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EchoStar Loses Viacom Programming

3/09/2004 01:20:00 PM Eastern

Englewood, Colo. - Citing the use of "strong-arm tactics" and exorbitant rate increases asked by Viacom, EchoStar announced it had "no choice" but to drop 16 CBS owned-and-operated local channels from its DISH Network service and 10 nationally distributed cable channels, effective midnight March 8.

The decision leaves EchoStar customers without CBS service in Austin, Baltimore, Boston, Chicago, Dallas-Ft. Worth, Denver, Detroit, Green Bay, Wis., Miami-Ft. Lauderdale, Minneapolis, Los Angeles, New York, Philadelphia, Pittsburgh, Salt Lake City and San Francisco.

At the same time, all DISH Network subscribers lose the following Viacom-owned national cable services: BET, Comedy Central, MTV, MTV2, MTV Espanol, Nickelodeon, Nick Games & Sports, Noggin, VH1, VH1 Classic and CBS-HD East and West.

DISH Network said it would issue a $1 monthly credit to customers who lose local CBS programming, and will continue fighting in court to have the services restored.

Customers who lost other Viacom channels from their America's Top 60, America's Top 120, America's Top 180, America's Everything Pak, and DISH Latino Max service programs will also receive a $1 monthly credit while the channels are unavailable.

In announcing the decision, EchoStar CEO Charlie Ergen said: "Our goal is to remain the best value for our customers for the lowest price. To do this, we need fair contracts with competitive pricing that allow DISH Network to select the channels most compatible with the interests of our customers."

In a prepared statement on the issue, Viacom said: "We are dismayed and disappointed by EchoStar/DISH Network's decision to pull the plug on our channels. We tried for months to reach an accommodation that would allow them to continue carrying CBS, Nickelodeon, Nick at Nite, Comedy Central, MTV, BET and many of our other channels, but EchoStar/DISH Network refused to entertain a reasonable proposal or to negotiate in earnest."

EchoStar said Viacom's "strong-arm tactics" included demands that DISH Network carry Viacom-owned channels of little or no measurable appeal to viewers in exchange for the rights to carry the 16 owned-and-operated CBS stations. Earlier, Viacom had threatened to withhold the Super Bowl from DISH Network customers until a federal judge intervened. EchoStar has challenged Viacom in court on these antitrust issues, noting that "Viacom is leveraging its control of the public airwaves -- acquired by Viacom for free."

"DISH Network customers in the cities with CBS owned-and-operated stations are entitled to keep up with local news and events distributed over publicly owned airwaves, and Viacom is interfering with that right," Ergen charged. "DISH Network will always have a place for CBS and we're willing to pay for retransmission rights, but Viacom is holding the public airwaves hostage, trying to extract concessions and higher rates on programming unrelated to CBS."

EchoStar said Viacom has asked for rate increases up to 40 percent over the length of the contract.

"That demand potentially equates to hundreds of millions of dollars in payments by DISH Network, plus additional payments for additional channels that would offer little or no value to DISH Network's customers -- while saddling them with the costs," according to an EchoStar statement.

Viacom urged DISH Network subscribers who wished to continue receiving its programming to consider receiving television service from DirecTV or a local cable operator carrying its packages.

"It is hard for us to make sense of their position," a Viacom statement said. "They recently hiked their subscribers' bills by as much as $3 a month. Yet they are unwilling to consider paying an additional six cents a month per subscriber for the right to carry our channels. Our networks are some of the most popular on television and when Americans watch TV, they spend more than 20 percent of their time with our networks; nonetheless, we are asking for less than 5 percent of what EchoStar/DISH Network currently generates from the average customer."

The satellite provider also charged that "Viacom's demands for carriage of low-interest channels impede DISH Network's ability to provide new, independently owned channels with a broad appeal."

EchoStar said it has reached a fair agreement for Viacom channels in the past, and DISH Network will continue to pursue negotiation so that it may broadcast all or most of those channels again.

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