NEW YORK — Voom HD brought out the big guns in the first day of testimony in the long-awaited trial of its $2.4 billion breach of contract suit against EchoStar Communications, calling cable legend Charles Dolan to the stand.
Dolan, who founded Voom HD and is currently chairman of Cablevision Systems, spent the early part of his twohour testimony answering questions about his long history in the industry. He created Voom in 2003 in a bid to capitalize on what he believed to be a burgeoning HDTV market.
EchoStar, now Dish Network, had agreed in 2005 to carry Voom’s 21 HD channels for 15 years, but dropped them in 2008. EchoStar had claimed Voom failed to invest an agreed upon $100 million annually in the service for its first five years, an assertion Voom disputes. Voom sued EchoStar shortly after the satellite giant stopped carrying the channels. The trial, in New York State Supreme Court in Manhattan, is expected to last four to six weeks. Dish chairman Charlie Ergen could take the stand later this week.
Dolan said it was his idea to include the $500 million spending requirement in the agreement, adding that the channels had spent $100 million or more annually since inception.
Dolan contended that Voom would have become successful if EchoStar had lived up to its end of the 15-year deal. At the time Voom was terminated, EchoStar had about 1.5 million HD customers (up from about 30,000 prior to the deal), and Dolan said he saw every indication that a large percentage of Dish’s 12 million subscribers would opt for HD service.
“There was so much momentum,” Dolan said. “We believed the package was becoming more attractive.”
But as the Voom relationship wore on, other programmers were simulcasting their standard-definition channels in HD and making them available for free. EchoStar found itself at a disadvantage as rivals like DirecTV were offering more HD channels at a much lower cost. That, according to Voom’s lawyers, is what prompted the satellite giant to take drastic measures to exit the contract.