Dish HD vs Disney (DISH sort of won...)

[Greg Bimson]

Hold on, the "Most Favored Nation" provision does apply to rates and packaging obligations vis a vis other nations, but it doesn't relate to channels for which there is no contract. That's why "Most Favored Nation" only relates to rates and packaging, but not to uncontracted channels.

Dish Network was trying to get the HD channels based on the "Most Favored Nation" clause. You know, because our competitors have the channel, we should have it because of our "Most Favored Nation" clause. The court said that clause only applies to pricing and packaging...

 

[whatchel1]

not like disney wants

Hold on, the "Most Favored Nation" provision does apply to rates and packaging obligations vis a vis other nations, but it doesn't relate to channels for which there is no contract. That's why "Most Favored Nation" only relates to rates and packaging, but not to uncontracted channels.

Ah but they are contracted, just not the way Disney wants them to be. 2 contracts to set precedence that HD is not the same contract as SD. That you have to have to pay for both.

 

[Greg Bimson]

Ah but they are contracted, just not the way Disney wants them to be. 2 contracts to set precedence that HD is not the same contract as SD. That you have to have to pay for both.

Expand, please. I don't understand this "precedence" theory.

 

[dodger72]

I hope this will make sense. when a channel is sent a channel to dish, or any other provider, for both sd and hd distriburion are two feeds sent or do they downgrade the hd feed? i hope this makes sense i'm sorry if it doesnt

 

[TNGTony]

Most "cable" providers send two separate and distinct feeds. Promos, graphics and other little things are completely different on the HD channels than they are on the SD.

Local channels for the most part are the same feed HD/SD with the sides cut off for SD if the channels are originally 16x9.

 

[Voyager6]

Hold on, the "Most Favored Nation" provision does apply to rates and packaging obligations vis a vis other nations, but it doesn't relate to channels for which there is no contract. That's why "Most Favored Nation" only relates to rates and packaging, but not to uncontracted channels.

Dish Network was trying to get the HD channels based on the "Most Favored Nation" clause. You know, because our competitors have the channel, we should have it because of our "Most Favored Nation" clause. The court said that clause only applies to pricing and packaging...

So what is the purpose of a "Most Favored" clause if not to get the same deal or better than your competitors? I think this decision will get overturned on appeal. The Judge took an extremely narrow view of the clause and said it only applied to several distinct channels and not to any other package provisions a competitor might have.

Defendants' contention is persuasive. The plain language of the section indicates that this Most Favored Nation provision was not meant to encompass agreements with other distributors

Huh? That is exactly what a "Most Favored" provision is for. E* had every reason to believe that they were entitled to the same deal as it's competitors got.

 

[whatchel1]

double dip

Expand, please. I don't understand this "precedence" theory.

They are trying to set up the precedence that SD is worth X amt of $$ but if you want HD you need to pay an additional few. This way in the future when there is less of SD they can say well you paid this much ( the combined amt for the 2) That is how much our HD is really worth. This is the same crap that distributors have been trying to pull w/their programs for TV stations.

 

[nlk10010]

Hold on, the "Most Favored Nation" provision does apply to rates and packaging obligations vis a vis other nations, but it doesn't relate to channels for which there is no contract. That's why "Most Favored Nation" only relates to rates and packaging, but not to uncontracted channels.
-snip-

OK, how about: an "uncontracted channel" is a "contracted channel" with an infinite price.

I tried.

From another perspective, this issue seems relevant to the current argument over the closing of the "terrestrial loophole" (e.g. MSG-HD). Is an HD channel a "different animal" than its SD counterpart? If it is then I believe this mitigates the argument of Comcast and CV cum MSG that they do not have to provide HD feeds of their sports channels to every service. Otherwise the channels are the same thing and they are already meeting all obligations by providing the SD feed (unless I have that backwards).

 

[Greg Bimson]

So what is the purpose of a "Most Favored" clause if not to get the same deal or better than your competitors?

A "Most Favored" clause takes into account packaging and pricing for contracted channels. It is these sentences from the provision that explains:

[The Most Favored Nation provision] pertains to (1) a lower "Net Effective Rate" or (2) "more favorable packaging rights or obligations." Examples of the latter include the "ability to distribute a Network on an a la carte basis," and "removing the obligaton to distribute a Network on Basic or Expanded Basic tiers and/or the availability of multi-package distribution of a Network such as, for example, on a cable television system's Expanded Basic tier and a separate sports tier." EchoStar does not appear to argue that any of these are relevant.​

The very next paragraph explains:

Calculation of the "Net Effective Rate" is based upon "residential, commercial and other rates paid by such Other Distributor [...]".​

The pricing and packaging are subject to "Most Favored Nation" provisions, but the fact that another multichannel carrier may have more programming does NOT apply to the "Most Favored Nation" provision. The requirement could only kick in if Dish Network CONTRACTED for the same channels as their competitors.

They are trying to set up the precedence that SD is worth X amt of $$ but if you want HD you need to pay an additional few. This way in the future when there is less of SD they can say well you paid this much ( the combined amt for the 2) That is how much our HD is really worth. This is the same crap that distributors have been trying to pull w/their programs for TV stations.

Set the precedence? From the decision:

The contractual obligation at issue arises out of the following three license agreements: (1) a Distribution License Agreement, dated as of September 15, 2005 (the "ESPN Agreement"), by which ESPN licensed to EchoStar six standard definition networks (the "SD Networks") and two high definition networks (the HD Networks);​

Dish Network signed the ESPN Agreement in late 2005. They've already been paying for HD above what they pay for SD.

It's hard to argue distributors are trying to "double-dip" when EchoStar agreed to a contract with both ESPN (for the six ESPN SD channels and two ESPN HD channels) and Sinclair (the OTA group definitely charged an SD and an HD fee fo their stations). And both of those agreements were signed four-plus years ago.

From another perspective, this issue seems relevant to the current argument over the closing of the "terrestrial loophole" (e.g. MSG-HD). Is an HD channel a "different animal" than its SD counterpart? If it is then I believe this mitigates the argument of Comcast and CV cum MSG that they do not have to provide HD feeds of their sports channels to every service. Otherwise the channels are the same thing and they are already meeting all obligations by providing the SD feed (unless I have that backwards).

Think of it more like the contract between YES and Dish Network. As in, there isn't one.

No one has stated that Disney would not provide the four HD channels to Dish Network. We have this from the decision:

According to EchoStar, other distributors, in the same territory as EchoStar, announced that defendants would be providing the following "simulcast" feeds of the following Networks: "Disney Channel HD," "Toon Disney HD," "ABC Family HD," and "ESPNews HD" (collectively, the "Disputed HD Programs"), but defendants indicated to EchoStar that they will not be providing the Disputed HD Programs to EchoStar.​

If "other distributors" signed an agreement giving them access to the four channels, then of course Disney is not going to provide "the Disputed HD Programs" to EchoStar".

Before anyone starts venting about how unfair this is, I'd like everyone to remember that two parties signed these contracts. If one party couldn't live with the terms of the contract, have fun in court, but don't expect a miracle.

 

[Greg Bimson]

I forgot to completely address this:

Is an HD channel a "different animal" than its SD counterpart? If it is then I believe this mitigates the argument of Comcast and CV cum MSG that they do not have to provide HD feeds of their sports channels to every service. Otherwise the channels are the same thing and they are already meeting all obligations by providing the SD feed (unless I have that backwards).

What the FCC defines and what a contract defines are two different things.

DirecTV and Dish Network are the first to test the FCC access requirement by "serving notice" to Comcast that they want access to CSN Philly. I believe Verizon won't be far behind with respect to MSG HD. The FCC's access requirement does address that simply providing the SD channel only does not fulfill this requirement, but until someone can:

1) challenge according to the process,
2) win the challenge at the FCC, and
3) withstand any legal challenge overturning the FCC's rulemaking regarding this process...

the channels will not be on systems.

 

[Laddyboy]

If the others (competitors) are paying extra for the HD equivalents, it is hard for me to understand how E* thinks they don't have to pay as well. There must be something in the other contracts we aren't seeing. Without being able to see all the contracts, it seems impossible to decypher each party's position.

 

[Greg Bimson]

Yes, but it's not so difficult...

Disney wants Dish Network to carry the channels, with compensation of course.

Dish Network doesn't want to pay much to carry the channels, of course. They sued to attempt to have the HD channels defined as free and available within the current affiliation agreements, showing that they didn't want to pay a cent for these channels.

That pretty much sums up the position. Heck, and that's from the press releases over the matter.

 

[whatchel1]

Rectify

Set the precedence? From the decision:

The contractual obligation at issue arises out of the following three license agreements: (1) a Distribution License Agreement, dated as of September 15, 2005 (the "ESPN Agreement"), by which ESPN licensed to EchoStar six standard definition networks (the "SD Networks") and two high definition networks (the HD Networks);​

Dish Network signed the ESPN Agreement in late 2005. They've already been paying for HD above what they pay for SD.

It's hard to argue distributors are trying to "double-dip" when EchoStar agreed to a contract with both ESPN (for the six ESPN SD channels and two ESPN HD channels) and Sinclair (the OTA group definitely charged an SD and an HD fee fo their stations). And both of those agreements were signed four-plus years ago.Think of it more like the contract between YES and Dish Network. As in, there isn't one.

Then they screwed up when they did that. Now they are trying to rectify the situation.

 

[Greg Bimson]

It's hard to argue distributors are trying to "double-dip" when EchoStar agreed to a contract with both ESPN (for the six ESPN SD channels and two ESPN HD channels) and Sinclair (the OTA group definitely charged an SD and an HD fee fo their stations). And both of those agreements were signed four-plus years ago.

Then they screwed up when they did that. Now they are trying to rectify the situation.

Good luck with that! I didn't realize a "do-over" is available in the business world.

I'll simply assume that most providers also signed similar contract to start carriage of ESPN-HD and ESPN2-HD back in 2005. So now that everyone has agreed to pay an additional fee for HD channels, Dish Network will try to "roll the clock back" and not pay for them.

 

[Laddyboy]

Yes, but it's not so difficult...

Disney wants Dish Network to carry the channels, with compensation of course.

Dish Network doesn't want to pay much to carry the channels, of course. They sued to attempt to have the HD channels defined as free and available within the current affiliation agreements, showing that they didn't want to pay a cent for these channels.

That pretty much sums up the position. Heck, and that's from the press releases over the matter.

The releases do express the positions but not the details underlying the positions. We do not know how much the competition is paying for the disputed HD channels and how that compares to what Disney is asking from E*. Does E* have to sign a contract with Disney for the HD with MFN language and then sue when they discover the competition is getting a better deal. If this is just E* trying to get something for nothing, it's another matter. I just don't see how E* can expect something for nothing if the others are actually paying substantially for the HD. I don't see what E* expects to gain in net from pissing off subs if everyone else is already paying under Disney's terms. This leads me to suspect that maybe Disney isn't offering the same terms to E* as the others. Without the contracts and/or offers, it is difficult to come down hard on one side or the other. On the other hand, maybe E* is just trying to put their foot down about paying for HD content that is only upscaled SD and not native HD. They axed Voom for lack of content. Maybe this is the same issue from E*'s perspective. I don't know. It doesn't seem this is likely to get solved any time soon if the case is being appealed. Subs bothered by the HD loss will migrate to D* or cable I would assume, but I doubt that will be very many in total for the time being.

 

[Bonneville44]

can't go anywhere because we're locked into contracts and dish CSRs tell us they have the right ot change channels whenever they want, so there, nah na nah na boo boo.

 

[Greg Bimson]

The releases do express the positions but not the details underlying the positions.

Very correct, so...

We do not know how much the competition is paying for the disputed HD channels and how that compares to what Disney is asking from E*. Does E* have to sign a contract with Disney for the HD with MFN language and then sue when they discover the competition is getting a better deal.

Well, yes!

I remember that one of Dish Network's points of contention was that they were paying the same as the "Other Distributors", but of course I don't know how it is possible Dish Network believes that the "Other Distributors" were getting the HD channels for free.

Think about this from Disney's perspective, then you'll see where this is going. Comcast, DirecTV and Time Warner all have an agreement to rebroadcast these four HD channels. Now here comes Dish Network demanding they receive these channels, under the existing contract. Disney said no (more likely because they are receiving compensation from the Other Providers) and Dish Network then decided to sue. These channels aren't even live yet.

Disney is not happy that Dish Network chose the courtroom route, so Disney countersued on a completely different issue: Dish Network cannot pay our fees within the time negotiated by our contract, so we want our interest on those late-paid fees. Basically, it is a shot across the bow to force Dish Network to the negotiating table.

So as of 29 January 2008, there weren't HD feeds of these four channels available. Dish Network filed the lawsuit the very next day. Fast-forward to today, and where do we stand?

1) Dish Network will be $65 million lighter because they cannot pay their bills on-time
2) Dish Network does not have the four HD channels any longer
3) Dish Network had carried those channels for 25 months WITHOUT PAYMENT, so Dish Network owes Disney for those as well.

And somehow Dish Network expects to get some kind of a sweetheart deal "to keep rates low for their customers", when they exponentially multiply costs due to boneheaded litigation as opposed to strategic negotiation? Then again, not carrying some channels keeps Dish Network's costs low, but that is a bit ridiculous.

 

[whatchel1]

Easy?

Good luck with that! I didn't realize a "do-over" is available in the business world.

I'll simply assume that most providers also signed similar contract to start carriage of ESPN-HD and ESPN2-HD back in 2005. So now that everyone has agreed to pay an additional fee for HD channels, Dish Network will try to "roll the clock back" and not pay for them.

Never said it was easy but that hasn't stopped Charlie from trying before. Like w/TIVO. Do overs are not uncommon really. It's called a new contract or a renegotiation of the terms. Then if those don't work it then time for the lawyers which is where it seems to be at this time.

 

[Greg Bimson]

Never said it was easy but that hasn't stopped Charlie from trying before. Like w/TIVO.

Right. But Dish Network never had an agreement with TiVo. And what is Dish Network out? I know they've paid TiVo $100 million plus about another $10 million in court costs, and there is currently a judgment of another $200 million on appeal.

Dish Network also (according to this suit) did not have an agreement for the four HD channels, but did have an agreement with Disney. And Disney has put them to the wall.

 

[Laddyboy]

Very correct, so...Well, yes!

I remember that one of Dish Network's points of contention was that they were paying the same as the "Other Distributors", but of course I don't know how it is possible Dish Network believes that the "Other Distributors" were getting the HD channels for free.

Think about this from Disney's perspective, then you'll see where this is going. Comcast, DirecTV and Time Warner all have an agreement to rebroadcast these four HD channels. Now here comes Dish Network demanding they receive these channels, under the existing contract. Disney said no (more likely because they are receiving compensation from the Other Providers) and Dish Network then decided to sue. These channels aren't even live yet.

Disney is not happy that Dish Network chose the courtroom route, so Disney countersued on a completely different issue: Dish Network cannot pay our fees within the time negotiated by our contract, so we want our interest on those late-paid fees. Basically, it is a shot across the bow to force Dish Network to the negotiating table.

So as of 29 January 2008, there weren't HD feeds of these four channels available. Dish Network filed the lawsuit the very next day. Fast-forward to today, and where do we stand?

1) Dish Network will be $65 million lighter because they cannot pay their bills on-time
2) Dish Network does not have the four HD channels any longer
3) Dish Network had carried those channels for 25 months WITHOUT PAYMENT, so Dish Network owes Disney for those as well.

And somehow Dish Network expects to get some kind of a sweetheart deal "to keep rates low for their customers", when they exponentially multiply costs due to boneheaded litigation as opposed to strategic negotiation? Then again, not carrying some channels keeps Dish Network's costs low, but that is a bit ridiculous.

I don't disagree that this is the likely sequence of events. It just seems so blatantly stupid, if true, that it makes little sense and makes one think something else is at play. On the other hand, this was back in the days when E* was managerially totally out of control, so anything is possible.