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Disney and Dish Wrangle Not Over Broadcast Fees, but the Future of TV

A sweeping distribution deal between television giants, the Walt Disney Company and Dish Network, expired more than a month ago, and there is still no new deal in sight.

What is taking so long? Not any disagreement about the billions of dollars that Dish will pay Disney for its programming over the life of the next contract. The two sides agreed about the money a while ago. The squabbling is over something more abstract: digital rights — or to put it another way, control of the future.

Disney would like Dish to quash the Hopper, a digital video recorder that can automatically skip ads, say on Disney-owned ABC’s prime time shows. Dish would like Disney to give it permission to stream shows in new ways. Both companies, and all of their competitors, are trying to protect themselves in a fast-changing industry.

Yet consumers still assume that when media companies slug it out, as Time Warner Cable and CBS did in public this summer, it must be all about the money. Of course money always matters, but often, as in the Dish-Disney negotiations, which are steadily advancing in private, the bigger sticking points involve digital rights.

“These battles are becoming so much more complicated than they used to be,” said Richard Greenfield, a media analyst for BTIG.

At the same time, the industrywide plan to let paying subscribers log onto websites and watch television on laptop computers, tablets and phones, sometimes known as “TV Everywhere,” has not made nearly as much progress as its proponents would like. Both sides, the Disneys that produce programming and the Dish Networks that deliver it, say they are working on behalf of subscribers to make live and on-demand television more readily accessible. But conflicts keep cropping up, sometimes leading to programming blackouts.

“Consumers are demanding, more and more, that they be enabled to watch whatever they want, wherever they want, whenever they want,” said Michael Willner, chief executive of Penthera Partners, who ran the cable operator Insight Communications until it was sold to Time Warner Cable last year. “The question on the table today is whether consumers are getting those rights with their current cable or satellite subscriptions or will they have to pay for them separately.”

Programmers that want to take advantage of new revenue sources, as CBS has by striking lucrative streaming deals with Netflix, Amazon and Hulu, are angering traditional distributors like Time Warner Cable that fear subscribers will cancel cable packages in favor of streaming.

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Dish Network is said to seek to distribute Disney properties like ESPN in channel bundles streamed over the Internet.Credit...Ted S. Warren/Associated Press

During the August blackout of CBS, both companies acknowledged that digital rights were an area of contention, but once the blackout ended, neither side would say how the issues were resolved. (Time Warner Cable took a customer relations hit — its quarterly earnings report last week revealed that it lost about 300,000 of its 11.7 million television subscribers over the summer, partly because of the blackout.)

While programmers eye Netflix revenue, some distributors want their contracts to be future-proofed. The ABC-affiliated station in Providence, R.I., WLNE, has been blacked out in DirecTV homes since the beginning of October partly because of what the station called DirecTV’s demand to “distribute our signal over the Internet.” WLNE says it cannot give DirecTV those rights because it does not have permission from the owners of the programs it broadcasts.

Similarly, two stations in northern New York and one station in Minnesota were blacked out in Dish homes for two weeks in October because of what the station owner, United Communications, said was “consumer technology language” in the contract Dish proposed, possibly involving the Hopper DVR. “It’s a new day,” said Kenneth L. Dowdell, a vice president of United, during the blackout. “There are so many questions about things other than money.”

Mr. Dowdell said he worried that “seemingly innocuous pieces of contracts can really come back and be a problem in the future.” On Oct. 26, the blackout ended; he said he could not comment on how the issue was sorted out.

Dish, likewise, declined to comment on the subject of digital rights. But the company’s owner, Charlie Ergen, has been among the industry’s most aggressive in exploring new modes of distribution and new services for subscribers. Mr. Ergen has been interested for some time in possibly streaming a bundle of television channels via the Internet, a so-called “over the top” play, which would allow Dish or another one of his companies to reach homes without satellite dishes. Wireless phone companies and technology giants like Google are considering similar moves, which would require rights negotiations with programmers.

People with knowledge of Dish’s current negotiations with Disney, which are crucial because Disney controls ESPN as well as ABC, say that “over the top” streaming is being addressed. So is Dish’s promotion of the Hopper, which triggered lawsuits from outraged broadcasters when it was introduced last year. The people, who insisted on anonymity because the talks were confidential, said the monetary terms (how much to pay for ESPN, for example) were mostly settled before the previous deal expired on Sept. 30. Since then, the two companies have signed short-term extensions while working through what one person called “new world” issues.

An ABC spokesman declined to comment. Mr. Ergen said in a Bloomberg Television interview last week that the discussions would continue for “as long as it takes to get a deal that’s fair for Disney, fair for our consumers.”

Peter Liguori, chief executive of Tribune Company, which owns 23 local stations and is acquiring 19 more, said the television structure generally worked for all the companies involved today, and “it’s when people try to break out of the paradigm that the ecosystem can be fractured.”

“As a collective ecosystem, you should grow with the needs of your end user,” he said. “At a minimum all of us should keep up. At best, we should get ahead of it.”

A version of this article appears in print on  , Section B, Page 3 of the New York edition with the headline: Disney and Dish Wrangle Not Over Broadcast Fees, But the Future of TV. Order Reprints | Today’s Paper | Subscribe

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