ESPN Ordered to Pay Dish Network $4.86 Million for Breach of Contract

A jury verdict came after three weeks of trial and one day of jury deliberation in a case over a 2005 licensing agreement.

After a day of deliberation, a federal jury gave a mixed verdict in Dish Network's lawsuit against ESPN for allegedly breaching the terms of a 2005 licensing agreement. Dish has been awarded $4.86 million after prevailing on one of its four breach-of-contract claims.

Dish spent nearly three weeks in a New York federal court attempting to prove that ESPN had violated a "most favored nation" clause in an eight-year licensing agreement. The contractual provision entitled Dish to be given the opportunity of receiving equal treatment on subscriber rates and packaging conditions when ESPN gave Dish's competitors better deals.

Specifically, Dish accused ESPN of allowing Comcast to remove packaging requirements that allowed ESPN Classic to be distributed beyond its most widely-distributed tier; of allowing DirecTV, Verizon and Time Warner Cable to have lower subscription rates on ESPN Deportes; and allowing others a la carte rights on ESPNHD, ESPN Classic, ESPNU and ESPN2.

Additionally, Dish brought a fourth breach of contract claim against ESPN for granting Time Warner Cable the ability to distribute its networks on the Internet without imposing a subscription fee.

Dish had alleged that the damages added up to more than $150 million, but the jury said that a lot less was due in order to make the satellite distributor whole. Dish only won on the claim over ESPN Deportes. Under its original agreement, Dish was obligated to pay a monthly subscriber fee of 35-47 cents for ESPN Deportes between 2007 and 2013, but then TWC got a deal for 8-18 cents and Verizon got a deal for 3 cents.

At trial, Dish presented ESPN as being careless when it came to looking after its contractual obligations and not promptly making "MFN" offers when they were due. Dish also showcased internal ESPN e-mails that calculated how licensing negotiations with other MVPDs impacted the money that was owed to Dish and how to "finesse" the obligations for financial advantage.

On the witness stand, ESPN's executives denied that Dish was robbed of the benefit of making its 2005 agreement and made the case that calculating "MNF" offers was complicated and took time. The ESPN execs said that offers were eventually made to Dish and that the company was credited with the benefit retroactively.

Dish's current carriage deal with ESPN expires in September.

Dish was represented by lead lawyer Barry Ostrager. ESPN was represented by Diane Sullivan.

ESPN said in a statement, "We are gratified that the jury rejected all but one of Dish’s claims and all but $4.8 million of the more than $153 million in damages they were seeking.“

Read More... http://www.hollywoodreporter.com/thr-esq/espn-ordered-pay-dish-network-425347

Dish sues ESPN for $150M over alleged licensing terms

ESPN Accused in Dish Case of Giving Comcast Better Terms
Dish Network Corp. is headed to court seeking $150 million from Walt Disney Co.’s ESPN for allegedly breaching a contract by offering competitors including Comcast Corp. better licensing terms for sports programming.

Dish, the third largest pay-TV provider, sued ESPN in 2009 for violating a so-called most-favored-nation clause in their distribution agreement, which it said requires the sports network to offer Dish the same terms it offers a competitor. A jury trial is set to begin today in Manhattan federal court.

ESPN argued in a court filing that it eventually granted Dish the terms offered to competitors. U.S. District Judge John Koeltl denied a motion for judgment without a trial in April 2011, saying it was up to a jury to decide whether the terms were similar.

“All contracts are confidential and for most-favored- nation, it’s difficult to maintain compliance,” Aditi Bagchi, a professor of contract law at Fordham University Law School in New York, said in a phone interview. “Suing is a way to extract information. Dish can claim the contract’s been violated and force some information out of ESPN.”

TV distributors pay ESPN and other cable programmers fees based on ratings and the number of subscribers. According to the media research firm SNL Kagan, ESPN charges TV providers about $5.13 a month per subscriber on average, one of the highest rates in the industry.

DirecTV Deal
In court papers, Englewood, Colorado-based Dish listed various deals it said were offered only to competitors. Dish said ESPN allowed DirecTV, the second largest pay-TV provider and a rival in the satellite-TV business, to move the sports documentary network ESPN Classic to a less-populated tier of subscribers, which would result in lower payments. ESPN also let DirecTV pay a lower rate per subscriber for the Spanish-language network ESPN Deportes, Dish said.

Dish claimed that ESPN offered Comcast, the largest pay-TV company, the right to distribute the college sports network ESPNU to bars and taverns on better terms than it got.

Distribution Agreement
Dish and ESPN signed an eight-year distribution agreement in 2005. Dish said in its complaint that it learned from press releases and news reports in 2009 that ESPN had made deals with Comcast and DirecTV that “contain more favorable provisions than ESPN has given to Dish.” In June 2009, Dish sent a letter to ESPN demanding the same terms and claimed that ESPN failed to offer them.

Since the lawsuit was filed, Dish has said that ESPN also made more favorable agreements with the TV distributors Time Warner Cable Inc., Verizon Communications Inc. and AT&T Inc. None of Dish’s competitors are named as defendants in the suit.

ESPN is 80 percent owned by Burbank, California-based Disney and 20 percent by New York-based Hearst Corp.

The case is Dish Network LLC v. ESPN Inc., 09-06875, U.S. District Court, Southern District of New York (Manhattan).

Read More... http://www.bloomberg.com/news/2013-02-11/espn-accused-in-dish-case-of-giving-comcast-better-terms.html

New TV LAW 'STELA': Hollywood's Next Big Legislative Fight - various legal controversies over the future of television

An analyst suggests that the renewal of an obscure satellite TV law could command the attention of the major broadcasters, big pay-TV distributors and giant tech companies.

Although political gridlock provides cause for disbelief that big legislation concerning the media industry is imminent, there might be reason to think that next Wednesday will be the beginning of a furious lobbying campaign in the nation's capital.

The past year has featured various legal controversies over the future of television.

In particular, broadcasters have battled Dish Network over an ad-skipping DVR they believe is "a bootleg, commercial-free video-on-demand service" that's in alleged violation of their retrans agreements. In addition, broadcasters have gone to war against Aereo over TV signals picked up by antennae and then relayed to subscribers online. And then, there's been other disputes over broadcast TV signals distantly retransmitted by pay-TV distributors.

The skirmishes have taken place in courtrooms and around negotiating tables, but Washington D.C. lawmakers might soon be getting involved thanks to the expiration of an obscure law -- the Satellite Television Extension and Localism Act.

STELA provides statutory licenses that allow satellite TV companies to distantly retransmit broadcast signals to local subscribers who otherwise would be in the dark. Without the law, it's estimated that 1-to-1.5 million who don't live in broadcast areas would lose access to CBS, NBC, ABC and Fox. It's a law that needs to be renewed after five years, and the expiration date comes up in 2014.

On February 13, the House Communications Subcommittee is scheduled to hold a meeting on renewing STELA.

But according to Paul Gallant, an analyst at Guggenheim Securities who previously worked as a legal advisor to the FCC chairman, the pending legislation might be the impetus to go larger.

Gallant notes in a research report that at hearings last summer, "multiple members of Congress expressed unhappiness with signal blackouts during retrans disputes. That suggests Congress might use this satellite bill to ban signal blackouts and require arbitration to resolve pricing disputes."

That will be unsettling, he adds, for broadcasters like CBS, Sinclair, Gray, Hearst, LIN, Belo, Media General and Tribune. At the same time, companies he believes that would stand to benefit are Time Warner Cable, Charter, Cablevision, DirecTV and Dish.

Broadcasters certainly wouldn't want to undercut the deal-making leverage that comes with the prospect of blackouts, but in theory, there could be the possibility of bargaining for something else.

Last year, a federal judge denied the broadcasters' attempts to get an injunction that shut down Aereo. The 2nd Circuit Court of Appeals will imminently be issuing a ruling in the broadcasters' appeal.

"If broadcasters run into unfavorable court rulings in the next year, they may press Congress to require distributors like Aereo to pay for signals like cable/satellite do," writes Gallant.

Read More... http://www.hollywoodreporter.com/thr-esq/stela-hollywoods-next-big-legislative-419180