September 05, 2013

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Different Instruments, Same Tune: Dish Prepares to Negotiate With Disney, ESPN

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We may have just ended a great big fight with CBS, but the conditions that created the fight haven’t gone away. We’ve said, over and over, that skyrocketing demands from TV programmers and broadcasters are part of the entire business landscape now, and not just unique to our industry. We also said that switching providers won’t provide any relief, either.

Sure enough, Dish Network Corp. and ESPN are about to square off in a negotiation that parallels our dispute with CBS. They’re even using the same words to characterize the issue.

This article in today’s Wall Street Journal sums it up perfectly. It’s worth reading the entire story, though it is behind a paywall. This excerpt carries the meat of it, italics are mine:

Dish’s agreement to carry ESPN, the highest profile and most expensive of the national sports channels, expires at the end of September. Dish and ESPN’s majority-owner Walt Disney are now in negotiations on a renewal for the agreement, which dates back to 2005.

The talks will also address the fees Dish must pay to carry Disney’s other channels, including ABC broadcast stations. As a result, the negotiations will likely revolve around some the pay-TV industry’s most contentious issues—broadcast fees and sports costs—even more than Time Warner Cable Inc.’s battle with CBS Corp., which ended just Monday after a monthlong blackout.

“There’s an unsustainable pressure in the TV ecosystem, and it’s just amplified when it comes to Dish and Disney,” said Tony Wible, an analyst at Janney Montgomery Scott.

Mr. Ergen last month already hinted at his willingness to use what some might see as the nuclear option—going without Disney’s channels permanently. “Disney is not going to go out of business without Dish Network and vice versa,” he told analysts on a conference call.

He added that, taking a “really long-term view,” a pay-TV provider could offer TV service without sports channels. “We’re prepared to go either way,” he added. Dish will try to strike a deal “with Disney that makes sense for our customers.” But “if we don’t get that deal, we’ll part ways.”

Dish is looking to “get a fair price” and “be treated fairly,” he said, while Disney would like to “increase the amount of money we pay them.”

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