• by Wayne Friedman , August 14, 2015

Following media stocks' sharp declines a week ago, Viacom on Friday witnessed another sharp drop -- due to concerns over a big pay TV provider, Dish Network, possibly dropping the cable group’s networks from its lineup.

Viacom’s stock on Friday closed down 4.6% to $43.66. A report from Todd Juenger, senior media analyst at Bernstein Research, suggested that if a Dish Network deal isn’t renewed, the stock could drop another eye-opening 20%.

Juenger writes: “The Dish renewal is a very binary event. If Dish renews, [Viacom’s] stock will go up. If Dish does not renew, [Viacom’s] stock will go down (a lot).” He estimates with a Viacom renewal, the stock will climb to $51; if not, it will sink to $28. He says there is a 60-40 chance that Dish will renew.

Juenger says Viacom is at risk because its carriage fees are more expensive for pay TV providers versus other large cable networks groups, and “with the fastest declining audiences and relevance.” Viacom networks include MTV, Comedy Central, Spike, and Nickelodeon.

While many pay TV providers typically can have rough renewal carriage negotiations with large TV network groups, those providers eventually renew deals -- even after some long, testy blackout periods.

But Juenger says that in a new TV environment, Dish may need to pursue being a “value” provider -- one with lower programming costs. Dish, which has some 14 million U.S. TV subscribers, began offering an inexpensive over-the-top (OTT) “skinny” digitally-delivered bundle of TV networks at around $20 a month earlier this year.

Viacom was among many media companies that were hit with sharply declining stock prices a week ago -- as much as 9% to 12% and more. That was due to concerns of TV consumer “cord-cutting” and “cord-shaving” of traditional high-priced pay TV packages that can run $80 to $100 a month.