Are lights created by Dancing Lights spell one effect or many?

In a game I played recently our group encountered shadow drakes. What interests me is their Stigian Breath ability.

Stygian Breath (Su)
As a standard action, a shadow drake can exhale a ball of black liquid that explodes into a cloud of frigid black mist. This attack has a range of 60 feet and deals 2d6 points of cold damage (Reflex DC 12 half) to all creatures within a 5-foot-radius spread. The mist snuffs out light sources in the area effect, extinguishing nonmagical light sources and dispelling light spells of 1st level or lower[…]

With one use of this ability our DM dispelled my Dancing Lights, while, being "torch version", it didn’t fit into 5′ radius spread.

His reasoning was, the ability says it dispells a spell, not a light source.

I sayed, what gets dispelled is always an effect of the spell, not a spell, so it is important what number of lights fits into an area, created by Stigian Breath.

But then I realized, maybe all four lights are a single effect? Unlikely, but why not? We resumed play with all lights dispelled, but the question still stands.