Fox News' pop-up site has been modified to thank supporters. Source: 21st Century Fox

On Thursday night, DISH Network (NASDAQ:DISH) viewers discovered that two 21st Century Fox (NASDAQ:FOXA) networks -- Fox News and Fox Business -- had been restored to their pay-TV channel lineups following a blackout that stretched nearly a month while the two companies battled over content pricing in a new contract. In a joint statement, Tim Carry, Fox News and Fox Business executive vice president of distribution, and Warren Schlichting, DISH senior vice president of programming, thanked viewers for "patience throughout this process."

Along with the channels comes a new multiyear agreement, so Fox News and Fox Business fans don't have to worry about future blackouts for some time. The terms of the deal weren't disclosed -- as is normal in network negotiations -- but the The Wall Street Journal cited people "familiar with the matter" as saying DISH is now paying 50% more for Fox News -- an increase from $1 per subscriber per month (per SNL Kagan) under the old contract to $1.50 per subscriber monthly under this new contract.

For those following the pay-TV industry closely, this was perhaps a case study of the power of content versus delivery. And if the above figures are correct, it is entirely possible DISH received a better deal than what was initially offered. 

Was Dish close to doubling rates?
On a pop-up site addressing the dispute, DISH founder Charlie Ergen offered a detailed reasoning for the company's dispute with Fox. On a video that has since been removed from the website, Ergen hinted toward agreement on a full doubling of the rate [emphasis added]:

But in this dispute, Fox was demanding a large increase in rates that would have doubled the amount Dish pays for the channel. Now these new rates were somewhat justified because Fox News continues to be a leading satellite news channel.

Both sides came very close to an agreement on new rates. However, during the negotiations, Fox demanded a surcharge that would have tripled the rates on an unrelated, less popular channel.

If DISH was prepared to nearly double rates before the contract dispute begins, but ultimately only signed off on a 50% increase, this points to a strengthened negotiation hand during the blackout period.

While many are focused on the amount of the increase -- and to be fair, a 50% fee increase is large for any channel -- the dispute's winner was whichever company improved its negotiating position during this blackout period. Because in the end, the contract was already due for a sizable bump anyway.

Perhaps content isn't truly king...
Many pay-TV followers -- including myself -- thought Fox would strengthen its hand during the blackout. But judging from Nielsen ratings, it actually fared poorly after the channels were removed from DISH. Fox News viewership dropped 12% year over year during the week ended Dec. 28 -- the network's first week off DISH -- and that viewership decline accelerated to 21.4% over the period from Dec. 20 to Jan. 7 .

While weekly viewership can be noisy from week to week, that 21% plunge against the preceding year's ratings (eliminating seasonality) might have been enough to bring it back to the negotiation table.

At some point advertisers would ask for lower costs if those Nielsen figures don't improve. While the entire ratings drop is probably not connected to DISH, which controls roughly 13% of the pay-TV market, reclaiming DISH's viewers could be a quick way to counter this trend.

Dish suffered as well, just apparently not as much as Fox
DISH also did not fare well during the blackout. Fox's Carry estimated the pay-TV company lost 90,000 subscribers (though that would be less than 1% of DISH's 14 million subscribers).

Of course, Dish doesn’t want to lose any subscribers, and the act of leaving a pay-TV provider is more laborious—and slower—than Fox’s stations being removed from Dish, meaning the exodus could have just begun. However, when considering Dish’s estimated losses versus Fox News’ confirmed viewership drop, it leads to an environment where Dish could be more patient than Fox. And let’s not forget this 90,000 figure is merely an estimate and is unconfirmed.

Fox also scored other concessions, Fox Business is now beside Fox News on DISH's channel lineup, which could drive viewership away from CNBC to the business channel.

Conversely, the unidentified channel that Ergen initially blamed for the impasse -- later reported to be Fox Sports 1 -- reportedly wasn't included in the negotiation. That would be a win for DISH Network if Ergen's claim Fox wanted to triple the channel fee was factually accurate.

A la carte would have prevented this dispute
In the end, a la carte pay-TV would have prevented this dispute: Fox News and Fox Business could let the open market decide their value and let DISH deliver the stations and attach its own profit margin. Consumers would have ultimate choice over their pay-TV bills and pay only for content they consume.

Unfortunately for pay-TV subscribers, both DISH and Fox fare better under the current business model than under an a la carte model. Pay-TV customers should prepare for higher subscription TV bills as exploding content costs from all channels -- not just Fox's -- are passed to the end consumer.