DirecTV Reaches Accord With Lifetime

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

The nation’s largest satellite provider and the women’s programmer, originally set to go to trial last week on the breach suit, have reached a tentative settlement, according to papers filed May 22 with the U.S. District Court for 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 a month ago, on May 10, according to court filings.

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

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

DirecTV alleged in its suit that Lifetime had reneged on a deal to pay $200 a head to EchoStar Communications’ Dish Network subscribers who switched over to DirecTV earlier that year.

Lifetime’s counterclaim denied it had an “enforceable contract” and alleged that Direc TV was withholding payment of license fees for Lifetime and LMN.

The programmer also complained in its countersuit that DirecTV was withholding payment of license fees for Lifetime and Lifetime Movie Network, starting with December 2005. It’s unclear if DirecTV has continued to hold back those payments, but last year, the satellite 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.

Officials at Lifetime and DirecTV last week confirmed that a tentative settlement had been reached, but they both said the terms are confidential. They declined to comment on whether DirecTV was still withholding license fees.

The license fees in question could add up to tens of millions of dollars. Using SNL Kagan figures, DirecTV’s license fees for Lifetime and Lifetime Movie Network would be in the ballpark of $5 million a 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 satellite provider is suing Comcast over the cable operator’s high-definition ads.

In its Lifetime suit, DirecTV was seeking $12 million in damages. The satellite provider had also charged in its litigation that Lifetime had violated a most-favored-nation clause in its carriage deal, asserting that EchoStar had gotten what amounted to a lower license fee — or 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 gaining 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 Corp. 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 that Hearst-Argyle collected in 2005. But the broadcaster doesn’t break out how much of that retransmission revenue comes 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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