Judge Won’t Bar Dish From Moving Voom To Alternate Tier

Author:
Publish date:
Updated on

A judge has refused to issue a preliminary injunction against Echostar Satellite LLC, which has gone ahead and moved Rainbow Media’s Voom suite of HD-only networks down to a less-penetrated HDTV tier.

New York Supreme Court Judge Richard Lowe Monday issued a 15-page ruling rebuffing Voom’s effort to temporarily block Echostar and Dish Network from relegating its 15 HD networks to a tier, “DishHD Ultimate,” instead of on the satellite provider’s more widely penetrated HDTV basic offering, “DishHD Essential.”

DishHD Essential is $10 a month, while DishHD Ultimate, with 19 networks, is an additional $10 on top of that, for $20 total a month.

In his ruling, the judge found that Voom failed to demonstrate that it will suffer immediate irreparable harm. Judge Lowe wrote that “Voom acknowledges that it has yet to obtain strong brand loyalty” and that it has “failed to demonstrate a likelihood of success on the merits” of the case.

Earlier this year, on Jan. 30, Echostar told Voom that it was terminating their 15-year carriage deal effective Feb. 1 and was looking to totally drop Voom’s HD suite from Dish Network’s lineup, according to the complaint filed by Voom. That’s when Voom sought the preliminary injunction.

That lawsuit, which also seeks a permanent injunction and declaratory judgment against Echostar, is still pending.

“This litigation is ongoing and it would be inappropriate to comment at this time,” a Rainbow spokesman said Tuesday.

Echostar declined to comment Tuesday, so it’s not known if the satellite provider is still planning to take the Voom networks off the air. According to Dish Network’s Web site Tuesday, the Voom services are now part of the Dish’s “Ultimate” HD tier.

In its original complaint, Voom charged that if Echostar drops Voom’s HD networks, it will violate their affiliation deal and “will deprive Voom HD of the substantial payments and broad distribution …to which it is unquestionably entitled under the agreement, thereby causing Voom HD irreparable and devastating harm, and threatening its continued existence.”

Currently, Voom’s only other distributor is its parent company, Rainbow owner Cablevision Systems. That carriage deal expires June 30. 

In 2005, Echostar bought Voom’s satellite from Cablevision for $200 million. Echostar affiliate, Echostar Media Holdings, got a 20% stake in Voom HD as part of that sale. And the Voom-Echostar affiliation agreement also flowed out of that transaction.

The Voom-Echostar 2005 carriage deal, which Voom described as a “multi-billion dollar, 15-year contract,” called for Echostar to pay a subscriber fee of $3.25 a month per HD customer in the first year of deal, with annual increases until it reached $6.43 a month in the pact’s final year.

That carriage deal, according to Voom, also called for Echostar to offer the Voom suite on the satellite provider’s basic HD package, to reach at least 93% of its HD subscribers this year.

For its part, Echostar argued that Voom has violated a provision of their carriage deal where Voom agreed to spend $100 million a year on a 21-channel version of Voom, up to an aggregate of $500 million. But Voom reduced its number of services to only 15, so it argues that its annual required spending “is currently no more than $82 million.”

In its complaint, Voom maintained that in 2007 it spent “$114 million in new dollars on Voom.” But Echostar argued that Voom has breached the spending requirement, in part because it included overhead expense as part of its spending obligation.

As a result, in November Echostar said it would terminate its carriage deal with Voom because of alleged spending shortfall unless Voom agreed to be carried on a “tiered” basis.

Then in January, according to Voom’s suit, Echostar said it would totally drop Voom Feb. 1 unless Voom agreed to a 30-day standstill period, when Voom would be re-tiered .

“Echostar further stated that it reserved its right to shut Voom off again if a new deal acceptable to Voom was not reached during such interim period,” Voom’s complaint said.

Echo wrote Voom on Jan. 30 to say it had terminated the affiliate agreement, Voom said in its suit, which said it has already spent $270 million on its HD suite.

Voom maintains it won’t be able to secure a national footprint if Dish Network stops carrying its suite, because the other nationwide distributor, DirecTV, has indicated it won’t carry Voom’s 15 HD channels.

In its papers, Voom also said that it would be “inconceivable” for any cable operator or satellite company to carry all 15 of its HD networks for 15 years, which are its terms with Echostar.  

Related