DISH DISH Network Corporation

By Keach Hagey and Shalini Ramachandran 

Despite months of worries among Viacom investors and warnings of a potential blackout that came down to the wire, Viacom Inc. and Dish Network Corp. renewed their carriage agreement Thursday without any service interruption, sending Viacom's stock soaring more than 12% in late afternoon trading.

Viacom is set to receive a mid-single-digit percentage increase in its affiliate fees from Dish for each year of the five-year contract, according to people familiar with the matter. Terms of the deal, reached after the latest contract extension expired Wednesday night, weren't publicly disclosed.

All 18 of the Viacom channels that had previously been carried by Dish's traditional service will continue to be carried, while a selection of them -- including MTV, Comedy Central and BET -- will be carried for the first time by Dish's Sling TV streaming service.

The fee increase will position Viacom to receive mid-single-digit affiliate fee revenue increases across all of its major distribution partners beginning in 2017, the people familiar with the matter said. In February, Viacom offered guidance that for fiscal year 2016, which ends in September, affiliate fee growth would be in the low to mid single-digit range.

"We believe that this agreement remains consistent with Viacom's guidance for [mid-single-digit] affiliate pricing increases, suggesting the bear thesis of a price rollback is unfounded," wrote Jefferies analyst John Janedis on Thursday.

The deal removes one of the clouds hanging over Viacom Executive Chairman and Chief Executive Philippe Dauman. The pay-TV business faces increasing pressure because of rising content costs and the proliferation of choices for consumers beyond the bundle.

Viacom had been viewed by some analysts as especially vulnerable to becoming one of the first major programmers to have to make significant readjustments to the pay-TV bundle. Its channels' ratings had fallen markedly since 2009, the last time it signed a distribution deal with Dish, and Dish Chief Executive Charlie Ergen had complained loudly about both its ratings woes and the availability of its content on digital platforms.

Several analysts expected Dish's leverage to be so strong that Viacom would have to accept a reduction in affiliate fees or else risk losing access to Dish's 14 million subscribers. Agreeing to a reduction in fees would have been a potentially cataclysmic event for Viacom, given that it has "most favored nation" clauses with major distributors like Comcast, who would then have the right to demand those lower fees for itself.

In the end, though, the normal state of affairs in the pay-TV industry seemed to prevail, with the bundle remaining intact. On Wednesday, a Viacom spokesman said that so far this year, "our networks represent nearly one fifth of cable viewership on Dish, which gives Dish enormous incentive to renew our agreement."

In their announcement of the deal, both Viacom and Dish CEOs alluded to the companies' long history together.

"Dish has historically been and remains an important partner for Viacom, and as part of our commitment to entertain audiences wherever they are, we are pleased to offer select Viacom networks as part of Dish's Sling TV product," Mr. Dauman said in a statement.

Mr. Ergen echoed him: "This creative, bold and consumer-friendly approach extends a nearly 20-year-old relationship."

Dish's stock was up 1.7% in late afternoon trading.

Write to Keach Hagey at keach.hagey@wsj.com and Shalini Ramachandran at shalini.ramachandran@wsj.com

(END) Dow Jones Newswires

April 21, 2016 16:14 ET (20:14 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.