By WILLIAM LAUNDER
AMC Networks Inc.'s channels remained on the air for AT&T Inc.'s pay-TV subscribers after midnight Saturday, as the two parties pledged to continue negotiations over rate increases that threatened a blackout of hit shows like "Mad Men" and "The Walking Dead" for AT&T subscribers.
Meanwhile, AMC's namesake channel as well as its IFC and WE tv channels were dropped from Dish Network Corp.'s pay-TV service at midnight Saturday. Dish, which had already dropped AMC's Sundance channel, said earlier this week that it wouldn't renew its carriage contracts with AMC and would replace the channels with independent network HDNet.
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, who 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, given the generally low viewership of its channels. Dish reaches around 14 million subscribers, while AT&T has about four million.
Despite garnering a high-profile 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.
In a statement Sunday morning, AMC said it is "in ongoing discussions with AT&T about a new agreement and will update our viewers as soon as possible."
A spokeswoman for AT&T confirmed the negotiations and said AT&T customers could still access AMC channels.
Small TV-channel owners typically have less leverage to negotiate with distributors over the rates they charge than big media companies, which typically 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, which they have incurred at a time when their video subscriber businesses have already 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 ending 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
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