UPDATED with Dish response: Viacom CEO Philippe Dauman told investors that there might be “hiccups” in his carriage renewal talks with Dish Network — and he was right.

The entertainment company’s shares are down about 8% today after it began to warn Dish’s satellite customers that its carriage agreement expires tomorrow, but it “has not engaged in a serious way to reach an agreement for Viacom’s number one family of cable networks, including Nickelodeon, Comedy Central, VH1, MTV, BET, Spike, TV Land and CMT.”

Viacom calls this “par for the course for Dish” — adding that the programmer has “made every effort to negotiate a renewal…including granting multiple extensions.”

Dish Network logoAlthough Viacom says it offered Dish financial terms “as good as larger distributors,” the No. 2 satellite company “made demands that are designed to be impossible to meet in order to take our negotiations public and likely force our programming off the air.”

Viacom adds on a web page about the dispute that its channels are “a great value for Dish.” It also says that Dish is “the most competitively disadvantaged distributor in the country” with many customers who are “fleeing” to competitors.

Dish says it regrets that Viacom “has chosen to involve customers in a business negotiation when time remains to reach an agreement.”

Dauman’s company “unilaterally elected to terminate an indefinite contract extension” tomorrow. Dish adds that Viacom “is asking hundreds of millions of dollars in increases, despite the changing landscape that includes drastically reduced viewership of Viacom channels and wide availability of their content across multiple platforms, frustrating consumers who don’t want to pay twice for the same content. Dish will continue to negotiate in good faith to reach an agreement that works for both sides.”

Viacom has a lot at stake in the talks with Dish. The loss of its 13.9 million subscribers would sting.

It also would fuel the belief that Viacom’s channels, which have lost viewers over the last two years, are not worth the price it has been charging. Some small cable companies including Suddenlink and Cable One said that their bottom lines improved after dropping Viacom.

Viacom is seen as especially vulnerable among network providers. Only three of the 25 it offers — Nickelodeon, Nick At Nite, and TV Land —  are among the top 20 in daily audience, Guggenheim Securities’ Michael Morris notes. If distributors only carried Viacom channels that rank among the top 40, then it could lose $173 million a year in revenue.

But if Viacom agrees to charge a low rate to win Dish’s business, then it might have to do the same with other large distributors. Some have so-called Most Favored Nations deals guaranteeing that they pay the lowest price.

Cowen & Co’s Doug Creutz says that both sides have an incentive to make a deal,  and it’s common to hear threats and tough talk in contract negotiations. Besides, Viacom shares have lost so much value — they’re down nearly 48% over the last 12 months — that they probably wouldn’t fall much more if it settled for less than it wanted.

If Viacom and Dish can’t make a deal, though, then the stock could take a hit. It would “create a much higher probability of future negotiations ending badly for the company,” the analyst says. “We think the likelihood of this happening is small, but not zero.”

Dish CEO Charlie Ergen has spoken warmly about Viacom — one of Dish’s early supporters. But he also told investors in February that he was prepared to dig in his heels.

At a time when pay TV network ratings are declining, “programmers come in for a renewal and say they want a double digit rate increase, and we say you should get a double digit decline,” he said. The balance of power in negotiations “has shifted to the distribution people having more leverage than they had in the past.”