Viacom Warns Dish Viewers of Possible Blackout in Fee Fight

Subscribers Could Lose Channels On Wednesday

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In the latest dust-up between pay-TV giants, Viacom Inc. began warning Dish Network Corp. subscribers they may lose channels including Comedy Central and Nickelodeon late Wednesday because of a fee dispute between the companies.

The New York-based media company has begun running a "crawl" message on its channels warning customers of the Dish satellite-TV service that their access to shows like "Broad City" and "Love & Hip Hop: Atlanta" could be interrupted if the two sides don't reach a new agreement.

Faced with a loss of viewers to Internet services such as Netflix, cable programmers like Viacom are seeking to increase the per-subscriber fees they get from pay-TV distributors including Dish. Dish is the third-largest pay-TV distributor after AT&T Inc. and Comcast Corp., with about 13.9 million subscribers.

"We are extremely disappointed that Dish has not engaged in a serious way to reach an agreement for Viacom's number one family of cable networks, including Nickelodeon, Comedy Central, VH1, MTV, BET, Spike, TV Land and CMT," Viacom said in a statement. "This is par for the course for Dish, which has deliberately derailed 10 renewal negotiations since last year by engaging in unproductive discussions and contentious public battles."

"Viacom is asking for hundreds of millions of dollars in increases, despite the changing landscape that includes drastically reduced viewership of Viacom channels and wide availability of their content across multiple platforms," Bob Toevs, a Dish spokesman, said in an e-mail.

Dish is no stranger to public battles with TV programmers. Recent disputes with CBS Corp. and 21st Century Fox Inc.'s Fox News resulted in both companies taking their channels off the satellite service before reaching new, long-term deals.

"We still believe the most likely outcome is a renewal, as neither player is in a competitively strong position and would run serious risks by walking away from a deal," Doug Creutz, a Cowen & Co. analyst, said in an e-mail. "If brinksmanship by both sides does lead to a broken relationship, then we think Viacom shares could see more downside as it would create a much higher probability of future negotiations ending badly for the company."

Viacom's channels tend to be more youth-oriented and attract fewer prime-time viewers than the most-popular cable networks, such as Fox News and ESPN. Its best-performing network this year is Nick Jr., up 37% according to Nielsen audience ratings, while its worst, Comedy Central, has declined 19% this TV season. Two small cable operators, Suddenlink Communications and Cable One Inc., dropped Viacom in 2014.

Dish and Viacom have been negotiating a long-term extension for months, and previously agreed to temporary extensions. Both Charlie Ergen, Dish's chief executive officer, and Viacom CEO Philippe Dauman have expressed optimism in recent months.

"There may be short-term hiccups along the way, but we firmly believe that we will ultimately reach an agreement that will be productive for both sides," Mr. Dauman said on a Feb. 9 call with analysts.

-- Bloomberg News

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