ESPN has had no live sports programming on for a month. The only reason to have ESPN is for live sports programming. This would be like TCM not showing classic movies or MTV not showing music videos... okay that second one was a bad example. ESPN's whole purpose doesn't exist right now. With Brady is Tampa, there is almost nothing to even talk about now.
I'm paying less for Starz than people are paying for ESPN at the moment... but I'm getting movies on Starz and almost no advertised programming on ESPN (well, if I got it). So ESPN is not providing sports programming, why should Dish be paying for it.
And it does go down the chain, why should ESPN be paying for the rights to broadcast certain things, if those events aren't happening. But Dish is right to ask for a refund.