The programming company already has a website warning Verizon FiOS‘ 4.6M subscrubers that they are “about to lose” channels including AMC, IFC, and WEtv when the current contract expires at year end. Now AMC Networks is reaching out directly to Verizon customers: AMC says in a message that negotiations to renew the programming deal, which goes back to 2006, “are ongoing and we are hopeful to reach an agreement with Verizon that recognizes the fair value of our networks.” That sounds like code for: we’re far apart on the terms. Verizon says AMC is simply trying to “scare” FiOS customers. The phone company adds that it’s “unfortunate that [AMC] has decided to unnecessarily publicize these discussions, but not surprising as they have a history of using their viewers as pawns in their negotiations with distributors.” Dish Network recently resumed carriage of AMC’s networks after dropping them in June while the companies were engaged in a legal battle.
The Q3 message for AMC Networks comes from William Shakespeare: All’s well that ends well. Although earnings were down, everyone knows the main reason — the court fight with Dish Network that led it in June to drop the company’s channels. And as AMC chief Josh Sapan reminds this morning, that’s past and his company is “delighted to partner with them again.” Meanwhile, AMC topped the Street’s expectations. It generated net income of $36.6M, -8.4% vs the period last year, on revenues of $332.1M, +17%. That revenue figure is well ahead of the $288.5M that analysts anticipated. And earnings at 51 cents a share beat expectations for 37 cents. The company’s National Networks (AMC, WEtv, IFC and Sundance Channel) generated $306.2M in revenues (+18.5%). Affiliate fees rose 24.3%, to $199M, as digital and licensing deals offset the lost revenue from Dish. Ad revenues increased 9.1% to $107M. But operating income dropped 2% to $98.5M in part due to litigation and other costs for the Dish dispute. The company’s grab-bag category for international networks and other operations — including IFC Films — recorded revenues of $29.3M (-4.6%) with an operating loss of $12.9M, an increase from last year’s $4M loss.
Dish Network Chairman Charlie Ergen can change his tune on an issue more elegantly than just about anyone in the media business. Consider how easily he just reversed himself in an analyst call where he explained his company’s agreement to resume carrying AMC Networks’ channels, which he dropped in June. He brought them back as part of the $700M deal to settle AMC’s breach of contract suit against Dish after it ended a 15-year agreement to carry the now defunct VOOM HD networks. Ergen noted that AMC’s hit The Walking Dead is “off the charts.” If the channel has more shows like that “then it will be a fair deal for us.” And he likes the AMC folks. “Absent the litigation we probably wouldn’t have gotten to that point” of dropping the channels. That’s a head-spinning shift from three months ago when he said it was a question of cost, not courts. AMC’s networks were too expensive, he said then, especially since “our customers are not looking at zombies in New York City… They live on farms and ranches.” What’s more, he preferred doing business with Mark Cuban, whose HDNet channels took the slots formerly held by AMC’s services.
Sure looks that way — for the company, not Dish Network subscribers. AMC Networks shares are +3.9% in early trading following yesterday’s $700M agreement with Dish Network to settle the $2.4B breach of contract case involving the defunct VOOM suite of HD channels. But the surprise is that Dish is up 2.2%. Consider that a sigh of relief from shareholders who feared the worst from the lousy hand chairman Charlie Ergen had to play in court. A series of rulings by New York Supreme Court Judge Richard Lowe III found that Dish destroyed or covered up important evidence that probably would have hurt its case — and made Dish a likely loser against the charge that in 2008 it wrongly terminated its 15-year deal deal to carry VOOM. Yet Ergen’s decision in June to drop the AMC channels appears to have paid off. The $700M settlement was “well below Street expectations” of at least $1B says Wells Fargo Securities’ Marci Ryvicker. Barclays Equity Research’s James Ratcliffe calls the amount “quite reasonable” in light of the court setbacks.
Cablevision Systems and AMC Networks announced today they have settled all litigation with Dish Network. Settlement includes a new long-term agreement for Dish to resume carriage of AMC Networks including AMC, IFC, Sundance Channel and WE TV. AMC will …
Listen to Episode 6 of our weekly podcast Deadline Big Media With David Lieberman. This week, Lieberman and host David Bloom discuss whether the big entertainment companies, with their reliance on ever-increasing cable-TV fees, are driving off a fiscal cliff; what happened to Google in its awful quarterly earnings report; what to expect from the rest of earnings season; and whether a possible settlement of the $2.5 billion VOOM lawsuit will finally bring AMC Networks TV shows back to the Dish Network.
It started today with a note on the New York State Supreme Court’s website that says there’s a “possible settlement” in the case when the trial resumes on Monday. That was enough to drive up stocks for AMC Networks (+3.9%) and Cablevision (+4.3%) — the companies that filed a $2.4B breach of contract suit against Dish Network following its 2008 decision to drop the now-defunct VOOM suite of HD channels. The settlement hopes also contributed to a 4.8% jump in Dish shares. Investors are eager to see AMC’s channels return to Dish, which dropped them in June, and for the satellite company to be free of the threat of a courtroom loss that is starting to look inevitable following a string of embarrassing revelations that suggest it tried to hide evidence that it feared might hurt its case. “In the context of the $2.4 billion in damages originally sought, we believe a cash settlement could be worth between $200 million and $1 billion…equating to $1-$4 per share in aftertax cash consideration” for AMC,” Barclays Equity Research’s Anthony DiClemente says. He adds, though, that “the amount of a potential cash consideration is less important than the value of a new carriage deal.” Without Dish’s 14.1M subscribers, AMC could lose much as $100M per year in cash flow. “Assuming a 7 year deal, we estimate carriage would be worth $7 per share” for AMC, DiClemente says.
AMC Networks shares are up 2.7% in mid-afternoon trading, and Dish Network is down nearly 1%, after New York Supreme Court Judge Richard Lowe III ruled that Dish”s only remaining damages expert can’t testify in AMC’s breach of contract suit involving the now-defunct VOOM networks. Dish wanted Timothy Brooks — a former research exec for Lifetime and USA Networks – to take the stand and refute the plaintiffs’ claim that they’re entitled to more than $2.4B following Dish’s 2008 decision to drop the VOOM suite of HD channels. But Lowe says that Brooks is not qualified to rebut the plaintiff’s expert, Susquehanna Financial Group’s Thomas Claps says. Since Brooks is not an economist, he doesn’t have the expertise needed to challenge the assumptions and models from the expert for AMC and its former parent, Cablevision: consulting firm Compass Lexecon’s Senior Managing Director Jonathan Orszag (who also happens to be the brother of the Obama administration’s former Office of Management and Budget director Peter Orszag). Lowe now has disqualified all three of the damages witnesses Dish wanted to call. Claps says this is “another significant blow to Dish” following a series of run-ins with Lowe, who found that satellite company improperly destroyed evidence, and hid emails that supported the plaintiffs’ case.
The emails were discovered over the weekend and disclosed in court today — and they’re “hurting [Dish Network] in a big way,” according to an account from George Reed-Dellinger of advisory firm Washington Analysis. Susquehanna Financial Group’s Thomas Claps, who’s also monitoring the case, calls it “the most damaging evidence to date” against Dish in AMC‘s $2.5B breach of contract suit involving the satellite company’s 2008 decision to drop the now-defunct VOOM HD channels. It’s so important that Claps says Dish “may re-think its strategy” to have Chairman Charlie Ergen testify — and might be more motivated to negotiate a settlement with AMC that would return its channels to the No. 2 satellite provider before the end of the month when the jury is expected to reach its verdict. Dish dropped AMC in June.
New York Supreme Court Judge Richard Lowe III continues to hammer Dish Network as it prepares to mount a defense in AMC Networks’ $2.5B breach of contract suit involving the now-defunct VOOM HD networks. The judge said today that Dish must allow investigators to examine internal information, according to an account of the proceedings from Susquehanna Financial Group’s Thomas Claps. Dish “has no credibility” with the court, Lowe said following rulings in which he charged that the satellite distributor destroyed evidence and tried to delay the current case long enough to create a mistrial.
New York Supreme Court Judge Richard Lowe III was visibly angry with Dish Network today, thumping his desk as he accused the company of disrespecting the court, according to an account of the VOOM case proceedings from Andrew Harms of advisory firm Washington Analysis. “I don’t care how much money you got,” Lowe’s quoted as saying to Dish lawyers after the company failed to comply with his order to turn over documents that he said were not privileged. If Dish doesn’t give him electronic copies of the material, he said, then he might rule in favor of AMC Networks in its $2.5B breach of contract suit before Dish even presents its case — leaving it to the jury to just decide on the size of the damages.
That’s what New York Supreme Court Judge Richard Lowe III and AMC Networks charged in court today according to Susquehanna Financial Group’s Thomas Claps. The judge became “extremely animated” and accused Dish of “blatant misconduct and attempts to delay” AMC’s $2.5B breach of contract suit, Claps reports. It seems that Dish yesterday appealed Lowe’s ruling requiring the satellite company to turn over documents that it considered privileged — but didn’t give the Appellate Division a copy of the documents, preventing it from reaching a quick decision. Claps says that Lowe characterized that as “further evidence of Dish’s ongoing, inappropriate conduct in this case” and accused the company of “attempting to ‘spin its wheels’ and delay the proceedings so that the current trial schedule could be jeopardized — and possibly result in a mistrial.” (Earlier the judge found that Dish inappropriately wiped out emails that might have supported AMC’s case.)
There’s still no jury for AMC Networks’ $2.5B breach of contract suit against Dish Network — and the New York State Supreme Court won’t reconvene until Thursday. The jury was supposed to have been picked …
It seems there were only 16 prospective jurors available today, not enough to begin the selection process, Susquehanna Financial Group’s Thomas Claps reports. So New York Supreme Court Judge Richard Lowe III apologized, and put AMC Networks‘ …