Dish Network, the large US-based satellite provider is in tough negotiations with Turner and CBS over a new contract. Over the past few weeks, Dish had cut certain Turner channels from the line-up. Now the two companies have agreed to continue negotiations and said that “they have mutually decided to restore service of CNN, Cartoon Network, Adult Swim, truTV, TCM, HLN, CNN en Espanol and Boomerang, and extend the carriage of TBS and TNT”.
The feud between Turner and Dish started in October when Dish cut some channels from the line-up, including CNN, as reported by CNN. Dish claims, on the other hand, that Turner made some unreasonable demands. Looking from the outside, this is just about money, or is it?
At the same time CBS and Dish Network announced that they have struck a short-term deal to continue their previous agreement until a new agreement can be reached. According to Advanced Television, the issues with CBS are centered around a deal that is worth less than other deals that CBS has made and also the ‘AutoHop’ ad skipping technology Dish is offering. Those two items cut right into the network’s results.
So, if Dish is paying less than other broadcasters and makes ad skipping possible, how will this business model work in the long run? In simple words, the networks will not play nicely with Dish. On the other side, with declining subscriber bases in the TV space, the networks will have to find additional income somewhere.
Dish on the other hand sees its subscriber base also deteriorating, so signing higher valued contracts with networks would put them out of business very soon. Just take a look at the following charts.
The subscriber base has declined since the beginning of 2014 and the average price per subscription is not increasing enough to make up for the lost revenue. While the broadband subscriber base continues to grow, the overall subscriber-based revenue is basically stagnant with $3.648 billion in the third quarter compared to $3.645 billion in the second quarter. With increasing cost of operations, the EBITDA is on a downward trend since Q4’13. This is not a good sign for the Dish business model and the upcoming negotiations with the networks and is another sign that tougher times are coming for the TV broadcast industry. – Norbert Hildebrand