Following a disagreement over retransmission terms between Dish and Viacom, the satellite TV caster had been threatening a blackout in carriage. A new agreement has been reached between the parties, which means Dish will carry 18 Viacom channels, including Nickelodeon, Comedy Central and MTV. Renewal of the carriage agreement without any service interruption has sent Viacom’s stock soaring at around 12% in late afternoon trading.
Viacom will get a mid-single-digit percentage boost in affiliate fees from Dish for each of the years inside the five-year contract, say sources closely involved in the matter. The decision was reached following expiration of contract on Wednesday, although the deal terms were not let out.
All 18 Viacom channels, which were being carried by the traditional Dish broadcasting service will continue to be carried, and a pick of these such as MTV, Comedy Central and BET, will be carried initially by the Sling TV online streaming service.
Increase in fees will place Viacom in the best position to achieve mid-single-digit revenue from affiliate fees. This will be from all of the major deals with distribution partners from 2017, according to people close to the subject. February saw Viacom making projections that for fiscal 2016, which draws to a close by September, fee growth will stay between low to mid single-digit. In any case, the deal seems to have removed the axe hanging over Viacom.
In pay-TV, businesses have been feeling exceeding pressure from the hike in content costs, as well as the widening of choices besides the traditional bundle.
Leverage from the Dish deal is expected to force Viacom to accept affiliate fee reduction, or stand losing the 14 million subs who use Dish services. Bringing down the fees would have had adverse results, owing to the fact that it has tie-ups with Comcast. The “most favored nation” clause would have let the latter claiming lower fees for itself too. Luckily, the bundle model has remained the same way as before.