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Is DISH Network Likely to Face a TEGNA Channel Blackout?

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Satellite TV operator DISH Network Corp. DISH and leading TV broadcaster TEGNA Inc. TGNA are currently at logjam over the retransmission deal of TV networks.

The existing carriage deal between the two companies is set to expire on Sep. 30, 2015. TEGNA has threatened to block DISH customers' access to 51 local channels in 39 markets nationwide if the two entities fail to reach an amicable solution.

DISH said it had offered a contract extension plan to TEGNA and is willing to pay compensation under any new agreement that would be retroactive to Oct. 1 if the TV station allows DISH to continue carriage during negotiations.

On the other hand, TEGNA claimed that DISH has refused to reach an agreement with respect to price at market prevailing rates. DISH, on its part, argued that TEGNA is using unfair means by blocking channels to force DISH to accept their terms in order to retain customers.

Like other pay-TV operators, DISH has been persistently losing video customers. At the end of the second quarter of 2015, DISH had roughly 13.932 million pay-TV subscribers, down 0.9% year over year. Average monthly pay-TV subscriber churn rate in the second quarter stood at 1.71% compared with 1.66% in the prior-year quarter.

A failure to strike a long-term agreement with TEGNA, we believe, might result in further customer churn and falling average revenue per user (ARPU) for DISH in the coming quarters.

Notably, this is not the first time that DISH has faced a spat with content providers. In Aug 2015, the company was engaged in a serious retransmission tussle with leading local TV broadcaster Sinclair Broadcast Group Inc. SBGI . The dispute was settled only after Federal Communications Commission (FCC) intervened.

In Dec 2014, a long contract renewal dispute between DISH and CBS Corp. CBS had resulted in a short programming blackout in 18 local markets across the country.

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DISH NETWORK CP (DISH): Free Stock Analysis Report

TEGNA INC (TGNA): Free Stock Analysis Report

CBS CORP (CBS): Free Stock Analysis Report

SINCLAIR BROADC (SBGI): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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