EchoStar settles broadcast case

August 29, 2006|By Bloomberg News

EchoStar Communications Corp. has settled a nine-year legal fight with affiliates of the ABC, NBC, CBS and Fox television networks over the transmission to their markets of TV programs aired by broadcasters in other cities.

EchoStar, the second-largest satellite TV service in the United States, agreed to pay $100 million to the affiliate associations, the Englewood, Colo.-based company said yesterday in a statement.

The settlement lets EchoStar retain the distant broadcasts.

Appeal rejected

The operator of the Dish TV service is settling after losing an appeal to U.S. Supreme Court Justice Clarence Thomas, who refused last week to block a lower-court ruling requiring it to stop transmitting distant broadcasts to hundreds of thousands of customers.

Affiliates owned by News Corp.'s Fox did not agree to the settlement. News Corp. controls EchoStar's larger rival, DirecTV Group Inc.

"Fox is still holding out, and as sister company of DirecTV, it's reasonable to guess that they're not in any hurry to sign," said Craig Moffett, an analyst with Sanford C. Bernstein & Co.

Litigation with about 25 Fox owned-and-operated stations continues, EchoStar spokeswoman Kathie Gonzalez said. The settlement is contingent on confirmation by a U.S. District Court judge in Florida, she said.

"We won a decision in court, and we see no reason to settle," News Corp. spokesman Andrew Butcher said. "Winners don't settle."

EchoStar said yesterday that it has over its nine years of legal disputes settled with almost 800 TV stations, including those owned by ABC, NBC and CBS.

"It's a great leap forward," said Matthew Harrigan, an analyst with Janco Partners Inc. in Greenwood Village, Colo. "They've been litigating for a long time."

EchoStar has been providing programming from broadcasters in far-away markets to subscribers who can't get high-quality reception of local stations. The TV networks and affiliates charged that many of those customers were ineligible for distant service.

Loss of revenue

At issue is the loss of advertising revenue by stations when local viewers watch programs from distant broadcasters.

The company said after Justice Thomas' ruling Aug. 22 that it faced "irreparable harm" if forced to halt signals for customers. The 11th Circuit had ruled that EchoStar engaged in "a pattern and practice" that broke the law "in every way imaginable" and probably provided illegal service to more than 20 percent of its subscribers.

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