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Echo Star Wants It's MTV
March 10, 2004

EchoStar wants its MTV; CBS exec sees happy ending
Staff and wire reports
NEW YORK — DISH Network owner EchoStar Communications (DISH) said Wednesday that it will do "whatever it takes" to quickly resolve a fee dispute with Viacom (VIAB) that has darkened CBS and other channels for millions of its satellite TV customers. For its part, a CBS executive said he sees a timely resolution to a contract spat..
In the latest flashpoint in the cable and satellite TV industry's battle with programmers over escalating costs, EchoStar on Tuesday yanked all Viacom-owned CBS stations and cable networks off its Dish Network.

That meant 1.6 million subscribers in 16 cities woke up to no local CBS station, and 9.5 million nationwide were without 10 Viacom cable channels, including MTV and Nickelodeon.

Adding a sense of urgency to the showdown: CBS is the network airing the popular NCAA men's college basketball tournament beginning next week. (Related column by Rudy Martzke: Satellite provider dishes out different March Madness)


The affected markets:

Austin, Texas
Dallas-Fort Worth
Green Bay, Wis.
Miami-Fort Lauderdale
Los Angeles
New York
Salt Lake City
San Francisco

The dispute also affected potentially 9 million DISH Network customers nationwide who receive BET, Comedy Central, the MTV channels, Nickelodeon, Nick Games & Sports, Noggin, VH1, VH1 Classic, and CBS-HD East and West through America's Top 60, Americas Top 120, America's Top 180, America's Everything Pak and DISH Latino Max.

Source: EchoStar Communications

Though both companies publicly assailed each other, EchoStar chairman and CEO Charles Ergen said Wednesday that they are still talking.

"We certainly are having negotiations with Viacom," Ergen said. "We had more discussion today. I hope we can get your channels back. We'll work really hard, nights, weekends, whatever it takes."

Martin Franks, executive vice president of the CBS television network, told lawmakers that the two parties are making headway in negotiations that have been stalled for months.

"We're making progress and I think we'll have a resolution in a very timely fashion," Franks told the U.S. House Commerce subcommittee on telecommuncitions.

Customers hoping to watch the disrupted channels on the DISH Network instead saw a message accusing Viacom of asking for an unreasonable rate increase that would result in higher monthly satellite bills.

Ergen accused Viacom in a statement of "holding the public airwaves hostage" by asking for rate increases of up to 40%.

But Mark Rosenthal, president of MTV Networks, told reporters on a conference call that 40% is "a lot of malarkey" and the increase sought is "less than 10%."

Viacom officials said EchoStar was fighting over what amounted to 6 cents more per customer per month.

Ergen disputed the 6-cent figure. "We're not stupid," he said. "If it were 6 cents per customer, we would have signed that deal and been happy to do so."

Said David Moskowitz, general counsel for EchoStar: "If Viacom is willing to agree that our increase is 6 cents ... we'll sign up right now for as many years as Viacom is willing to offer."

Dish is giving subscribers a credit of $1 a month for losing cable networks and another $1 if they lost CBS. It is the No. 2 satellite network after DirecTV, which was taken over by News Corp. (NWS) in December.

"This is the biggest in a new wave of programming disputes," said Craig Moffett, cable analyst for Sanford C. Bernstein. "DirecTV is probably the next shoe drop. The new management is looking at programming as a place where they can change the cost structure."

The EchoStar-Viacom matchup is the biggest programming-cost spat since Time Warner Cable (TWX) blacked out ABC in several cities for a few days in 2000 in a fight with the Walt Disney Co. over the stations and a price increase for ESPN. Cox Communications and Disney recently agreed to a new ESPN deal after a bitter negotiation was resolved short of a blackout.

John Mansell, senior analyst for cable research firm Kagan World Media, said blackouts are typically resolved within a few days with cable or satellite operators taking the blame. "Consumers don't want to hear who's right or wrong. They just want their service."

This dispute has taken on a personal tone: EchoStar, which also filed an antitrust lawsuit against Viacom in January, gave out the home phone number of Viacom President Mel Karmazin to customers over the weekend via a recorded message. EchoStar spokesman Steve Caulk called it a mistake.

Viacom, meanwhile, through its phone operators and upcoming ads, is urging Dish subscribers to switch to a "reputable" cable or satellite operator.

EchoStar's cable rivals pounced in the Los Angeles area, where CBS was yanked. A coalition of Adelphia, Cox (COX), Charter and Time Warner Cable launched radio and print ads urging EchoStar customers to "Dump the Dish" and call an 800 number to sign up for cable.

"It's not clear that anybody will win," Moffett said. "But it is clear that consumers, at least in the short term, are going to lose."


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