Dish Is Renewing Its Carriage Agreement with Viacom: Must-Knows
Dish Network's Q1: More Subscriber Losses, Sling TV Revamped
Dish renews its agreement with Viacom
Dish Network’s (DISH) carriage renewal agreement with Viacom (VIAB) was up for negotiation, and the two companies finally reached an agreement on April 20. Media companies like Viacom mostly derive their revenues from affiliate fees and advertising. Affiliate fees are the carriage fees paid per month per subscriber by MVPDs (multichannel video programming distributors) such as Comcast (CMCSA) and Dish Network to media companies.
Viacom’s affiliate fees were the second-largest source of revenue for the company in fiscal 1Q16. The company’s affiliate fees were $1.1 billion in fiscal 1Q16, as the chart shows below, and comprised 35% of the company’s total revenues of $3.2 billion.
On April 20, Dish announced that it had entered into a multi-year agreement with Viacom. Dish also stated that as per the terms of its agreement with Viacom, select live and VOD (video-on-demand) content from Viacom will also become available on Dish’s Sling TV service.
Viacom stated after its agreement renewal with Dish, “DISH has historically been and remains an important partner for Viacom, and as part of our commitment to entertain audiences wherever they are, we are pleased to offer select Viacom networks as part of DISH’s Sling TV product. Today’s renewal, together with several additional affiliate agreements announced over the past year, will enable Viacom to drive growth and deliver better, more engaging viewer experiences for years to come.”
Why was Dish reluctant to pay Viacom higher affiliate fees?
Dish had referred to its negotiations with Viacom at its 1Q16 earnings call and stated that while negotiating its carriage renewal agreements, it looks at the program ratings for media companies and the carriage fees that it pays for their programming. Dish also stated that an important criterion was its reluctance to pay higher carriage fees for programming that was accessible to viewers on over-the-top platforms like Netflix (NFLX). Why? It perceives the content available on other platforms than Dish as less valuable for customers.
Dish makes up 0.2% of the PowerShares QQQ Trust Series 1 ETF (QQQ). QQQ also has 12% exposure to the computers sector.
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