Dish settles Voom lawsuit for US$700m

DTH provider Dish Network has finally settled its long running lawsuit with media groups Cablevision and AMC Networks over the alleged breach of contract regarding the cessation of its broadcast of the Voom HD bouquet of channels.
Under the terms of the…

DTH provider Dish Network has finally settled its long running lawsuit with media groups Cablevision and AMC Networks over the alleged breach of contract regarding the cessation of its broadcast of the Voom HD bouquet of channels.

Under the terms of the settlement, Dish will pay US$700m in damages to Voom’s parent companies. US$80m of this will be in consideration for the purchase of Cablevision’s 500MHz of wireless multichannel video distribution and data service spectrum licences that cover a population of 150 million in 45 designated market areas including New York, Los Angeles, Chicago, San Francisco and Philadelphia.

In order that all of the remaining US$620m cash settlement remains with Cablevision and AMC Networks, Dish will also transfer its 20% ownership interest in Voom to Rainbow Programming Holdings, a holding company for AMC.

Dish has subsequently entered into a long term carriage agreement for AMC’s HD channels and will begin broadcasting the first of these on 21 October.

The settlement brings to an end a prolonged legal battle that first began in 2008 after Dish terminated the fifteen year affiliation agreement it had signed with Rainbow Media, the former name of AMC Networks and a subsidiary of Cablevision, back in 2005.

That agreement gave Dish the right to distribute the Voom HD channels in return for paying an annual per subscriber fee and purchasing a 20% stake in Rainbow Programming Holdings. As part of the deal, Rainbow was to invest approximately US$100m per year in the Voom bouquet of channels for the first five years of the contract.

At the beginning of 2008, Dish cancelled the agreement, arguing that Rainbow had not invested the US$100m per year as promised. Cablevision and Rainbow denied this and subsequently sued Dish for breach of contract and sought over US$2.5bn in damages.

The jury trial finally commenced in the New York State Supreme Court on 19 September and on 21 October Judge Richard Lowe announced that a settlement had been reached.

Analysts reacted positively to the news, with Credit Suisse stating that ‘the cash portion of the settlement was a bit better than we had expected’ for Dish given its weak legal position in the case. It added that it was in Dish’s best interest due to the popularity of AMC shows such as Breaking Bad and the Waking Dead.

Voom HD was originally set up by Cablevision as the central offering of its planned DTH platform that was to complete with Dish and DirecTV. The Lockheed Martin-built Rainbow-1 satellite was subsequently launched in mid-2003 but by 2005 Cablevision backed away from its satellite project and sold the spacecraft and its orbital rights to Dish’s parent company at the time EchoStar. It was then renamed Echostar-12 and is located at 61.5W providing services to Dish.