Cable Operators

Dish Scraps With ESPN On Carriage

8/09/2009 2:00 AM Eastern

Charlie Ergen’s Dish Network is asking for at least $1 million from ESPN, alleging in a federal lawsuit filed last week that ESPN breached its contract by not extending the same carriage terms the programmer provided to Comcast and DirecTV.

In its complaint filed Aug. 4, Dish cited deals ESPN struck recently with Comcast and DirecTV for ESPN Classic and ESPNU. Those agreements include what “Dish understands are more favorable” terms than those Dish had agreed to.

ESPN said it would fight the lawsuit.

“We have repeatedly advised Dish that we are in full compliance with our agreement and have offered them a distribution opportunity with respect to ESPNU and ESPN Classic consistent with the rest of the industry,” ESPN said in a statement. “We will not renegotiate settled contracts and will vigorously defend this legal action, the apparent sole purpose of which is to get a better deal.”

ESPN’s deals with Comcast and DirecTV, announced in May, were designed to widen distribution of ESPNU in exchange for distributors repositioning Classic on less widely penetrated tiers (see “NFL, ESPNU Score In Comcast Pacts,” May 25, 2009, page 2).

Financial terms of the deals weren’t disclosed. In Comcast’s case, the MSO said it would launch ESPNU on its Digital Classic level of service, its second-most-widely distributed package. The deal also left it up to individual Comcast systems whether to leave ESPN Classic in its current position, switch it immediately or swap it out when ESPNU is upgraded through the fall and into early in 2010.

DirecTV said it would widen its distribution of ESPNU to the Choice programming package, with ESPN Classic being repositioned to its Sports Pack.

Currently, Dish offers ESPN Classic in the Classic Silver 200/SilverHD package, and ESPNU as part of Classic Gold 250/Gold HD.

Dish’s September 2005 agreement with ESPN, which runs through the end of 2013, includes a “most-favored nations” clause that requires the programmer to provide the same provisions, according to the lawsuit.

Dish said its damages exceed $1 million with the precise amount “to be determined at trial, plus exemplary damages.”

The satellite operator filed suit in the U.S. District Court for the Southern District of New York.

September