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Dish Network & Viacom Settle Their Differences
weshart writes "I haven't yet seen anyone mention the fact that CBS and other Viacom channels are back on DishNetwork. They've been unavailable for the past day and a half, as was reported earlier. No word on the details of the agreement; and the DishNetwork announcement doesn't say anything about whether or not they'll be raising their rates."
CNBC basically described the situation as Echostar caving in to Viacom's demands for a $.72/year fee hike.
Looks like content is king.
Here's a few things we do know about the deal:
- One of the reported sources of conflict was Viacom's demand that Dish add the new Nicktoons network into their lowest base package, America's top 60. That didn't happen. Instead, the network will be added to one of Dish's more obscure packages, America's Top 180.
- The three notable Viacom-owned networks that weren't deleted from Dish Network, namely TV Land, SpikeTV and CMT had contracts that expired at a different time, and Viacom wanted those three networks to be tied to expire at the same time as the rest of Viacom's channels. Apparently, those three networks have had their contracts extended as part of this deal. No official statement on when they now expire, but I think we can all assume the next time things expire, everything will all expire together.
- Echostar had a pretty good anti-trust lawsuit working against claiming that the tactic of withholding the popular networks to force the purchase of unpopular networks is illegal because it's using a monopoly product (copyrighted content) to force the purchase of another product. If Echostar had won, this would send a shockwave through the industry because every content provider does this to every signal distributor. However, we'll never know the result of this suit because this deal agrees to dismiss all pending litigation between both companies.
- Every Dish Network Subscriber will recieve a $1 credit on their next bill, and those who also subscribe to a locals package that lost their CBS station will get a second $1 credit on their next bill as well. These will not be pro-rated down to pennies because the outage only lasted 36 hours. In addition, all Dish Network subscribers will get a coupon for a free pay per view movie, which is worth $3.99. The cash credits will cost the company at least $15 million, and allowing for the fact that some of the coupons will be unused the PPV movie offer should cost the company about $10-15 million. Ironic, because $25-30 million is about the total price increase Viacom was seeking.
Give a hand, not a hand-out.
I was watching Charlie Ergen's chat show the other night and he explained a lot of things that you don't normally hear explained by a big company, let alone from the CEO. I am actually a bigger fan of Dish now than I was before. I really dig the fact that he comes on the air and takes calls and emails from his customers.
Regarding the packaging of channels, Charlie said that he wishes Dish could do ala carte, but they can't because companies like Viacom won't let them. Viacom (and Disney, and all the rest) explicitly lay out in their contracts with distributors which channels have to be bundled with other specific channels. It's not a matter of Charlie having double standards - he's simply not allowed to break up packages any more than you can.
You think that the cable tv industry doesn't pull this kind of thing all the time? In order to get the same number of channels that I get with my current DirecTV system, I would have had to pay Comcast cable over $100 a month for their digital package, while DirecTV has more channels at half the price.
If anyone, the blame more likely rests on Viacom who will just assume that all cable/satellite companies should swoon at their feet for the chance to carry MTV and the rest of their garbage.
If you start getting the government involved in regulating something, you're going to end up with problems. Calling for regulation over losing VH1 classics for a day and a half is pretty stupid anyway.
slashdot, news for crazed liberal socialist zealots
I question your reasoning. Dish does want it both ways, but I believe they have a right to. There is a real reason for them to do package pricing:
1) Since decoding is done at the customer's box, every single channel is broadcast to every single home. To add Nicktoons, they have to broadcast it to everyone, regardless of whether anyone wants it.
2) Each channel they broadcast takes up bandwidth to transmit, and bandwidth costs money.
3) Each channel costs the same in bandwidth to broadcast as any other channel, so the cost scales linearly with number of channels broadcast.
4) Since everyone would opt for roughly the same 10 to 20 channels, the very low rated ones wouldn't support themselves.
Dish/DTV/Cable MUST use package pricing, unless you want to pay something like $5/channel/mo. The price would be high since you not only have to pay for the channels you want, but have to support the channels only a few want. The other option would be to have variable cost channel pricing... MTV would only be $3/mo, while Nicktoons would be $7/mo. That would make it even less of an incentive to buy those obscure channels, though.
So, the problem becomes that once you can only buy the 10 channels you want, the low rated channels don't support themselves and get dropped. Now we have much less variety and fewer options. Sound familiar? Yeah, that is how radio is now. So you would be paying more money for less variety.
The reason Dish/DTV/Cable wants individual package selection from Viacom et.al. is that they would never purchase Nicktoons if they didn't have to. Providing it will add no new customers and nobody will want to pay extra for it. They will be paying for bandwidth of a channel that adds no revenue.
Picking a side should be easy and not silly... If there were no package pricing for Dish/DTV/Cable, they wouldn't have to broadcast Nicktoons and others nobody cares about, therefore lowering your bill. If there were no package pricing for you, the average customer bill would actually go up. Also, there are monopolistic concerns to help choose sides... you have the choice between Dish, DTV, Cable, real Sat dish, Voom!, and just broadcast. Dish, however has no choice in whether they broadcast different channels; they are FORCED to have certain channels.
Now, I would love to have individual channel selection, since I literally only watch 5 channels; and even at $5/channel my bill would lower. But anyone who isn't single will need at least 10 channels to satisfy others in the household.
IANAL, but I play one on
Fortunately their biggest market niche is the low-end tier for not a lot of money and they were able to successfully defend that market. Being a subscriber to that tier, I'm glad this is the outcome (and I got a free movie out of the deal!).
...and that's the way the cookie crumbles.
I complained to dish and Viacom by email, warning dish that I would cancel the service if those channels were not restored (I don't really care who is to blame).
I got a response quickly from an actual person at Dish (I was impressed by this) but not from Viacom. The letter was apologetic, and directed towards my particular concerns, but suggested I voice my displeasure to Viacom as well; this I had already done. Today after the channels were restored I received this dish form letter, which you'll notice does not address price hikes (or a lack thereof):
Dear Loyal DISH Network Customer,
I am very pleased to announce that we've successfully reached a long-term agreement with Viacom to provide you with CBS and MTV Networks including MTV, Comedy Central, and Nickelodeon. I am happy to say that this agreement will allow us to continue to provide you the lowest all-digital price everyday.
I understand that it has been a difficult 36 hours to be without these popular channels. We appreciate your patience, your support for DISH Network and your continued business.
As promised, you will receive a credit on your next billing statement. In addition, we would like to thank you for all of your support by sending you a free DISH On Demand Pay-Per-View coupon that will allow you to view upcoming hits like "Cat in the Hat" and "School of Rock." The coupon will arrive in your April billing statement. Enjoy a movie on us.
Everyone at DISH Network will continue to fight to provide the best possible programming and services at the lowest possible price, every day.
Thank you for your loyalty and thank you for being a DISH Network customer.
Charlie Ergen
CEO
DISH Network
$.06/mo/cust -or- $.72/cust/yr *more* than dish was already paying!!! That's $1,368,000/yr. This is about right when you consider that Dish paid ~$12,500,000/yr. for the recently expired programming contract. The addition of NickToons to the line up could have been worth the extra 1.3 million alone. Nickelodeon is an extremely compelling property to offer to viewers.
The major problem is where Viacom wanted Dish to put the two(2) extra channels associated with the new contract. Dish offers 60 channels with our basic package. Viacom wanted to put *2* more of its own station in with that package.
Our problem was along the lines of "what do we kick out of the Top60 package to make room, and is the NickToons channel more valuable to us than, say, a Disney? The answer is/was no. They wanted $.72/cust/yr for 1.9 million customers. The way the contract is written up now, we will pay then $.72/cust/yr for ~260,000 customers. That's a 1.18 million dollar savings for Dish. Viacom gets to add their channel; we still get to offer a programming line up that is good value to the consumer.; subscribers won't see an immediate impact on their bills...
Everyone happy? Sorry about the outage...
The rate increase Ecostar/Dish was fighting was 6 cents. And it wasnt arbitrary, they added NickToons to their lineup (only place to get a daily dose of Ren and Stimpy, Rocko's Modern life, Invader Zim, Angry beavers and a host of other awesome yet otherwise unaired Nickelodeon cartoons)
They also had several channels which went from having about 6 hours of programming a day reaired again and again to having full line-ups.
Even if its only for Nicktoons, I would pay 6 cents extra.. now the test is to see how Ecostar reacts rate-wise.
If they don't increase, good for them. If they do increase them any more than a reasonable amount considering they are paying less than a dime more, then THEY are the money mongers you need to be complaining about.
As pointed out on the thread that informed Slashdotters about the takedown, Dish didn't have to give any break (as per customer agreement), but chose to, as a sign of good faith. 9 million+ subscribers, cost to Dish $9 million plus. In addition in the next bill (or if you don't receive a bill, in a seperate mailing) You will receive a PPV coupon for a free PPV movie. Cost $3.99 to every subscriber who was affected (that comes out to nearly $36 Million) Dish took a $45 milllion hit on this. The prices will not go up. Dish network is still cheaper than DirecTv, and the price increase is less that DirecTv had earlier this year, and a lot less than my cable company announced after being held up by the same company over ESPN.
In addition VIACOM's action by dragging this to people on cable and every Viacom channel on every cable system and even on the competition was about as sleazy business practice I've ever seen. From what I understand both sides gave a little.
In this whole scenario there were no winners,only losers, regardless of which side you were on.
If I remember right DishNetwork (And DirecTV along with all cable providers) are required by law to carry all the major local networks, or none at all, as it wouldn't be fair for them to carry NBC and Fox but not CBS and ABC, or at least that's how the logic goes.
I'd have to look it up to be any more sure. But I know that when these games have been played in the past they never lasted long because both sides are scared of the FCC stepping in and dictating terms.