Dish averts mega-blackout, continues retransmission negotiations with Sinclair

Dish Network (NASDAQ: DISH) continues to negotiate with local TV broadcaster Sinclair Broadcasting over a new retransmission agreement -- the two companies narrowly averted a blackout of Sinclair's local TV station on Dish's satellite-based pay-TV service on Saturday.

Dish announced Sunday morning that the two companies "have agreed to a short term contract extension as they continue to negotiate a new retransmission agreement." The companies did not provide details on the agreement, including how long it will last.

Prior to the short-term agreement, Dish filed a complaint with the FCC alleging that Sinclair Broadcasting was violating good-faith negotiating clauses to laws governing broadcast retransmission licensing. However, Dish said Sunday it asked the FCC to suspend that complaint while the companies continue their negotiations.

"Sinclair is threatening the largest local channel blackout in retransmission consent history," Dish Network said in its initial FCC complaint. "Dish said its customers will lose access to 153 local channels in 79 markets if a blackout occurs."

According to Dish, not only is Hunt Valley, Md.-based Sinclair refusing to negotiate renewal licensing on a number of its network affiliate stations, it's also demanding that Dish let Sinclair  negotiate retrans terms for 32 stations in many of those same markets that Sinclair doesn't control.

Sinclair reported a 21.8 percent increase in second-quarter revenue in the second quarter to $554.2 million. During its August 5 earnings call, company executives told its investors to expect sizable revenue growth to continue, since 75 percent of Sinclair's retransmission deals with pay-TV operators are set to expire over the ensuing 12 months. 

Word of Dish's complaint comes just a few days after San Diego CBS affiliate KFMB-TV announced that it had been pulled off DirecTV (NYSE: T) in a similar retransmission impasse. 

The FCC has indicated it plans to act to prevent such blackouts. FCC chairman Tom Wheeler said that he is proposing an end to exclusivity rules that restrict pay-TV operators from pulling in signals of distant network affiliates when blackouts with local stations occur. Wheeler's proposal, which would be a boon to operators. 

According to SNL Kagan, retransmission fees are set to skyrocket to $9.8 billion by 2020. 

For more:
- read this Dish Network statement
- read this Dish Network Verified Retransmission Complaint filing
- read this Wall Street Journal story

Related articles:
FCC's Wheeler thrills pay-TV operators, proposes removal of exclusivity rules from retrans negotiations
ACA's Matthew Polka tweets to FC about runaway retrans, proliferating OTT, rampant consolidation, more at #ACAMattPolka
Moonves: CBS to make $2B per year in retrans fees and reverse compensation by 2020

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