AMC in Deal to Keep Channels on AT&T

By WILLIAM LAUNDER

AMC Networks Inc. and AT&T Inc. reached an agreement Sunday to keep AMC shows like "Mad Men" and "The Walking Dead" available for AT&T's pay-TV subscribers.

The agreement came hours after the companies said they were negotiating past a midnight deadline to reach a deal. Without a new agreement, AMC's namesake channel as well as its Sundance, IFC and WE TV channels could have been blacked out for AT&T's U-verse pay-TV subscribers.

Meanwhile, Dish Network Corp. dropped AMC's channels from its pay-TV service at midnight Saturday, after having previously dropped its Sundance channel. Dish said as recently as Friday that it wasn't renewing its contract with AMC because of high costs relative to the channels' viewership, and would replace them with independent network HDNet. AMC said it has never engaged in talks with Dish about a rate increase.

The tense relationship between AMC and the two distributors marks the latest example of continuing disputes over rate increases by TV-channel owners and their distributors, which have balked at paying higher carriage fees, especially for channels with relatively small audiences.

Dish and AT&T have previously complained that AMC wants to raise fees by too much, citing the generally low viewership of the channels. Dish reaches around 14 million subscribers, while AT&T has about four million.

AT&T, in a statement Sunday, said it had reached "a fair distribution agreement" with AMC, but the telecom company didn't disclose the terms of the deal. A spokeswoman for AMC confirmed the agreement.

Despite garnering a cult following with shows like "Mad Men," the AMC channel has averaged only 1.2 million prime-time viewers per night this season, well below that of rivals like Comcast Corp.'s USA channel, which drew an average of three million.

Small TV-channel owners typically have less leverage to negotiate with distributors over the rates they charge than big media companies, which frequently bundle low-rated channels with must-have programming like sports to ensure deals.

The distributors argue that their profit margins are getting squeezed by continually rising programming costs, at a time when their video subscriber businesses have shrunk because of increased competition and the soft economy.

In another recent example of a standoff over carriage fees, Madison Square Garden Co.'s channels were dropped for Time Warner Cable Inc. subscribers in a seven-week spat that ended in February. The companies reached a compromise on rate increases brokered by the New York attorney general.

Write to William Launder at william.launder@dowjones.com