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Disney, Dish End Family Feud

Ending a nasty public spat, ABC Family last week settled its carriage dispute with at least one of its major distributors, EchoStar Communications Corp.

But the network hasn't resolved all of its distribution problems.

ABC Family's parent, The Walt Disney Co., reached a multiyear deal with the direct-satellite broadcast provider that will not only keep ABC Family on Dish Network's most basic tier, America's Top 50, but also calls for it to resume carriage of ESPN Classic.

ESPN Classic, which EchoStar dropped at the start of the year, will be restored to Dish Network's America's Top 100 package, representing roughly 4 million homes, later this month.

At the start of the year, EchoStar also planned to drop ABC Family, claiming its affiliation agreement permitted it to get out of the deal when the channel changed ownership.

Disney bought Fox Family Channel for $5.2 billion last fall and renamed it ABC Family.

ABC Family, which would have lost nearly 7 million subscribers had EchoStar dumped it, immediately got a temporary injunction to bar the DBS company from taking any action.

Details of last week's settlement, announced by EchoStar chairman Charlie Ergen and Disney president Robert Iger, weren't disclosed. EchoStar had been paying $1.1 million a month in license fees for ABC Family, according to documents filed as part of the suit.


Although the EchoStar situation has been resolved, ABC Family still has major distribution woes.

Affiliation deals with six MSOs, including Charter Communications Inc. and Time Warner Cable, have expired and need to be renegotiated.

Those deals are worth 37 million subscribers, nearly half of ABC Family's distribution. ABC Family has been talking to those cable operators for months, but no new deals have been announced as of yet.

"We're continuing to talk with major operators," an ABC Cable Networks spokesman said.

Industry executives said last week there's no love lost between Disney and operators who have been cornered into carriage agreements for ESPN that include yearly double-digit rate increases. Because those contracts are long-term, ESPN no longer offers Disney any leverage to use for its Family talks.

As a newly branded network, ABC Family is particularly vulnerable, because it hasn't had a chance to build a strong following, observers said last week.

That could make it easier for cable operators to drop the channel in a contract dispute without the public outcry that would come from dropping a broadcast network or not carrying the Yankees Entertainment & Sports (YES) Network.

Several sources familiar with the situation said relations between ABC Family and Charter are especially strained, and the MSO has threatened to drop the network. Charter officials could not be reached for comment at press time.

A Time Warner spokesman last week said the MSO was still in negotiations for ABC Family.


During his acrimonious dispute with ABC Family, EchoStar senior vice president of programming Michael Schwimmer charged that Disney had threatened to use its might to lobby in Washington against the EchoStar-DirecTV Inc. merger.

EchoStar also complained about the poor ratings of ABC Family's programming and annual license-fee increases from ESPN.

EchoStar changed its tune substantially in light of the settlement.

In a prepared statement, Ergen said, "EchoStar has traditionally carried all of Disney's and ESPN's high-quality programming services and we are pleased to continue carrying ABC Family based on its current strong programming line-up and well developed long-term plans to grow into an even more compelling and high-quality family entertainment programming service."

ABC also agreed to drop its role in a long-standing distant-network-signal dispute between EchoStar and the major broadcast networks. EchoStar last week said it would ask the Supreme Court to allow the company to transmit local broadcast stations to any distant subscriber across the country.