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AMC: Dish Spat Could Have ‘Material Effect’

5/14/2012 12:01 AM Eastern

AMC Networks’ ongoing carriage
battle with Dish Network continued
last week, with the programmer’s
CEO, Josh Sapan, telling analysts the
dispute could have a “material effect”
on the company if its channels go dark
for a lengthy period.

“If an interruption does occur, the
impact on our financial results will depend
on the length of time that we are
off Dish’s platform,” Sapan said on the
May 10 first-quarter earnings call.

Satellite provider Dish — the third
largest pay TV distributor in the U.S.,
with 14 million customers — said on
May 4 that it would not renew its carriage
deal with cable network AMC,
the home of such series as Mad Men,
The Walking Dead and Breaking Bad.
Dish’s decision to stop carrying the networks
as of June 30 came after a setback
in court. On April 26, a federal appeals
court denied Dish’s petition to reverse a
lower court ruling that said the company
destroyed evidence in a separate litigation
with Voom Networks. Defunct
Voom, which is seeking about $2.5 billion
in damages from Dish, and AMC
are both units of AMC Networks.

Sapan said AMC Networks would take part in a court
hearing this Tuesday (May 15), at which a trial date is expected
to be set.

Dish has claimed that its decision to drop the channels
has nothing to do with the litigation —which AMC Networks
vehemently disputes — and more to do with low ratings
for the channels among Dish’s mostly rural customers.

Enlivened by The Walking Dead, AMC Networks overall
saw net income rise 45%, to $43.2 million, in the
quarter, and a nearly 30% ad sales gain helped revenue
rise by 19.5%, to $326 million. Affiliate revenue was up
15%.

In a May 7 earnings call, Dish chairman Charlie Ergen,
armed with what he called extensive set-top box
data, claimed that losing the AMC channels
would go unnoticed by the subscriber base.
He also contended that by making many of
its shows available online and through services
like Netflix, AMC has “devalued” its
product.

“We believe the product has been devalued,
not that there are not some good programs,
but it’s been devalued because you
can get it multiple ways and customers
have more flexibility to get the programming,”
Ergen said. “It’s not quite the same
as if something were exclusive.”

On the AMC Networks earnings call
last week, chief operating officer Ed Carroll
begged to differ. Noting that he had no
access to Dish’s set-top box data, Carroll
argued that the Nielsen ratings paint a different
picture.

National Nielsen ratings for AMC, IFC and
WeTV increased in the double digits in the
quarter, Carroll said, adding that its zombieapocalypse
series The Walking Dead leads the
ratings pack among cable scripted series.

“We have absolutely no reason to believe
that Dish’s results would be any different
from the Nielsen results,” Carroll added.
“That leads us to a clear conclusion that what
we are looking at is all about the litigation.”

AMC has a plan to deal with being
dropped by Dish, Sapan said, but he wouldn’t
give any details.

“We’ll see how it goes,” Sapan said on the call. “We think
that the potential absence of our service and services on any
platform by definition creates a competitive opportunity for
another platform. It’s a very competitive world for multichannel
video. We’ll watch it as it goes. Of course we’re contemplating
it, and making all sorts of contingency plans.”

 

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