UPDATE 1-Gannett extends negotiation deadline with Dish

(Adds analyst comments, background)

Oct 8 (Reuters) - Gannett Co Inc and Dish NetworkCorp have agreed to extend by several hours theirdeadline to reach a deal over the satellite TV provider'scommercial-skipping digital video recorder.

Dish said on Friday that the broadcasting arm of newspaperpublisher Gannett had threatened to stop broadcasting on itsplatform if it did not block the commercial-skipping feature onits DVR, the Hopper, or agree to pay massive penalties.

Gannett had earlier set a midnight, Oct. 7 deadline fornegotiations with Dish and said that an agreement was possible.

If the contract expires without renewal, Dish customers in19 cities including Atlanta, Washington D.C., Denver,Minneapolis, Cleveland, Phoenix and Sacramento would lose accessto various ABC, CBS and NBC-affiliated stations owned byGannett.

Dish introduced the Hopper earlier this year with a functionthat allows subscribers to skip commercials automatically whenthey are watching recorded shows.

In August, Fox Broadcasting Co asked a court to put a stopto two features on the new DVR that let consumers skipcommercials because they were hurting the TV network's business.

While Autohopper can currently only skip ads the day afterairing, Dish can exert further pressure on broadcasters bythreatening to skip ads for recorded broadcast shows the sameday, which would destroy ad revenue for broadcast stations,Janney Capital Markets analyst Tony Wible said in a note.

The ads that Hopper can skip currently represent only 18percent of C3 viewing, Wible said. C3 is a measure of thecommercials watched both live and during the first three days ofairing and is the metric under which much of the primetimeadvertising is bought and sold.

Gannett is asking for a 300 percent increase in broadcastingfees, while Dish has offered 200 percent, the cable serviceprovider said on Friday.

Dish maintains that the Hopper is something consumersdesperately want.

But CBS and fellow broadcasters -- Disney's ABC,Comcast's NBC, and News Corp's FOX -- arguethat Dish, led by chairman Charles Ergen, is undermining thenetworks' key source of revenue: advertising.

Gannett shares closed at $18.41 on Friday on the New YorkStock Exchange, while those of Dish closed at $32.12 on theNasdaq.

(Reporting by Neha Alawadhi and Sruthi Ramakrishnan inBangalore; Editing by Louise Heavens and Sreejiraj Eluvangal)

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