CORRECTED-UPDATE 1-Dish drops AMC Networks as contract expires
(Corrects at bottom that AMC has sued Dish, not the reverse)
* Dish subscribers lose "Breaking Bad," other AMC programs
* Satellite TV provider and network in dispute over fees
* AMC reaches agreement with AT&T's U-verse (Adds AMC's settlement with AT&T)
By Liana B. Baker
July 1 (Reuters) - AMC Networks, which carries "Breaking Bad," "The Walking Dead," "Mad Men" and other popular television shows, was removed from Dish Network early Sunday after its contract with the satellite TV company expired without a new agreement.
Dish, the second-largest satellite TV provider behind DirectTV, said i t dropped New York-based AMC because it was charging fees that were too high for the low-rated channel.
AMC said in a press release that Dish has refused to discuss rates and could not have dropped the satellite company because of low ratings. "The Walking Dead" is the highest-rated scripted drama on cable, it said.
If Dish and AMC fail to strike a deal soon, Dish subscribers may miss the July 15, fifth-season debut of "Breaking Bad," a drama about a high-school teacher turned drug dealer.
Separately, Dish competitor AT&T said it reached an agreement on Sunday with AMC to continue delivering AMC channels to subscribers of U-verse TV. The contract between AT&T and AMC expired on June 30, but AMC channels were never dropped from U-verse.
Dish Network has 14 million customers. AT&T's U-verse TV service has about 4 million customers in the United States.
Dish has said that big rate increases are not merited, in part because many of AMC's programs are available on the Internet.
As AMC - formerly known as American Movie Classics - has evolved from a backwater cable channel for old movies to a provider of premium TV shows, cable and satellite operators have braced themselves for higher subscriber fees.
AMC executives have said they want to triple the fees charged to carriers to 75 cents per subscriber over the next four to five years. It now charges 26 cents per subscriber per month, more than the History Channel and ABC Family, according to research by SNL Kagan.
Morningstar analyst Michael Corty, speaking before the Sunday morning blackout, said he expects a programming fight to last at least a few weeks, although pressure on DISH to reach an agreement may build as the "Breaking Bad" season premiere nears.
Dish said it will replace AMC Networks' channels, which include AMC, IFC, Sundance Channel and WE tv, with HDNet Movies, Style and HDNet.
Dish Chairman Charlie Ergen has been outspoken about fighting escalating fees from cable networks for their programming, Morningstar's Corty said, and may be willing to stop carrying the channels for an extended period. AMC is much more vulnerable to blackout threats from program providers than larger companies with higher-rated cable networks such as Disney , which owns sports network ESPN, and Viacom, which owns MTV, the analyst said.
"Ergen has been the most vocal among the distributors about pushing back on those programming increases and this is one time where it's easier for them to take a stand," Corty said.
AMC, along with its former parent company Cablevision , has also sued Dish for $2.5 billion in damages alleging improper termination of a 15-year contract with AMC unit called VOOM HD.
"Dish customers have lost some of their favorite shows because of an unrelated lawsuit which has nothing at all to do with our programming," AMC said in a prepared statement.
A spokesman for DISH did not respond to calls for a comment on Sunday. (Reporting By Liana B. Baker; Editing by Jed Horowitz and Maureen Bavdek)
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