DirecTV, Lifetime Reach Tentative Settlement

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It looks like DirecTV, which is involved in at least three messy litigations, resolved one of them -- namely its breach-of-contract lawsuit against Lifetime Television.

The nation’s largest direct-broadcast satellite provider and the women’s programmer, originally set to go to trial Tuesday, reached a tentative settlement, according to papers filed May 22 with the U.S. District Court of the Central District of California in Los Angeles.

A hearing on the pending legal matter has been continued to July 2, as both sides are in the process of documenting the settlement terms, court papers said. The tentative settlement was reached May 10, according to court filings.

“We confirm that a tentative settlement has been reached, but terms are confidential,” Lifetime said in a prepared statement. DirecTV also confirmed the settlement but declined additional comment.

DirecTV filed its breach-of-contract suit against Lifetime last March, alleging that the programmer reneged on a deal to pay $200 per head to EchoStar Communications’ Dish Network subscribers who switched over to DirecTV earlier that year. Lifetime extended the $200 offer after it was dropped, for about one month, by Dish during a contract dispute.

Lifetime filed a counterclaim against DirecTV last April, conceding that it retracted its $200 offer but denying that it ever had an “enforceable contract” with DirecTV.

The programmer also complained that DirecTV was withholding payment of license fees for Lifetime and Lifetime Movie Network, starting with December 2005 and January 2006. It’s unclear if DirecTV continued to hold back those payments, but last year, the DBS provider asserted that it planned to continue withholding license fees to offset the damages it was incurring because of Lifetime’s alleged breach of contract.

The license fees in question add up to tens of millions of dollars. Using SNL Kagan figures, DirecTV’s license fees for Lifetime and LMN would be in the ballpark of $5 million per month.

In addition to its suit against Lifetime, DirecTV is involved in two other pending lawsuits. DirecTV is being sued by Time Warner Cable over its HDTV ads, and the DBS provider is suing Comcast over the cable operator’s HDTV ads.

In its Lifetime suit, DirecTV was seeking $12 million in damages. The DBS provider also charged in its litigation that Lifetime violated a most-favored nation clause in their carriage deal, asserting that EchoStar got what amounted to a lower license fee -- on net effective rate -- from the women’s programmer.

The litigation was messy for both sides. Back in November, a judge ordered DirecTV to produce all of its distribution agreements, from 2000 to present, that involved the satellite provider getting retransmission consent for TV stations in exchange for carrying a cable network.

In the deal that got Lifetime back on Dish, EchoStar pays the network directly for carriage and also to distribute the signals of Hearst-Argyle TV stations. Hearst owns 50% of Lifetime and controls the broadcast group.

Under its agreement with EchoStar, Lifetime has to compensate Hearst-Argyle directly for Dish’s retransmission of the broadcaster’s stations, reportedly $11 million.

Hearst-Argyle received $17.7 million in retransmission-consent revenue last year, “payable to us by Lifetime,” stemming from deals Lifetime brokered for it, acting as its agent, according to the broadcaster’s 10-K filing. That’s more than double the $6.7 million in such revenue Hearst-Argyle collected in 2005. But the broadcaster didn’t break out how much of that came from satellite providers versus cable operators or telcos.

In the first quarter, Hearst-Argyle reported $4.9 million in retransmission-consent revenue “payable to us by Lifetime,” a slight increase from $4.6 million in the first quarter last year.

In September, the court ordered Lifetime to produce a host of documents relating to its negotiations and communications with EchoStar and the Hearst stations.

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