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Starz, Disney Sue Dish Over Year-Long Free Access To Starz Channels

Starz Entertainment and The Walt Disney Co. filed separate lawsuits Tuesday against Dish Network, alleging the satellite TV operator's offer to let its subscribers have access to one free year of Starz's premium networks violates the terms of their distribution agreements.

Dish raised rates for almost all of its video tiers as of Feb. 1, 2011, adding $3 to $5 per month to most of its programming packages and then enacting a two-year price freeze through January 2013. At the same time, the operator offered virtually all subscribers free access to seven different Starz channels and one Encore channel.

According to the Starz lawsuit, the "free preview" provision of its agreement with Dish permits the satellite TV operator to provide Starz television channels to Dish subscribers free of charge, but only on under mutually agreed-upon terms.

"[W]hen it decided to raise rates, Dish also began looking for ways to take some of the ‘sting' out of those increases and ultimately settled on using Starz to accomplish this goal," Starz said in its complaint.

Starz is seeking a temporary restraining order and a preliminary and permanent injunction restraining Dish from further offering any Starz television channel services to its subscribers in violation of their agreement. Disney also alleged that Dish's actions are infringing its copyrights by permitting the content to be exhibited in excess of Starz's copyright licenses to such content.

In a statement, Dish said: "Dish Network pays hundreds of millions of dollars for the right to distribute Starz content to our customers, which includes the rights to a number of Disney movies, and our current distribution of Disney content on Starz is permitted under our contract with Starz. Dish Network does not have visibility to the contract between Starz and Disney, but we will vigorously defend our rights against any attempt to drag our customers into the middle of their dispute."

Most of the movies available through the Starz and Encore channels are from Disney and Sony Pictures Entertainment.

On March 9, Starz said, it wrote to Dish notifying the operator that its giveaway of the Starz and Encore television channels was a breach of their agreement but said that the operator has not changed its policies.

"The Dish Agreement permits Dish to offer Starz's television channels to its base of subscribers but only on certain conditions," Starz said in its complaint. "Because the Starz and Encore channels are premium channels -- or Pay Television channels -- Starz does not permit Dish to simply give away its channels and content to its entire subscriber base."

Disney filed suit with the U.S. District Court Southern District of New York, while Starz filed its complaint in Colorado's District Court for Douglas County. 

"Dish's unlawful distribution, transmission, copying and public display and/or performance of the Starz Programming, including Disney Enterprises' Copyrighted Movies, has already resulted in the repeated and continuing infringement of Plaintiffs' copyright rights," Disney said in its complaint.

On March 4, Disney-ABC Domestic Television -- doing business as Buena Vista Pay Television LLC -- wrote to Starz requesting that it instruct Dish to immediately cease and desist its Starz giveaway for a year on the grounds that it directly violates the Starz license, according to the Disney complaint.

"Starz in fact asked Dish to immediately cease and desist. In addition, representatives of BVPT also asked Dish to cease and desist its Starz giveaway," Disney said in its lawsuit. "Notwithstanding this notice and opportunity to cure its ongoing unlawful conduct, Dish refused to terminate the free giveaway of the Starz channels."

Dish had 14.19 million satellite TV customers as of March 31.

On Monday, Dish and EchoStar said they would pay $500 million to TiVo to settle the parties' seven-year litigation over the TiVo-owned "Time Warp" patent, which eight older models of Dish DVRs were found to have infringed.