Dish Network Still Has a Problem

Dish network
Dish network

Dish Network (DISH) -- and its subscribers -- dodged a bullet this week.

The country's second largest satellite television provider has secured a deal with Gannett (GCI) to continue broadcasting local television channels in some of its markets.

Gannett is best known as the parent company of USA Today, but the diversified media company also operates CBS, ABC, and NBC affiliates in 19 different cities.

The two sides were negotiating over carriage rights. If a compromise hadn't been reached on Monday, Dish Network subscribers in those 19 markets would have been blacked out of those seemingly "free" stations.

Score One for The Hopper

Terms of the renewal weren't made public, but Dish Network is on the record as offering to pay up for access. It was publicly complaining that Gannett wanted a 300% rate increase, even as it was offering to pay more than 200% above what it's presently paying.

Why did Gannett want so much out of the fledgling satellite television provider, which has a habit of playing hardball with cable networks? Well, if you've seen any of the Dish Network ads promoting "The Hopper," you know what the local affiliates are fearing.

Dish Network's new DVR allows subscribers to record six shows at the same time. But the real controversial magic comes in the device's ability to zap through commercials. Folks have been able to blaze through ads since the original TiVo (TIVO) hit the market, but Dish Network's Auto Hop technology flies through commercials automatically.

Fearing that its stations would be missing out on local ad revenue, Gannett wanted to make sure that it was being compensated in the form of substantially higher carriage fees.

Mad Men Walking

The four major networks are already locking horns with Dish Network in legal proceedings over Auto Hop, but there's plenty for Dish Network to worry about even before the lawyers slug it out.

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For starters, Dish Network still hasn't resolved its issue with AMC Networks' (AMCX) channels. Dish Network hasn't had access to AMC's channels for months, and that will become a sticking point later this week when the season premiere of Walking Dead airs -- everywhere but on Dish -- come Sunday.

Dish Network also continues to disappoint investors. Revenue and earnings fell well short of Wall Street expectations in its latest quarter, and Dish also continues to lose subscribers.

Dish Network is down to just 14 million subscribers at a time when even cable and satellite television providers are having a hard time keeping their customers around with a full slate of popular programming.

Dish Network needed this week's Gannett deal, but it's ultimately just one less problem that the company has to tackle.

Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article.