AT&T Says AMC Networks Seeking 'Excessive' Rate Increase

06/28/2012| 01:33pm US/Eastern

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--AT&T still negotiating to renew its U-verse contract with AMC Networks

--AT&T says AMC is asking AT&T to pay nearly double what other competitors pay

--Dish isn't expected to renew its AMC contract because of price

(Updates with context on Dish lawsuit in 10th paragraph)

 
   By Victoria Stilwell 
 

AT&T Inc. (>> AT&T Inc.) is still negotiating to renew its U-verse TV contract with AMC Networks Inc. (>> AMC Networks Inc), saying AMC Networks is seeking an "excessive" rate increase in overall fees.

AT&T said the rates AMC Networks is seeking are disproportionate compared with the network's viewership on its channels. AT&T said it believes AMC Networks is asking it to pay nearly double what other competitors pay, including a smaller-sized competitor.

"We don't think that's reasonable, especially in these economic times, and we will continue to work toward a fair deal," AT&T said in a statement.

An AMC Networks countered AT&T in a statement, saying it has not reached an agreement that "adequately reflects the popularity of our programming and AMC's position as a top tier network."

"We hope AT&T will recognize this and quickly reach a fair agreement with us, so their viewers don't lose out," AMC Networks said.

AT&T's U-verse delivers internet, TV and phone services, and its TV service alone has about 4 million subscribers. AT&T pays AMC Networks a fee to carry channels including AMC, Independent Film Channel and WE tv.

AMC airs well-known dramas such as "Mad Men," "Breaking Bad" and "The Walking Dead."

The contract is set to expire June 30.

Dish Network Corp. (>> DISH Network Corp.) in May said it would drop all of AMC Network's cable channels, citing the channels' high costs "compared to their low viewership." Dish said the programming on AMC was available to its customers through other media outlets such as Amazon.com Inc. (>> Amazon.com, Inc.), Apple Inc.'s (>> Apple Inc.) iTunes and Netflix Inc. (NFLX).

Dish's contract with AMC Networks also expires June 30. An AMC Networks spokeswoman said because of a separate lawsuit, there have been no rate negotiations or proposals with Dish and the network expects Dish to drop its channels this weekend.

Dish's move and AT&T's negotiations highlight increasing tensions in the television industry as pay-TV distributors balk at the rising cost of programming. Disputes over renewal terms for channels have become common. Adding to the tensions is the practice of popular channels being bundled with less popular channels owned by the same company.

Shares of AT&T slipped 0.1% to $35.16 in recent trading, while shares of AMC Networks dropped 4.1% to $35.05. AT&T stock is up 16% so far this year, while AMC Networks is down 7% in the same period.

Write to Victoria Stilwell at Victoria.Stilwell@dowjones.com

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