AMC's Settlement Returns Mad Men to Dish Networks
By Don Jeffrey - Oct 22, 2012 9:45 AM ET
AMC Networks Inc. (AMCX) and pay-TV provider Dish Network Corp. (DISH) said they reached a settlement in their lawsuit over AMC’s claim that Dish wrongfully terminated their contract for high-definition television programming.
The settlement includes a return of AMC’s networks and award-winning shows like “Mad Men” and “Breaking Bad” to Dish’s viewers starting yesterday, according to AMC’s statement. Dish had dropped AMC’s channels in July, saying that they didn’t deliver the ratings to justify their price.
“We are glad to have settled the case and reestablished our long-term relationships with AMC Networks and Cablevision,”Dave Shull, Dish’s senior vice president of Programming, said yesterday in a separate statement. “This multiyear deal delivers a fair value for both parties and includes digital expansion opportunities for AMC Networks’ programming.”
Dish Network Corp. will pay $700 million to Cablevision Systems Corp. and AMC Netowrks Inc. and enter into a long-term distribution agreement with AMC to carry AMC, IFC, Sundance Channel and WE tv, according to a statement. Photographer: Matthew Staver/Bloomberg
Cablevision Systems Corp. (CVC), AMC’s former owner, sued Dish in 2008 over a now-defunct HD satellite TV service called Voom, claiming Dish breached a 15-year contract to offer the service to its 14 million TV subscribers. AMC sought $2.4 billion in damages. A trial had been proceeding in New York State Supreme Court in Manhattan. State Supreme Court Justice Richard Lowe told the jury today that the case was settled.
“They have reached a settlement that both sides feel is equitable and beneficial,” Lowe said.
Dish will pay $700 million to Cablevision and AMC and enter into a long-term distribution agreement with AMC to carry AMC, IFC, Sundance Channel and WE tv, according to the companies.
The settlement also includes Dish receiving a portion of satellite video airwaves from Cablevision. As part of the agreement, Dish will receive multichannel video distribution and data service or MVDDS spectrum in 45 markets. Stefan Anninger, an analyst with Credit Suisse AG (CSGN) wrote in a note that while the spectrum transfer is interesting, “we are not sure it does much for Dish in the near term.”
AMC rose 2.3 percent to $46.59 while Dish climbed 1.6 percent to $36.03 at 9:35 a.m. New York time in Nasdaq Stock Market trading.
Cablevision claimed that it spent $103 million on Voom in 2006. Dish said that figure included corporate overhead expenses and that the contract stipulated the money must be spent on programming. The legal dispute was over the meaning of the contractual phrase “on the service” in relation to spending.
Cable provider Comcast Corp. (CMCSA) and DirecTV are the largest U.S. pay-TV companies. Englewood, Colorado-based Dish is the third largest U.S. pay-TV service.
Georgia Juvelis, a spokeswoman for New York-based AMC, and Kelly McAndrew, a Cablevision spokeswoman, said the companies had no additional comment beyond their statement.
The case had been marked by disputes over evidence, which led to sanctions against Dish by Lowe.
Lowe had planned to tell jurors before deliberations that Dish destroyed e-mails before and after the suit was filed. Lowe said he granted AMC’s motion for sanctions because Dish should have anticipated a lawsuit and begun saving e-mails when it notified Voom it might terminate the contract. Dish said the e- mails were automatically deleted.
After the trial began, Dish was accused again by AMC of withholding evidence. Dish argued that the communications at issue were between an attorney and his client and should be protected from disclosure. Lowe ordered that the documents be presented to him. Dish appealed and lost.
The evidence sought by AMC for the trial might have influenced the amount of damages awarded if it won, Orin Snyder, a lawyer for AMC, had said in court while the jury wasn’t present. The lawyer claimed that Dish provided HD subscriber totals that were lower than what some analysts estimated, which could reduce a potential damage award by more than $1 billion. He sought additional files that would back up Dish’s numbers.
Dish accounted for 13 percent of AMC’s subscriber base, AMC said. The number of subscribers can determine what advertisers and broadcasters pay the cable network company.
Dish Chairman Charles Ergen, a 59-year-old native of Tennessee, co-founded EchoStar Corp. in 1980 with his wife and a friend, selling satellite TV dishes to rural homes in Colorado. He had been scheduled to testify in the trial today.
EchoStar and Dish became separate companies in January 2008, with Ergen remaining the chairman of both.
Charles Dolan, the chairman of both Cablevision and AMC, was AMC’s first witness. Cablevision, based in Bethpage, New York, spun off AMC Networks, formerly known as Rainbow Media, as a separate publicly owned company last year. Dolan family members remain the controlling shareholders in AMC.
In the settlement, Dish agreed to carry the Madison Square Garden Co. (MSG)’s Fuse channel on its service. James Dolan, the chief executive officer of Cablevision and the son of Charles Dolan, is Madison Square Garden Co.’s executive chairman.
The case is Voom v. EchoStar, 600292-2008, State Supreme Court of New York (Manhattan).
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