Dish Network Corp. (DISH) and Walt Disney Co. (DIS) reached a short-term extension of their programming agreement, averting a blackout of Disney channels including ESPN and ABC while the parties negotiate a long-term deal.
Details of the extension weren’t disclosed, Englewood, Colorado-based Dish, the third-largest U.S. pay-TV service in total subscribers, said yesterday in a joint statement with Burbank, California-based Disney.
The extension temporarily prevents a blackout of ESPN, the Disney Channel and some ABC stations for millions of pay-TV subscribers. More than 3 million Time Warner Cable Inc. (TWC) customers lost CBS Corp. (CBS) programming for a month before those two companies agreed to a new retransmission contract on Sept. 2. Dish has about 14 million subscribers.
Dish Chairman and co-founder Charlie Ergen has lamented the rising cost of sports programming for several years. He suggested last month a pay-TV company may one day choose to go without the top-rated all-sports channel -- a strategy that would lower prices to consumers.
ESPN charges pay-TV operators about $5.54 a month per subscriber, according to research firm SNL Kagan.
“Somebody, sometime may decide that sports isn’t something they have to have,” Ergen said on a conference call in August. “There could be a day when, strategically, companies just can’t get together, where they go opposite directions and they both have strategies that work for them, and we’re prepared to go either way.”
The extension affects ESPN, Disney Channel and ABC stations owned by Disney in markets including New York, Los Angeles and Chicago. Disney also is trying to build distribution for a new channel, the SEC Network, that will feature Southeastern Conference college sports in 2014.
Dish rose 1.1 percent to $45.50 at 11:28 a.m. in New York. The shares had gained 24 percent this year through yesterday. Disney, up 30 percent in 2013, climbed 1 percent to $65.14 today.
Broadcast networks have been raising prices for so-called retransmission rights -- fees paid by pay-TV services to carry signals that are available free over government airwaves. Content owners are also seeking to boost revenue from mobile devices that extend delivery of their shows beyond the home.
In the earlier dispute, New York-based Time Warner Cable agreed to pay a significant increase for the right to carry CBS, approaching $2 per subscriber per month, people with knowledge of the situation said in early September. Time Warner Cable failed to obtain out-of-home rights for mobile devices, except for CBS’s Showtime Anytime, they said.
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