Viacom, EchoStar settle dispute

CBS, other programming return to DISH Network in several U.S. cities

March 12, 2004|By Robert Manor | Robert Manor,CHICAGO TRIBUNE

Media giant Viacom Inc. and EchoStar Communications Corp., which operates the satellite DISH Network, have settled their dispute and returned CBS and MTV to viewers in major U.S. cities.

But the rancor of the negotiations became obvious after EchoStar Chief Executive Officer Charles Ergen said that early in the talks, Viacom threatened to withhold the Super Bowl.

"We got off on the wrong foot," Ergen said in a conference call with analysts and media. "There were some strong-arm tactics that were used."

On Tuesday morning, Echo Star dropped Viacom's programming - including MTV, Nickelodeon and Viacom's CBS stations around the country - after negotiations broke down. But shortly after 2 a.m. yesterday, CBS stations around the country were again on the DISH Network, as were Viacom's other channels.

"I don't think we got a deal as good as we wanted," Ergen said. "But I think it was good enough."

Viacom did not return calls for comment.

Viacom wanted EchoStar to take the Nicktoons cartoon channel. EchoStar offers children's programming and did not want Nicktoons.

Ultimately, EchoStar accepted Nicktoons, but also held Viacom's price increase for its programming to 6 cents a month per subscriber, which Ergen described as "fair and reasonable."

"Neither side could afford to have this dispute drag on much longer," said Standard & Poor's equity analyst Tuna Amobi. "Going forward, both sides are looking to avoid this kind of confrontation."

Viacom and EchoStar each may have come out a winner, one analyst said.

"I think both parties got what they wanted," said Todd Mitchell, an analyst with investment bank Blaylock and Partners LLP.

He said Viacom's main goal was to expand outlets for Nicktoons and other new channel offerings. With relatively inexpensive programming, Echo Star can retain its status as a low-cost provider of satellite service.

Meanwhile, EchoStar said it might have to restate its results for 2001 because of the way the company had accounted for some expenses.

But it indicated that the restatement will be relatively minor and will reduce expenses.

The Chicago Tribune is a Tribune Publishing newspaper.

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