DISH Network Threatens to Drop AMC

Carriage fight would impact 14 million households

DISH Network subscribers who also happen to be fans of Mad Men, The Walking Dead and Breaking Bad may be in for a rude awakening this summer, as the satellite-TV service on Friday threatened to kick AMC off its channel lineup.

According to AMC officials, DISH recently signaled its intention to drop the network and its siblings (Sundance Channel, IFC and WE tv) by the end of June. AMC claims that DISH is acting out of spite—the two sides are mired in a $2.5 billion breach of contract suit related to the defunct VOOM HD service—but DISH insists the decision to part ways with AMC is a matter of simple economics.

“[The] AMC Networks…overall have had significant declines in viewership among DISH subscribers,” the satellite provider said in a statement. DISH went on to say that the most popular AMC programming is readily available via, iTunes and Netflix.

DISH Net serves nearly 14 million U.S. households, a base that accounts for 15 percent of AMC’s subscriber base (95.7 million). Its carriage agreement with DISH expires June 30.

While DISH argues that AMC is overpriced—the carrier says AMC’s asking price for a new carriage deal is high “when compared to their low viewership”—the current rates are actually moderate. SNL Kagan estimates that AMC earns 26 cents per subscriber per month, for an annual haul of $298.6 million in fees. Cable’s average carriage fee is 25 cents.

If Josh Sapan has his way, AMC will triple its sub fee. in December, the president and CEO of AMC Networks told investors that “our rates on AMC are particularly out of whack,” adding that the channel is worth as much as 75 cents per subscriber per month. (He went on to add that the hypothetical fee “is not necessarily the rate we will be paid tomorrow.”)

DISH Net’s claims that AMC's ratings aren’t worth the price of admission are not exactly supported by Nielsen data. The network enjoyed a record first quarter, scaring up an average prime-time audience of 1.23 million viewers and 554,000 adults 18-to-49 on the strength of its original series The Walking Dead. The demo delivery marked a 33 percent improvement from Q1 2011.

Season 2 of The Walking Dead nailed down five of cable’s top 10 deliveries in the quarter. The Feb. 12 episode, which marked the series’ return from a three-month hiatus, delivered 10.7 million viewers, of which 7.26 million were members of the dollar demo.

Among the roster of cable networks that command a much higher carriage fee than AMC but do not deliver comparable ratings are a host of news and sports outlets, including CNN (54 cents), Fox News Channel (78 cents), CNBC (30 cents), NFL Network (73 cents), NHL Network (30 cents) and NBC Sports Network (28 cents). DISH Net carries all six of the aforementioned networks.

“AMC Networks has some of the most acclaimed programming on television; in fact, The Walking Dead is the No. 1 scripted drama with DISH subscribers,” the programmer said in a statement. “It is unfortunate that, because of setbacks in an unrelated litigation, DISH even suggests that they might deny their customers access to some of their favorite networks and shows that are offered by every other major satellite and cable TV provider.”