Viacom Press Briefing on EchoStar Pulling our Networks
March 9, 2004
Remarks by Mark Rosenthal, President and COO, MTV Networks:
For the past few months, as this situation with EchoStar has unfolded, we've been trying to take the high road, speaking just to the larger issues and trying to ignore the gross distortions and inaccuracies that Charlie Ergen and EchoStar have been flinging around. There comes a point, however, where you have to respond, if only to set the record straight. And that’s why we're here today – and we appreciate your taking the time to join us.
As we said in our statement last night, we are disturbed and disappointed by EchoStar's decision to pull the plug on our channels. This is channel yanking by a distributor on an unprecedented scale. This is not something we wanted to happen or would ever want to happen. We are broadcasters and programmers, and the most important relationship we have is with our viewers. The idea that something or someone would disrupt that relationship -- particularly in an effort to extort a better deal for themselves -- is, to us, really reprehensible. And, additionally, as consumer oriented people, it really bothers us to see a company treat its customers with such disregard.
EchoStar has been trying to paint itself as the victim in this situation. To hear them tell it, they were forced to pull the plug on our networks to protect their subscribers from the “exorbitant” rate increases and unfair carriage requirements we were trying to “foist” on them.
In a word, that's ludicrous.
Here are the facts:
First of all, EchoStar is hardly some small mom-and-pop operation that is being pushed around. It has more than 9 million subscribers -- 10% of all multichannel homes and 43% of all satellite households. It is the fourth largest distributor in the U.S. and as a result it has enormous negotiating power.
Faced with the clout that comes with having that massive distribution, we've been doing everything humanly possible we can -- for months now -- to finalize a deal with them. As I said before, the last thing we ever want to do is wind up in a situation where our viewers can't get the channels and shows they love. So in our negotiations with EchoStar, we were extremely flexible and offered substantial compromises.
Now I hope you will keep in mind that every cable and satellite operator negotiates these sorts of agreements, and we have been able to establish and maintain solid business partnerships with virtually all of them. The sole exception is EchoStar/DISH Network.
Along these lines, I would also point out that over the years there have been thousands of successful marketplace negotiations between broadcasters and cable and satellite distributors involving the packaging of retransmission consent rights with cable carriage. In all those cases, only one company ever had a problem with it. That’s right -- it was EchoStar, which complained to the FCC about the same "packaging" practices it challenged in its recent lawsuit against Viacom.
As it happens, the FCC decisively rejected EchoStar's complaint, pointing out that Congress established a detailed regulatory scheme that permits broadcasters to negotiate retransmission consent and cable carriage together. For the same reason, the Federal district court judge who is hearing EchoStar’s case against Viacom recently denied EchoStar's motion for a preliminary injunction and gave us permission to deauthorize (which we did not do) EchoStar's carriage of CBS if we were unable to work things out.
It's also worth noting that EchoStar has a history of bringing frivolous lawsuits and has been sanctioned or admonished by federal judges several times, including in a litigation with CBS when they were found by a Federal judge to have engaged in "clearly willful" copyright violations. Just this week, a federal judge sanctioned EchoStar in yet another an antitrust case they brought.
Anyway, we could not have worked harder to try to make a deal with EchoStar. And back on Jan. 15, we did make a deal with them, and then they reneged.
We don't really understand why. Because despite what they are saying now, the increases we've been asking for are both modest and reasonable -- amounting to less than 6 cents per month per subscriber for all of our services (combined) including CBS and BET. To put that in perspective, I'd point out that EchoStar recently raised its rates to subscribers by as much as three dollars per month. I'd also point out that what we were seeking for all of our multiple channels together -- which include Nickelodeon, the #1 rated cable network -- was substantially less than the $2 a month per subscriber that distributors pay for ESPN alone. In all, Americans spend more than 20% of their TV viewing time watching our networks, yet our fees amount to less than 5% of what EchoStar generates from their average customer.
Those are the facts. And the facts make it clear that EchoStar/DISH Network's decision to pull the plug on our channels shows they care a lot more about lining their own pockets than about what matters to their subscribers. Rather than negotiate in good faith like every other cable and satellite operator, they prefer to peddle insults, distortions, and outright untruths. Which is to say they are not acting in the public interest or in a commercially reasonable manner.
We would still like to reach a deal with EchoStar that would allow its millions of subscribers to continue receiving the Viacom channels and shows they love. But the ball is in EchoStar's court, and unless and until they pick it up, all we can do is inform their unhappy customers, who are calling us by the tens of thousands, about all the excellent alternative TV distribution services available to them with cable and with DirecTV.
Remarks by Marty Franks, EVP, CBS:
I'm afraid March Madness came 10 days early this year. Normally March at CBS is all about buzzer beaters and Cinderella stories.
But in this version of March Madness, time ran out at midnight last night, and despite his protestations about being the "mom and pop" victim in this fight, Charlie Ergen and Echostar are no Cinderella.
First and foremost, CBS sympathizes with our viewers who awakened this morning to find that their local CBS station had been dropped by Dish Network. We hope for their sake we can conclude a new agreement with Echostar quickly.
If not, CBS would like to remind our viewers that we are available, for free, to every viewer with an antenna, but also via DirecTV and their local cable operator.
March 9, 2004
Remarks by Mark Rosenthal, President and COO, MTV Networks:
For the past few months, as this situation with EchoStar has unfolded, we've been trying to take the high road, speaking just to the larger issues and trying to ignore the gross distortions and inaccuracies that Charlie Ergen and EchoStar have been flinging around. There comes a point, however, where you have to respond, if only to set the record straight. And that’s why we're here today – and we appreciate your taking the time to join us.
As we said in our statement last night, we are disturbed and disappointed by EchoStar's decision to pull the plug on our channels. This is channel yanking by a distributor on an unprecedented scale. This is not something we wanted to happen or would ever want to happen. We are broadcasters and programmers, and the most important relationship we have is with our viewers. The idea that something or someone would disrupt that relationship -- particularly in an effort to extort a better deal for themselves -- is, to us, really reprehensible. And, additionally, as consumer oriented people, it really bothers us to see a company treat its customers with such disregard.
EchoStar has been trying to paint itself as the victim in this situation. To hear them tell it, they were forced to pull the plug on our networks to protect their subscribers from the “exorbitant” rate increases and unfair carriage requirements we were trying to “foist” on them.
In a word, that's ludicrous.
Here are the facts:
First of all, EchoStar is hardly some small mom-and-pop operation that is being pushed around. It has more than 9 million subscribers -- 10% of all multichannel homes and 43% of all satellite households. It is the fourth largest distributor in the U.S. and as a result it has enormous negotiating power.
Faced with the clout that comes with having that massive distribution, we've been doing everything humanly possible we can -- for months now -- to finalize a deal with them. As I said before, the last thing we ever want to do is wind up in a situation where our viewers can't get the channels and shows they love. So in our negotiations with EchoStar, we were extremely flexible and offered substantial compromises.
Now I hope you will keep in mind that every cable and satellite operator negotiates these sorts of agreements, and we have been able to establish and maintain solid business partnerships with virtually all of them. The sole exception is EchoStar/DISH Network.
Along these lines, I would also point out that over the years there have been thousands of successful marketplace negotiations between broadcasters and cable and satellite distributors involving the packaging of retransmission consent rights with cable carriage. In all those cases, only one company ever had a problem with it. That’s right -- it was EchoStar, which complained to the FCC about the same "packaging" practices it challenged in its recent lawsuit against Viacom.
As it happens, the FCC decisively rejected EchoStar's complaint, pointing out that Congress established a detailed regulatory scheme that permits broadcasters to negotiate retransmission consent and cable carriage together. For the same reason, the Federal district court judge who is hearing EchoStar’s case against Viacom recently denied EchoStar's motion for a preliminary injunction and gave us permission to deauthorize (which we did not do) EchoStar's carriage of CBS if we were unable to work things out.
It's also worth noting that EchoStar has a history of bringing frivolous lawsuits and has been sanctioned or admonished by federal judges several times, including in a litigation with CBS when they were found by a Federal judge to have engaged in "clearly willful" copyright violations. Just this week, a federal judge sanctioned EchoStar in yet another an antitrust case they brought.
Anyway, we could not have worked harder to try to make a deal with EchoStar. And back on Jan. 15, we did make a deal with them, and then they reneged.
We don't really understand why. Because despite what they are saying now, the increases we've been asking for are both modest and reasonable -- amounting to less than 6 cents per month per subscriber for all of our services (combined) including CBS and BET. To put that in perspective, I'd point out that EchoStar recently raised its rates to subscribers by as much as three dollars per month. I'd also point out that what we were seeking for all of our multiple channels together -- which include Nickelodeon, the #1 rated cable network -- was substantially less than the $2 a month per subscriber that distributors pay for ESPN alone. In all, Americans spend more than 20% of their TV viewing time watching our networks, yet our fees amount to less than 5% of what EchoStar generates from their average customer.
Those are the facts. And the facts make it clear that EchoStar/DISH Network's decision to pull the plug on our channels shows they care a lot more about lining their own pockets than about what matters to their subscribers. Rather than negotiate in good faith like every other cable and satellite operator, they prefer to peddle insults, distortions, and outright untruths. Which is to say they are not acting in the public interest or in a commercially reasonable manner.
We would still like to reach a deal with EchoStar that would allow its millions of subscribers to continue receiving the Viacom channels and shows they love. But the ball is in EchoStar's court, and unless and until they pick it up, all we can do is inform their unhappy customers, who are calling us by the tens of thousands, about all the excellent alternative TV distribution services available to them with cable and with DirecTV.
Remarks by Marty Franks, EVP, CBS:
I'm afraid March Madness came 10 days early this year. Normally March at CBS is all about buzzer beaters and Cinderella stories.
But in this version of March Madness, time ran out at midnight last night, and despite his protestations about being the "mom and pop" victim in this fight, Charlie Ergen and Echostar are no Cinderella.
First and foremost, CBS sympathizes with our viewers who awakened this morning to find that their local CBS station had been dropped by Dish Network. We hope for their sake we can conclude a new agreement with Echostar quickly.
If not, CBS would like to remind our viewers that we are available, for free, to every viewer with an antenna, but also via DirecTV and their local cable operator.
