wrote. Dish would be more profitable without Viacom so long as its subscriber losses stay under 15%, he projected.
Viacom asserted that it has sought to reach a deal and that Dish would feel the heat from subscribers if the channels go dark.
“Consumers have spoken loudly and clearly. Over the past 24 hours, hundreds of thousands of concerned subscribers have reached out to implore DISH to negotiate reasonable terms with Viacom for continued carriage of our networks,” Viacom said in a statement “Based on year-to-date Nielsen data, our networks represent nearly one fifth of cable viewership on DISH, which gives DISH enormous incentive to renew our agreement. As a long-standing partner, we are hopeful that we can work together to reach a deal.”
Ergen voiced frustration with the general environment for negotiating with content providers at a time when ratings are down and some programming is being widely distributed on rival platforms such as Netflix, Amazon and Hulu. He cited the high-profile carriage standoffs that have dragged on between regional sports networks and distributors — Comcast and the YES network in New York and Time Warner Cable’s Los Angeles Dodgers channel — as examples of “overreaches” by content providers that pushed distributors to the breaking point.
“People look at it and say ‘No, we can’t pay that kind of money,’ ” Ergen said. “It’s starting to be a fairer fight. (But) the industry hasn’t worked through the balance of the cost of content and viewership … There’s going to be some food fights between any number of companies and content providers in the future.”
Regarding Viacom specifically, Ergen emphasized that he sees the new carriage contract as an opportunity for the two companies to collaborate on forward-looking initiatives and not just about “dollars and cents.”
“If we can’t work together as a companies on strategic things that build value between us — I’d rather spend my time with companies that are a bit more forward-thinking,” Ergen said.