As predicted, at 3am Tues, the border skirmish between EchoStar [DISH] and Viacom escalated into all-out war as the satellite service yanked broadcast signals of local CBS O&O’s, including those in the NY and LA markets. Viacom cable nets were also bumped, affecting all 9.5mln DBS subs. While EchoStar steered blame squarely toward Viacom, analysts say Charlie Ergen & co may not be able to weather a lengthy standoff. "There is clearly an increased risk of churn for DISH in 1Q’04-2Q’04, especially if a new agreement is not secured before the lucrative NCAA basketball tournament," UBS speculated Tues. (CBS evp Martin Franks seconded that, telling a midday conference call, "March Madness came 10 days early this year.") Moreover, Viacom said it couldn’t figure out EchoStar’s math. "They recently hiked their subscribers’ bills by as much as $3/month. Yet they are unwilling to consider paying an additional 6 cents/month per sub for the right to carry our channels." While the dispute isn’t likely to end overnight, what’s certain is Ergen’s crew is guaranteed to lose a "meaningful number" of subs if things drag on too long. DirecTV is waiting to snap up disenchanted DISHers, and local cable ops can also be expected to strike quickly. — In place of Viacom content Tues, DISH ran an on-screen graphic condemning the media co’s "unreasonable" rates, while on its info barker channel, Ergen appeared on a looped message, assuring subs they’d get a $1 credit while the channels remain off-air. In a special edition of "Charlie Chat" last night, Ergen fielded queries from concerned subs but held out hope that an accord might be reached. (He’s especially unhappy about the possibility of missing the NCAAs.) He concluded the chat by telling his audience, "Sometimes relationships get worse before they get better."

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