Lifetime and Lifetime Movie Network off Dish due to contract dispute

[twinrocks]

Charlie Chat 1/9/06

We listened to the Charlie Chat, Lifetime was NOT there! Charlie was just bla, bla, bla, bla, bla about the same old stuff we already know. They are showing Elove and We FREE on those channels......hmmmmm....free my you know what!!! I get them already, so am still down two major channels.

My main question now is how come Direct TV can afford Lifetime/LMN, yet Dish can't? I am mad at them both. Ought to stick an antenna on my roof and go with that, because most the programming on sat. TV sucks anyway!

 

[Stargazer]

Lifetime definitely wouldnt want to just let Dish Network have it for free or for too much of a discount because that would hurt their contract deal with the other providers when it comes time for renewal through them.

 

[cablewithaview]

Lifetime definitely wouldnt want to just let Dish Network have it for free or for too much of a discount because that would hurt their contract deal with the other providers when it comes time for renewal through them.

You would be correct.

 

[Purogamer]

How do you know they won't ask D* for a similar increase? Not everyone's contract ends at the same time, D*'s could be up in 2 months and then what would you do, you're locked into a contract...might be something to ask on the phone though I doubt they'd know...

BTW, charlie said they did 318 contracts successfully last year...WTF are they working on??

 

[cablewithaview]

BTW, charlie said they did 318 contracts successfully last year...WTF are they working on??

Well each channel renews every year, so he is working on that. Some (few) will actually give you up to three years on contracts at a lower rate however.

 

[GeorgeLV]

Lifetime's page is updated. They have an open letter to Charlie Egren posted now. http://www.lifetimetv.com/about/dish_openletter.html

In it they claim the increase they sought was only 4 cents.

 

[CPanther95]

They also say:

we sought a very modest increase of 4 cents per month per customer, with further increases — still totaling far less than 76% — spread over several years.

What exactly is "far less than" mean - and why not just say, since they mentioned the $0.04 starting increase?

 

[gdarwin]

I yawned through the whole letter...

 

[tbenning]

While 4 cents seems unimportant, it still adds up to a lot of money when talking about the number of customers involved...

Figure for Year 1 only:
.04 x 12,000,000 customers x 12 months = $5,760,000.00 increase.

If the Modest increase for year 2 was only 4 cents as well (it's a guess, but Charlie's graphs all show a linear increase...) also including a modest increase in subscribers that would mean:
.08 x 13,500,000 customers x 12 months = $12,960,000.00 increase.

For Year 3 again assuming only 4 cent increase...
.12 x 15,000,000 customers x 12 months = $21,600,000.00 increase.

So, after 3 years the total increase would be $40,320,000.00. This is on top of what has already been paid. Assuming this is "far less" than a 76% increase we can only then assume that these 2 channels would cost DISH far more than $100,000,000.00 over the next 3 years.

I find it strange that LifeTime repeatedly makes claims of DISH lying, but still does not come forward with enough facts to prove it. LifeTime still is claiming "DISH has unilaterally chosen to pull Lifetime and Lifetime Movie Network." The presented evidence (from both sides) shows that Lifetime refused the extension until the last minute on Sunday night(New years eve) after the channels were already pulled and likely nobody with any authority was actually working.

 

[CPanther95]

They also make no mention of any LRW demands which likely account for the difference between "far less than" and the 76% Charlie quoted.

 

[rad]

TBENNING, so Lifetime is raising their prices, everyone does it. E* raised their prices, so shouldn't some of that go to pay for programming provider increases or just go into Charlies pocket? Using $2.00 as an example of the increase in the monthly E* bill each year for the next three years:

$2.00 x 12,000,000 x 12 = $288,000,000

$2.00 x 13,500,000 x 12 = $324,000,000

$2.00 x 15,000,000 x 12 = $360,000,000

So over three years that's $972,000,000 in E* price increases. So using your numbers that leaves E* $931,680,000 to spend on increased cost from other content providers, assuming that E* raises their prices only $2.00 for each of the next three years.

 

[CPanther95]

Fortunately, Lifetime has absolutely no right to decide how E* allocates its revenue.

Plus, $0.04 annually doesn't come close to what Lifetime was asking for. If Charlie thinks he can get more value from another channel(s), he's free to do so.

 

[cablewithaview]

Fortunately, Lifetime has absolutely no right to decide how E* allocates its revenue.
Plus, $0.04 annually doesn't come close to what Lifetime was asking for. If Charlie thinks he can get more value from another channel(s), he's free to do so.

They do have the right to give them a cheaper rate to put it where they want it.

 

[rad]

Plus, $0.04 annually doesn't come close to what Lifetime was asking for.

The open letter says $0.04 per subscriber per month, not annually.

 

[CPanther95]

Sorry, I should have said the annual increase is in excess of the $0.04 per month after the first year.

 

[rtt2]

January 10, 2006
Hearst-Agyle, EchoStar Strike Carriage Agreement
By Jay Sherman
Hearst-Argyle Television said Monday that it reached a new retransmission consent agreement with satellite operator EchoStar Communications, a move that appears to signal that the broadcaster moved ahead with a deal with EchoStar even as Lifetime and EchoStar battle over a new carriage agreement.

In carriage agreements with pay TV distributors, Hearst-Argyle and Lifetime have customarily negotiated new carriage agreements together, leveraging on both operations' presence in the broadcast and cable worlds. However, Lifetime and EchoStar are at odds over a new carriage agreement, which came to a head at the end of the year, when EchoStar removed Lifetime and Lifetime Movies from its lineup.

In a filing submitted to the Securities and Exchange Commission Friday, Hearst-Argyle said that the deal it struck with EchoStar began Jan. 1 and expires Nov. 30, 2008, and features cash consideration from EchoStar, though the company refused to disclose how much beyond saying the amount will be less than 1.5 percent of 2006 estimated revenue.

 

[Stargazer]

Dang, 4 cents per month? That is quite a bit! 48 cents per year over three years is $1.44 increase. It all adds up. If they are getting $2.00 a month then $1.44 increase would be a 72% increase in rates from $2.00 to $3.44 per month. Thats pretty steep. Heck $2.00 a month is pretty steep.

So does this mean when a channel's ratings drop that Dish can get the channel cheaper or do they expect to have to pay at least the same amount as they did last time even if they had a temporary ratings increase? They could have the ratings increased for a few years then drop back down after the increase was paid.

 

[tbenning]

TBENNING, so Lifetime is raising their prices, everyone does it. E* raised their prices, so shouldn't some of that go to pay for programming provider increases or just go into Charlies pocket? Using $2.00 as an example of the increase in the monthly E* bill each year for the next three years:
$2.00 x 12,000,000 x 12 = $288,000,000
$2.00 x 13,500,000 x 12 = $324,000,000
$2.00 x 15,000,000 x 12 = $360,000,000
So over three years that's $972,000,000 in E* price increases. So using your numbers that leaves E* $931,680,000 to spend on increased cost from other content providers, assuming that E* raises their prices only $2.00 for each of the next three years.

Rad,
There are 2 problems with this argument.
1) it assumes that all of the money DISH is asking for the price increase is going to programming costs. I have to guess that their other expenses are increasing too. Things like wages, benefits, Workman's comp insurance, electricity, Bandwidth costs etc are all increasing.

2) It also neglects that this is only 2 of many channels. Let's assume the average customer gets 120 channels...I would guess that it is actually higher than that since many of us get well over 200. If each channel asked for the same type of "modest" increase over the next 3 years of 2 cents per channel per month, then we'd have:
.02 x 120 channels x 12 months x 12,000,000 customers = $345,600,000.00
.04 x 120 channels x 12 months x 13,500,000 customers = $777,600,000.00
.06 x 120 channels x 12 months x 15,000,000 customers = $1,296,000,000.00
So, adding the 3 years together we'd see an ADDED programming cost to dish of $2,419,200,000.00 ($2.4 Billion) This added cost would not be covered by the $2.00 price increase in your example. DISH would be out over $1.4 Billion in programming costs even after that $2 rate increase. So, I guess it is safe to say that this 2 cents per channel per month increase is considerably higher than dish could afford to offer all of it's channels.

We all know that not all channels seek this type of increase. But I think it is easy to believe Charlie when he says DISH's programming costs have risen over 6% and DISH's rates are only going up about 4%.

 

[tbenning]

Dang, 4 cents per month? That is quite a bit! 48 cents per year over three years is $1.44 increase. It all adds up. If they are getting $2.00 a month then $1.44 increase would be a 72% increase in rates from $2.00 to $3.44 per month. Thats pretty steep. Heck $2.00 a month is pretty steep.
So does this mean when a channel's ratings drop that Dish can get the channel cheaper or do they expect to have to pay at least the same amount as they did last time even if they had a temporary ratings increase? They could have the ratings increased for a few years then drop back down after the increase was paid.

Jacob,
Your math is only accurate for the first year (48 cents). They are asking for addition increases in years 2 and again in year 3. If it were only 4 cents for each year then it'd be .04 x 12 months + .08 x 12 months + .12 x 12 months = $2.88 increase per customer over 3 years.

 

[Stargazer]

Dang, and I thought what I was calculating was bad. No wonder why Dish Network told them to shove it, I would have too. Thats pretty bad!!! Is that $2.88 Dish Network's cost? If they had to resell the channel then they would have to get what - $3.50 to $4.00 at least to make it a decent profit? Even raising it without making any additional profit would be a hefty increase.