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Dish’s Ergen: Streaming on Netflix “devalues” Mad Men

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Don’t try to pawn off the argument to Dish Network (s DISH) chairman Charlie Ergen that “catch-up” viewing of previous seasons on Netflix (s NFLX), Amazon (s AMZN) and iTunes (s AAPL) augments current-campaign ratings for shows like Mad Men.

Speaking to investors Monday morning to discuss Dish’s first-quarter earnings report, Ergen said that digital distribution of shows including Mad Men, Breaking Bad and The Walking Dead is a key factor as to why Dish and series network AMC aren’t able to come to terms on a new carriage deal.

Also read: We’ve got hard data: Netflix really is killing Nickelodeon

“One of the things that programmers have done is they’ve devalued their programming content by making it available in multiple outlets,” Ergen said. “Our customers are not really saying ‘we want to pay more money,’ they’re saying ‘we want more flexibility in our programming and we don’t want to pay more.’

“From a timing perspective that is just a contract that we can change,” Ergen added. “We believe the product has been devalued, not that there are not some good programs, but it’s been devalued because you can get it multiple ways and customers have more flexibility to get the programming. It’s not quite the same as if something were exclusive.”

Dish officials say that pending renewal of an agreement, flagship channel AMC, as well as Sundance Channel, WE tv and IFC, will go dark for the satellite service’s nearly 14 million subscribers on July 1.

Dish’s carriage accounts for around 15 percent of AMC’s base of nearly 96 million homes. According to data provided by SNL Kagan, AMC commands carriage fees that average around 25 cents per subscriber. And AMC annually commands around $300 million in total affiliate revenue.

For its part, AMC claims the Dish’s position is influenced by litigation between the two parties over the now-defunct Voom Networks. Last week, a New York appeals court denied Dish’s bid to continue the $2.5 billion breach-of-contract case, ruling that the satellite provider had destroyed evidence.

With AMC seeking to as much as triple its current carriage deal, Dish contends it’s position is just about business — AMC’s ratings, it says, don’t merit an increase.

But that argument holds only so much water.

As Adweek noted, stellar ratings performances for shows like The Walking Dead spurred 33 percent audience growth in the key adults 18-49 demographic for AMC in the first quarter. The network now significantly out-delivers news channels like CNN and Fox News Channel in that demo, even though those networks respectively command much higher carriage fees of 54 cents and 78 cents per subscriber.

3 Responses to “Dish’s Ergen: Streaming on Netflix “devalues” Mad Men”

  1. Nathan

    With the additional revenue AMC is getting from Netflix’s international expansion, perhaps it makes economic sense for AMC to let Dish go. If that means Dish customers switch to a different provider to get AMC, or more of them supplement their Dish subscription with one from Netflix, ultimately AMC loses very little compared to what Dish stands to lose.

    • Ocean MacAdams

      I’m not sure. If you’re a Dish subscriber, you are probably a) in a contract and/or b) happy with satellite service. You’ve probably resisted the urge to get cable many, many times or left cable for satellite. So now you lose AMC. So you say to yourself – I can go through all the hassle of changing to DirecTV OR I can wait and get Mad Men and Walking Dead on netflix/amazon/DVD in a few months. None of us are fortune tellers, but I’d place my money on Dish.

  2. Ocean MacAdams

    I would hope that paid content would not fall victim to the same backwards thinking that afflicts most writers when they write about carriage fees. The only thing that matters to DISH is not losing subs. It doesn’t matter if CNN costs more than AMC, the question is will people drop Dish if they lose AMC vs. CNN. And study after study shows that ESPN and news networks are must-haves for people, even if they watch other channels more. That’s why CNN will not end up with lower carriage fees even with their faltering ratings.