Dish and Disney Avoid Blackout of ESPN and ABC -- for Now

Third-Largest Pay-TV Company Laments Cost of Sports

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Dish Network and Walt Disney Co. 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, the companies said Monday night.

Kerry Washington on ABC's 'Scandal'
Kerry Washington on ABC's 'Scandal' Credit: ABC/Danny Feld

The extension temporarily prevents a blackout of ESPN, the Disney Channel and some ABC stations for millions of pay-TV customers. Dish is the third-largest U.S. pay-TV service in total subscribers.

More than 3 million Time Warner Cable customers lost CBS Corp. 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 ESPN, 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. That's more than any other TV network.

"Somebody, sometime may decide that sports isn't something they have to have," Mr. Ergen said on an Aug. 6 conference call. "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, the Disney channel and ABC stations owned by Disney in markets including New York, Los Angeles and Chicago.

Fee demands
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, 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.

~ Bloomberg News ~

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