UPDATE 1-Gannett extends negotiation deadline with Dish

(Adds analyst comments, background)

Oct 8 (Reuters) - Gannett Co Inc and Dish Network Corp have agreed to extend by several hours their deadline to reach a deal over the satellite TV provider's commercial-skipping digital video recorder.

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

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

If the contract expires without renewal, Dish customers in 19 cities including Atlanta, Washington D.C., Denver, Minneapolis, Cleveland, Phoenix and Sacramento would lose access to various ABC, CBS and NBC-affiliated stations owned by Gannett.

Dish introduced the Hopper earlier this year with a function that allows subscribers to skip commercials automatically when they are watching recorded shows.

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

While Autohopper can currently only skip ads the day after airing, Dish can exert further pressure on broadcasters by threatening to skip ads for recorded broadcast shows the same day, 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 18 percent of C3 viewing, Wible said. C3 is a measure of the commercials watched both live and during the first three days of airing and is the metric under which much of the primetime advertising is bought and sold.

Gannett is asking for a 300 percent increase in broadcasting fees, while Dish has offered 200 percent, the cable service provider said on Friday.

Dish maintains that the Hopper is something consumers desperately want.

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

Gannett shares closed at $18.41 on Friday on the New York Stock Exchange, while those of Dish closed at $32.12 on the Nasdaq.

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

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