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Content creators vs carriers: The Dish/AMC dispute

Posted on Friday, July 6th, 2012 at 12:28 am

Author: s.e. smith

Disclosure: I work for the Sundance Channel, an AMC property.

On 1 July, Dish Network subscribers looking for the Sundance Channel, AMC, WE, IFC, and more had to look elsewhere—because an ongoing dispute between parent company AMC Networks and Dish ultimately ended in a contract expiration at midnight on 30 June. The bitter and very public feud dragged on until the last possible moment, but Dish stuck to its position, refusing to renew the contact and continue carrying AMC’s offerings. The two have radically different explanations for the dispute, and both highlight emerging issues in a new media landscape.

Such carriage disputes are not new; DirecTV and Fox, for example, squabbled last year and ultimately reached a resolution that satisfied both parties. Fights characterised by service interruptions and pointed advertisements encouraging fans to take their complaints to their cable providers are not unusual, but this one was particularly vicious, and perhaps especially important.

Dish Network serves 14 million customers, making it a critical distribution network for companies like AMC Netweorks. When the company announced it would no longer be carrying AMC’s offerings, it cited several issues, including the practice of bundling; AMC, like many other content providers, forces distributors to buy a package of shows rather than being able to pick individually. Thus, it used AMC’s hit status with shows such as Mad Men and Breaking Bad to oblige Dish Network to pick up offering like IFC.

Bundling, Dish Network claimed, made the deal too expensive, and the company argued that AMC’s numbers didn’t make up for the higher cost. The network also claimed that AMC’s practice of releasing episodes of hit shows soon after airing on services like iTunes was hurting its bottom line and providing a disincentive for cable subscribers. The company attempted to force AMC’s hand and negotiate a drop in prices or a debundling, but AMC Networks stood its ground, so Dish pulled out its next weapon in early June, when it became evident that the dispute was going to turn vicious.

Starting in early June, AMC’s offerings were moved to different channels, forcing fans to make a hop down into infomercial territory to catch their favourite shows. No longer situated in the primetime range for channel-flipping, AMC knew it would experience a numbers drop, right before the season finale of Mad Men and in the leadup to the premiere of Breaking Bad. Dish counted on hitting AMC where it would hurt most.

AMC fought back, enlisting Mad Men as a spokesshow in full page ads encouraging fans to take their grief to Dish Network and adding interstitial ads to the websites of many of its holdings. Dish remained unmoved, sticking to its original points of contention and refusing to back down. Despite AMC’s pressure, its entire lineup disappeared from Dish Network’s lineup on 1 July. Dish replaced AMC’s offerings with HDNet, a ‘men’s interest’ assortment of programming which is unlikely to satisfy the appetites of fans used to the likes of The Walking Dead.

Despite the fact that many subscribers will probably be less than thrilled with this tradeoff, Dish has no plans to lower subscription prices for its viewers; it argues that it removed some programming and replaced it with others, and thus people can expect to pay the same for access. Some subscribers undoubtedly disagree, and it’s likely there will be a consumer revolt in the coming weeks as the consequences of the Dish-AMC dispute settle in; particularly in advance of the much-anticipated Breaking Bad season premiere. Savvy subscribers may be wondering if they can renegotiate their own contracts with Dish by threatening to drop their subscriptions unless the network lowers their fees; perhaps they will have better luck than the embattled AMC.

AMC has a very different explanation for the dispute; it claims that the origins actually lie in a lawsuit stemming from a 2008 programming battle. AMC subsidiary VOOM was dropped from Dish in 2008, in what AMC claims was a breach of contract. The two have been litigating over the matter ever since. In a series of escalating press releases and advertisements, AMC took very public swipes at Dish, implying that the network was having its revenge over the VOOM HD litigation.

Officials at AMC must be stinging after their ignominious drop from Dish programming. Not only did their public shaming campaign fail, but their viewer numbers just fell drastically in response to the programming shift. Over the course of June alone, numbers dropped 21% due to the change in channel location, and without any coverage on Dish at all, AMC can expect to see further decline in July; right when it wants to see viewer numbers going up in correspondence with a new season of Breaking Bad.

As the Dish dispute grew ever more acrimonious, AMC was able to manage a last-minute negotiation with AT&T U-Verse to keep its offerings flowing to subscribers of that service. It’s made pointedly sure that as many people as possible are aware of this fact, casting Dish as a villain in press releases shaming the company for not meeting AMC in the middle on the contract resolution. Bus ads for the premiere of Breaking Bad in cities like New York have also included a note reminding viewers that one place they won’t catch the show is on Dish.

This very public fight is a sign of more to come, not just from AMC and Dish but from other content creators and carriers. Such contract disputes may grow more aggressive as networks like Dish struggle with the rise of on-demand streaming and downloads, services demanded by many users who want to be able to access television on multiple devices and on their own schedules. Other users want to decouple themselves from cable providers entirely, and rely on tools like iTunes releases to pick up the latest shows, a trend that clearly threatens the cable industry, which explains why it is digging in its heels over distribution deals.

As overall costs of cable subscriptions rise and networks use bundling to their advantage, cable companies will be increasing their resistance to being forced to pick up channels with much lower commercial appeal alongside more flashy offerings. They may also be heartened by Dish’s apparent ‘win’ in the AMC dispute. That means more pushes ahead to put a stop to bundling, which could be bad news for lesser-known labours of love.

If the only way to get AMC back on dish is to drop IFC from the bundle, for example, the parent company may eventually cave in order to get AMC viewer numbers back up, which means IFC will take a big hit that it may not recover from. If Dish is successfully able to strong-arm AMC into complying with the terms it wants, other cable providers may get the same idea, which could result in a radical shift in the programming landscape, and one that might not work out well for consumers interested in more diversity, not less, in their cable offerings.

As cable becomes increasingly an art form, with some of the most critically-acclaimed shows of the last few years appearing on cable, networks are zeroing in on where the profits lie. That means less time for what they view as chaff, but what some viewers may consider critically important and interesting offerings.

Could such disputes lead to a turn away from the traditional cable distribution model? Viewers are often as frustrated with bundling as cable providers, since they want to be able to pick and choose the shows they pay for, and online streaming or distribution models allowing them to individually select their subscriptions could create an access method they prefer. If that’s the case, that could be very bad news for cable networks, and potentially very good news for companies like AMC, with the foresight and skills to put high-quality shows into development and wait for them to grow an audience.

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  1. Contrary to what Dish is saying about the competition for viewers based on AMC licensing its programming via Netflix or Amazon, there is no reason to pay $3 an episode for each new episode of Breaking Bad (etc.) since they are not available for purchase until the day after they air on AMC. I don’t know of anyone who pays for a higher package (what Dish required to access AMC’s channels) and who also wants to pay for the same programming to watch online, a full day after the new shows premiere. While Netflix streaming is an excellent way to watch older seasons of current or past programs released to DVD, subscribers to satellite or cable are just as apt to simply DVR program re-runs when their parent channel airs them.

    Dish’s arguments–especially not lowering its prices because AMC’s channels have been replaced by the dregs of HD programming–keep falling short. And while it is true that AMC’s ratings will drop due to Dish dropping AMC, it is hardly a reliable way of measuring their popularity or viewership. If anything, Dish will end up putting itself out of a job, as television viewers tolerate high rates and multitudes of undesirable channels to get the few channels whose programming they want to watch; without those, there is no reason to continue subscribing. Television viewers do not want a “parent,” or a parent company, to decide for them what is valuable programming for viewers, period.

  2. Dish refuses to give their customers a straight answer. On their Facebook page they just keep using a copied and pasted script.

    They remove complaints that contain factual references and will even ban you. I have been banned. Look at their Facebook page it is %95 complaints about the loss of AMC. Yet they do not pay attention.

    They are making a lot of their customers angry with their automated responses.

  3. I got a new DISH DVR a few months ago and had to sign a 2 year contract to get it. Now I wish I hadn’t done that. If I wasn’t under contract, I would have called customer service (most likely in the Phillipines; American jobs gone offshore sadly) and told them to take my Dish and shove it where the Sun don’t shine. I like the AMC shows Breaking Bad, The WAlking Dead, and Mad Men. Now I’ll have to go up online and watch them and pay extra I shouldn’t have to pay. If one of the commetors is correct, then I can watch them on Netflix a day after they air on AMC. That at least is a solution. I don’t have a Netflix account. I’ll have to pay for that too. When my two year contract ends, it’s bye bye DISH!

  4. ” If one of the commetors is correct, then I can watch them on Netflix a day after they air on AMC. That at least is a solution. I don’t have a Netflix account. I’ll have to pay for that too. When my two year contract ends, it’s bye bye DISH!”

    Netflix offers streaming or DVD options for seasons 1-3 of Breaking Bad, and DVD-only for season 4. You will not be able to watch the new season with Netflix, that will require Amazon, iTunes or Vudu purchases at $2-$3 per episode. It’s another faulty Dish excuse that AMC devalued their programs and hurt Dish’s ratings by offering these pay-per-episode options for those who don’t, or can’t, access cable or satellite.

    “They remove complaints that contain factual references and will even ban you. I have been banned. Look at their Facebook page it is %95 complaints about the loss of AMC. Yet they do not pay attention.

    They are making a lot of their customers angry with their automated responses.”

    That is a very insulting way to treat customers and, in many ways–as early as moving the AMC channels without any customer (or customer support!) notice–is a poor business model. I do hope subscribers will cancel, as that seems to be the only option that will get any attention from Dish. I’ve heard that other providers are offering to pay the early-termination fee of new subscribers to their services, and it seems worth trying for.

    I do wonder about the legality of what Dish is doing… While it is true that, written into contracts, there is no guarantee of which channels will be included/kept/picked-up, I think this matter goes beyond this. It’s clearly a case of not acting in the best interest of its customers and not acting in good faith. The Better Business Bureau might be a place to take these complaints–or perhaps a firm will take on a large suit against Dish for how it has taken advantage of its customers.

    I continue to see posts elsewhere with people unhappy with the Dish’s decision but who feel that Dish is holding firm on price for the sake of the customer. Where they get this impression is confusing to me. Dish representatives have been clear that they did not, and would not, negotiate with AMC. And, as should be apparent to Dish customers, their bills are not being lowered as a result of Dish offering less critically-acclaimed programming.

  5. I work as an installation tech for Dish. Since this dispute started I have been in about 65-85 homes and maybe 3 customers have asked me what happened to AMC. No one has asked about the rest of the channels associated with AMC. I would say my employer is for the most part keeping its promise to provide the cheapest pay TV service available. That what AMC Networks is offering is not worth an overall price increase for all customers. That being said I hope they get a new contract before October

  6. I find your article interesting and while favorable to AMC a pretty balanced description of the situation. However, I do find your logic to be illogical. You state that customers are tired of having to pay for bundled channels and prefer to pay for only the channels they want. I totally agree that this is true. The point that Dish is making is that they don’t want to be forced by the content providers, in this case AMC, to buy a bundle of channels to get the one they want. They apparently would like to put AMC on their offerings, but don’t want channels like IFC and Sundance that noone watches. So it seems like the content creators are forcing bundling of channels not the cable and satelite providers. From my view, it looks like Dish is taking a stand against content providers forcing bundling, which cable and DirectTV refuse to do. Similar to the fight Dish is having with broadcasters about skipping commercials, customers don’t want to watch commercials, so it appears that Dish is trying to be a customer first company, it can just be painful process as they fight the battles.

    Also, most channels on their websites or Hulu have their programming available for free on the internet. I don’t watch any of these shows or channels, so I really couldn’t care less if Dish has them as options.

  7. Mephisto,
    Perhaps you can speak to this better than I can guess: Is AMC the only network that requires bundling of several less-popular channels in order to get one more-popular channel?

    If Dish Network is making a stand against this practice, then why only AMC? It simply doesn’t makes sense to me. I was surprised to find that one of my favorites, FX, is part of Fox News, etc. Now, I really no interest in Fox News (and I don’t know more than 2 people who do), but I wouldn’t want to go without FX. It seems like the difference for AMC is that they aren’t part of a major network/corp.

    It also would cut into Dish’s charges if suddenly their “200″ “250+” ect. channels (where no one watches more than probably 20 of those) were only the desired channels. The major networks that presumably bundle most of the channels that make up those hundreds of channels would be lost revenue for Dish and lost revenue for the parent network. It is not an honest practice for Dish to only hold AMC to this standard–if it wants to do this–it has to do it across the board with every carrier–or at least more than one. It’s poor management to only have a standard for one company and charge away for the rest. And it certainly isn’t fair to the customers.

    AMC has successfully negotiated a fair price for its channels for every single other carrier. Dish hasn’t taken a stand, they never negotiated, said they will not negotiate and dropped the channels. How common is that for Dish?

  8. The idea of consumers getting in the middle of this fight is ridiculous. Its lose/lose people. If AMC wins all the people who have Dish (like me) will probably have to pay higher rates for programming no one watches. And after seeing Dish cave other content providers might try the same tactics against Dish. If Dish wins consumers might lose out on all the AMC shows we all love.

    The only grounds any consumer should be arguing for is a compromise. Amc needs to realize their shows are great but not huge ratings behemoths and losing 14 million opportunities will due significant damage to any future programming they have planned. Dish needs to realize consumers will cancel their service and start buying shows on iTunes and AmazonVOD. Settle this. Amc debundle your stations and Dish give Amc an extra bag of potato chips so the idiot execs at Amc can act like they won this battle.

  9. I agree with you rusty that both sides should compromise, I just haven’t heard anything from the Dish people I’ve spoken to to suggest they are interested in negotiating anything. It’s hard not to think AMC’s winning lawsuit against Dish Network isn’t the real reason why this nonsense is happening.

    In terms of ratings: Dish Network’s highest-rated cable drama is The Walking Dead.

    So, even if a lot of Dish’s subscribers don’t watch AMC’s original programs, it is ultimately a screwball move for Dish Network to remove it’s highest-rated cable drama from its own service!

    There are channels advertising that Direct TV is about to drop them, and the whole thing makes me think that the networks need to license to HuluPlus, as it’s the only service with new (not just past) TV programs that you don’t have to purchase episode by episode. Or Netflix should cut such a deal since they’re changing their offerings. I hope cable and satellite providers end up driving their own businesses out of business due to their absurd greed. Hopefully these problems will change the platform once and for all!

  10. I stopped watching AMC years ago when they started putting comercials in every movie, and I don’t watch Mad Men, Breaking Bad, or The Walking Dead. So when Dish stopped carrying AMC and the other channels, its not big loss to me.

    Honestly, I much prefer the channels that AMC and the others were replaced with and I hope Dish keeps them.

  11. Thanks Susan K. I had heard about the lawsuit but didn’t know much about the details. Sounds like Dish found a way to make up for the several million dollars they will end up paying AMC; by taking it away from them in future revenue. I guess Charlie Ergan is king of the pissing contest, wow, what a win for him…

    It was nice to see the facts listed in regard to Netflix’s streaming availability of AMC’s shows being such a ratings boost for AMC/Dish/any provider carrying AMC. Certainly the average person knew that being able to catch up on series only gets more viewers for the new season.

    All due respect Whit, I’m glad Dish’s new line-up works for you, but 14 million subscribers are liable to have different preferred shows and networks. Dish could remove every ESPN and sports network they have and I wouldn’t bat an eye, but I would fight for Dish to keep its contracts, as I know there are a lot of people out there enjoying those networks.

  12. The ultimate irony is that Dish complains that AMC is forcing them to purchase bundles… which is EXACTLY what Dish is doing to me! Hypocrites. DirectTV is offering to buy contracts off of Dish, and I will be taking their offer.

  13. I’m moving in to my first home, and I grew up in a DISH network home. I will more than likely be looking to adopt a different service. However – I do feel the cable provider days are coming to an end. I don’t even think that the Netflix and iTunes models are quite right or ready to take the reigns.. but I think the models of these sites that keep getting shut down are the real future. The ninjavideos, the re1eases, etc. Now, obviously they would need to be above board and not free – but what works about them is that they find great T.V. from all over the world and host it up in one convenient place to watch at your leisure at the time it’s released. Everything good that came on for a night is on one page. That’s the future. I don’t need to know what time it came on or wait at least a week after it came out – I just get on a site and I see what came on worth watching and I watch it. I learn about new shows I wouldn’t have seen otherwise because I don’t spend my time browsing channels.

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