Voom Claims More Than $1 Billion In Damages From Dish Diss

Network Claims DBS Breached Contract By Ditching 15-Year Carriage Deal

By Linda Moss -- Multichannel News, 6/2/2008 4:41:00 PM

Voom HD has filed an amended complaint against EchoStar, claiming it will suffer more than $1 billion in damages because the satellite provider dropped its 15-channel HD suite last month.

Voom filed its 28-page breach-of-contract action last week in New York Supreme Court against EchoStar, now known as Dish Network. It amends the suit that Rainbow Media’s Voom filed back in January against EchoStar, and claims the satellite company violated the affiliation agreement between both parties when it dropped the Voom networks in May.

The 100-count amended complaint claims that EchoStar was looking for ways to terminate the valid 15-year carriage deal it forged with Voom in 2005 by making “baseless” charges that Voom had violated the agreement.

 “EchoStar had no right to terminate the affiliation agreement on the basis of a trumped-up and pretextual claim of breach simply because it no longer liked the deal it struck,” Voom said in its amended document. “Unable to prevent EchoStar from ‘pulling the plug’ on Voom, Voom HD now has been forced to bring this suit for breach of contract to recover well in excess of $1 billion of damages that it will suffer as a result of EchoStar’s wrongful and improper termination.” 

The affiliation deal initially called for the satellite provider to pay a license fee of $3.25 a month per HD subscriber receiving Voom.

“With EchoStar’s HD subscriber base already having expanded from approximately 20,000 at the end of 2005 to approximately 1.3 million at the end of 2007, and its HD subscriber base projected to grow to more than 11 million by the end of the term of the contract, Voom HD was expected start turning a profit as early as 2009, and generate billions of dollars in revenue over the life of the affiliation agreement,” Voom said in its amended complaint. 

EchoStar declined to comment on Voom’s amended complaint last week. Alleging a breach in their deal, EchoStar dumped the Voom networks in May.

 Voom said it’s already spent more than $300 million on its HD suite, whose only other distributor is Cablevision Systems, parent of Rainbow Media.

“Since the middle of 2007, EchoStar has been dissatisfied with its payment obligations under the affiliation agreement, and tried to fabricate a basis for avoiding its commitments to Voom HD,” the amended complaint said.

EchoStar has charged the Voom HD failed to meet its investment requirement for the suite, which Voom HD denied.

Voom HD is seeking “substantial damages in an amount to be determined at trial.”