Direct Tv Dish Network

Byline: Mike Musgrove

EchoStar Communications Corp. and Viacom Inc. reached agreement early this morning to end a dispute that for almost two full days left millions of Dish Network satellite-television subscribers without their MTV, Nickelodeon and other Viacom-owned channels, and many of them without CBS programming.

Charles W. Ergen, EchoStar's chief executive, announced the agreement on the company's Web site. "This agreement with Viacom allows Dish Network to remain the lowest-cost, all digital TV provider in the country," Ergen said. "We understand that this has been a difficult few days for our customers, and we thank them for all the encouragement they have given us throughout."

The agreement came hours after EchoStar and Viacom told Congress they were optimistic about ending the dispute over programming costs.

"We're making progress and I think we'll have a resolution in a very timely fashion," said Martin D. Franks, executive vice president of Viacom-owned CBS Television, addressing the House Energy and Commerce Committee's subcommittee on telecommunications and the Internet.

EchoStar's Dish Network, the No. 2 U.S. satellite-television service, stopped carrying Viacom-owned channels Tuesday morning when a contract between the two companies ran out after months of attempts to negotiate a new one. That left 9 million Dish Network customers without 10 Viacom channels and 1.6 million customers without CBS content. EchoStar's action affected CBS only in the 16 cities where Viacom owns local network affiliates.

The NCAA college basketball tournament, which is broadcast on CBS and begins next week, was a major motivating factor for the two sides to reconcile quickly.

"It seemed that there was some real optimism that this will get resolved before March Madness," Subcommittee Chairman Fred Upton (R-Mich) said yesterday afternoon, referring to the tournament. "There's a lot of folks out there and a lot of offices in that office pool that need to see these games in action. . . . It didn't seem that there was vehement anger directed at either party."

"I think they just wanted some reassurance that we were, in fact, talking," Franks said yesterday afternoon after the hearing. "And we are."

EchoStar had said Viacom's demands for higher programming payments amount to hundreds of millions of dollars. Viacom had said the increase would be 6 cents a month per customer.

"If Viacom is willing to agree that our increase is 6 cents, we'll sign up right now for as many years as Viacom will offer," EchoStar General Counsel David K. Moskowitz said.

The occasion that brought Franks and Moskowitz together was a hearing, scheduled weeks before the current dispute, on the issue of the satellite carriers broadcasting the signals of local affiliates to its subscribers.

Off Capitol Hill, a more intense battle for public opinion continued yesterday. Viacom struck a blow with a full-page ad in The Washington Post and other papers that included telephone numbers for Dish Network customers to call to switch to cable or Dish Network competitor DirecTV.

"You, our viewers, are the most important relationship we have and we are really saddened that EchoStar/Dish Network has taken these channels away from you," read the ad, which included an image of a stricken-looking SpongeBob SquarePants.

Daniel E. Zito, managing director at Legg Mason Inc., blamed the unusual situation mainly on . Ergen.

"Ergen has a great reputation for using negotiations as catalysts for highlighting bigger issues going on in the industry," Zito said.

The escalating tensions between content owners such as Viacom and the cable and satellite companies that carry their programming to homes "has been an issue, but this really puts it right up in the limelight," Zito said.

COPYRIGHT 2004 Washingtonpost Newsweek Interactive
COPYRIGHT 2004 Gale Group

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