Dish reaches short-term extension with Viacom, holds off highly anticipated carriage war

Dish Network (NASDAQ: DISH) and Viacom have agreed to a short-term carriage extension, forestalling what many believe could be a protracted and bitter negotiation. 

Speaking to investors during Viacom's quarterly earnings call Tuesday, company Executive Chairman Philippe Dauman admitted there could be "hiccups along the way" as the two sides tried to forge a longterm agreement. "We believe we will reach an agreement that will be productive for both sides," he added.

Viacom has long-term agreements with the majority of major pay-TV operators. But over the last 24 months, as ratings for its linear channels have faltered, largely due to SVOD proliferation, the company has failed to come to terms with mid-sized operators including Suddenlink Communications and Cable One, as well as numerous small operators. 

Last month, Comcast (NASDAQ: CMCSA) moved several Viacom channels, including Spike TV and CMT, to a lower tier, a decision, Dauman hinted, that might result in Viacom filing a lawsuit.

The sum total makes the prospect of a protracted negotiation with Dish, and its 13.9 million subscribers, unpalatable for embattled Viacom shareholders. 

Dish reps demurred comment, referring FierceCable to comments made by company Chairman and CEO Charlie Ergen during the company's third-quarter earnings call in November.

"Viacom has been a long-term partner, so it'd take a lot for us not to do a deal with them, but they have to be realistic that their ratings have deteriorated over the last three years or four years in some cases in a material way," Ergen told investors. "And if the world has changed somewhat, and to the extent that we are given a fair deal, I think, and there's a reality embedded in that deal, I think we'll get a deal done with them."

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