In order to avoid disruption of services,
DISH Network Corp.
) - the second largest satellite TV operator in the U.S. - has
extended its television broadcast deal with TV network major
Walt Disney Co.
). The deal extension is for a short period and both the parties
are trying to reach a long-term agreement. However, the terms of
the deal were not disclosed.
DISH Network's deal extension decision has stemmed from the
recent rift between pay-TV operator
Time Warner Cable Inc.
) and TV network giant,
). Demand for higher service renewal fees by CBS had caused Time
Warner Cable to drop the former's channels from its list.
However, the cable company eventually renewed the service at a
higher rate. Start of the NFL season on Sep 8 had induced Time
Warner Cable to restore the channels, apprehending subscriber
In the second quarter of 2013, DISH Network lost around 78,000
net subscribers compared with 10,000 in the year-ago quarter.
Hence, we believe that reaching a short-term agreement with the
Disney channels will avoid complete channel blackouts, thereby
minimizing the chance of further subscriber loss.
In the same time frame, DISH Network reported dismal financial
results with Subscriber-related expenses up 5.5% year over year
to $1,924 million, driven by higher programming content costs.
Expensive sports content drives programming content costs largely
since people always prefer watching live sporting events. As per
research firm SNL Kagan, Disney's most popular sports channel,
ESPN charges as high as $5.54 a month per subscriber from every
So unavailability of the ESPN channel on its list for a short
period may further aggravate subscriber loss for DISH Network.
Currently, DISH Network carries a Zacks Rank #5 (Strong
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