Making good on its threat, Dish Network has dropped the last five Voom HD networks it was carrying.
In the midst of pending litigation, overnight Monday the satellite provider had deleted 10 of the 15-channel Voom HD suite from its channel lineup. Then, during a first-quarter conference call Tuesday, Dish Network CEO Charlie Ergen said the satellite service would be “taking down the rest as soon as we can.”
And today, Wednesday, those five Rainbow Media Voom channels are gone from the Dish lineup. The satellite provider alleges that Voom, which is suing it, is in violation of their carriage deal, therefore voiding the contract.
“We believe we can replace those channels with other channels that have more value for our customers,” Ergen said Tuesday.
On the call, Ergen said the Voom HD drops will make way for Dish Network to add the more popular HD networks it is bringing to its roster this week, including Disney HD, Sci Fi HD, CNN HD and Bravo HD.
In response to Dish Network’s first deletions, Rainbow issued a statement Tuesday.
“EchoStar's decision to drop the Voom channels is unjustified and, we believe, is a violation of our distribution agreement,” a Rainbow spokesman said. “We are intent on enforcing our legal rights in court. Because the litigation is ongoing, it would be inappropriate to comment further at this time."
In a lawsuit filed earlier this year, Voom said that if Dish Network dropped it HD networks, it would violate their affiliation deal and “will deprive Voom HD of the substantial payments and broad distribution …to which it is unquestionably entitled under the agreement, thereby causing Voom HD irreparable and devastating harm, and threatening its continued existence.”
Now the only distributor that is carrying the Voom HD suite is Rainbow’s parent, Cablevision Systems. That deal expires June 30.
Voom sued EchoStar, now Dish Network, earlier this year after the satellite provider first threatened to move its networks to a less widely penetrated HD tier, and then said it was going to drop them.
But last week, New York Superior Court Judge Richard Lowe refused to issue a temporary injunction against Dish, which then moved the Voom channels to a tier, “DishHD Ultimate,” off of its more widely penetrated HDTV basic offering, “DishHD Essential.”
In his ruling, Judge Lowe found that Voom failed to demonstrate that it will suffer immediate irreparable harm. He wrote that “Voom acknowledges that it has yet to obtain strong brand loyalty” and that it has “failed to demonstrate a likelihood of success on the merits” of the case.
That lawsuit, which also seeks a permanent injunction and declaratory judgment against EchoStar, is still pending.
Earlier this year, EchoStar told Voom that it was terminating their 15-year carriage deal effective Feb. 1 and was looking to drop Voom’s entire HD suite from Dish Network’s lineup, according to the complaint filed by Voom. That’s when Voom sought the preliminary injunction.
An EchoStar affiliate, EchoStar Media Holdings, got a 20% stake in Voom HD as part of that sale. And the Voom-EchoStar affiliation agreement also flowed out of that transaction.
The Voom-EchoStar 2005 carriage deal, which Voom described as a “multi-billion dollar, 15-year contract,” called for EchoStar to pay a subscriber fee of $3.25 a month per HD customer in the first year of deal, with annual increases until it reached $6.43 a month in the pact’s final year.
EchoStar charged that Voom has violated a provision of their carriage deal where Voom agreed to spend $100 million a year on a 21-channel version of Voom, up to an aggregate of $500 million. But Voom reduced its number of services to only 15, so it argues that its annual required spending “is currently no more than $82 million.”
In its suit, Voom maintained it won’t be able to secure a national footprint if Dish Network stops carrying its suite, because the other nationwide distributor, DirecTV, has indicated it won’t carry Voom’s 15 HD channels.
In its papers, Voom also said that it would be “inconceivable” for any cable operator or satellite company to carry all 15 of its HD networks for 15 years, which are its terms with EchoStar.
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