Hearst-Argyle Tweaks EchoStar Carriage Pact

Feb 1, 2006  •  Post A Comment

A month after striking an affiliation agreement with EchoStar Communications, Hearst-Argyle Television said Wednesday it has revised its carriage agreement with the satellite operator due to a new affiliation agreement between EchoStar and Lifetime Entertainment Services. Hearst-Argyle will generate more revenue from the deal as a result.

For years Hearst-Argyle has helped Lifetime obtain carriage and distribution for its three main cable networks-Lifetime, Lifetime Movie Network and Lifetime Real Women-with Lifetime acting as Hearst-Argyle’s negotiation agent with certain distributors, including EchoStar.

However, amid a fight over programming fees between EchoStar and Lifetime that ended with Lifetime and Lifetime Movie Network being removed from EchoStar’s lineup over New Year’s weekend, Hearst-Argyle struck its own carriage agreement with the satellite operator at the end of last year.

That agreement changed Wednesday when EchoStar and Lifetime reached a new affiliation agreement, returning Lifetime and Lifetime Movie Network to EchoStar’s lineup. As part of that pact, Hearst-Argyle and EchoStar agreed to revoke the previous agreement and replace it with the pact reached between Lifetime and EchoStar, which also covers Hearst-Argyle’s stations.

Revenue generated from the new agreement will be less than 2.5 percent of the company’s estimated net revenue for 2006, Hearst-Argyle stated in a filing with the Securities and Exchange Commission. Based on First Call’s consensus revenue estimate of $774 million, that number will be no more than $19.4 million.

The company said the new pact includes “consideration relating to numerous agreements with multichannel video programming distributors,” not just EchoStar. The previous agreement Hearst-Argyle had with EchoStar was projected to generate less than 1.75 percent of the 2006 total revenue estimate, with EchoStar being the only source of the revenue.

Hearst-Argyle is majority owned by Hearst Corp., which also owns a 50 percent stake in Lifetime.

In conjunction with the new carriage agreement, Hearst-Argyle and Lifetime will revise the terms of their alliance, with Hearst-Argyle receiving compensation from Lifetime. Previously, EchoStar was paying Hearst-Argyle directly.