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Dish Network, never far from the courtroom, is suing sports giant ESPN for $152 million in a New York federal court in Manhattan. The argument concerns carriage deals, with Dish Network alleging that ESPN has broken the terms of a licensing agreement between the two parties.
Barry Ostrager, a Dish lawyer from Simpson Thacher & Bartlett, told the court that ESPN had provided more favourable licensing terms for its channels to Dish’s competitors and deliberately made the decision not to offer matching terms to Dish. Dish, in its action, is looking to prove that others received better terms. “In violation of this most-favoured nation provision, ESPN provided more favourable terms to Dish’s competitors and made the calculated decision not to offer those terms to Dish,” said Ostrager.
However, a court action will see 10 jurors presented with side-by-side comparisons of the sort of legal contracts that are more usually highly confidential. Indeed, some commentators have suggested that the action will unveil a can of very dangerous worms and potentially open up a slew of fresh negotiations between broadcasters and distributors. Aware of these threats the court’s judge has already redacted numerous references in officially submitted documents, and some sessions have already been held in secret because of the commercial impact of the data.
Dish is arguing that other carriers were able to unbundle ESPN’s various channels (ESPNU, ESPN Classic, ESPN2, ESPN-HD, etc) onto different pricing tiers and packages. Dish also alleges that a competitor like Comcast was able to distribute a channel like ESPNU to bars and taverns on an a la carte basis. Another grumble from Dish is asking how Time Warner Cable has been able to distribute ESPN on the Internet without requiring subscribers to pay for that as an additional digital service.
“This is a complicated case,” said an earlier statement in a pre-trial hearing of the case. “These are not simple claims. There are 13 of them. They’re based on 18 contracts; they’re based on provisions that the parties have disputes over how to interpret language, not only in the DISH-ESPN agreement, but also the meaning of the terms in these other third-party contracts.”
ESPN in its opening remarks told the court that the time for Dish to renegotiate its contract was prior to the end of the current 8-year contract, not part-way through the contract. ESPN also said that Dish wanted to “cherry pick” the best portions of the agreements that ESPN had in place with other distributors.