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ESPN Ordered to Pay Dish Network $4.86 Million for Breach of Contract


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#1 OFFLINE   phrelin

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Posted 28 February 2013 - 04:38 PM

From The Hollywood Reporter:

After a day of deliberation, a federal jury gave a mixed verdict in Dish Network's lawsuit against ESPN for allegedly breaching the terms of a 2005 licensing agreement. Dish has been awarded $4.86 million after prevailing on one of its four breach-of-contract claims.

Dish spent nearly three weeks in a New York federal court attempting to prove that ESPN had violated a "most favored nation" clause in an eight-year licensing agreement. The contractual provision entitled Dish to be given the opportunity of receiving equal treatment on subscriber rates and packaging conditions when ESPN gave Dish's competitors better deals.

Specifically, Dish accused ESPN of allowing Comcast to remove packaging requirements that allowed ESPN Classic to be distributed beyond its most widely-distributed tier; of allowing DirecTV, Verizon and Time Warner Cable to have lower subscription rates on ESPN Deportes; and allowing others a la carte rights on ESPNHD, ESPN Classic, ESPNU and ESPN2.

It wasn't everything Dish hoped for, but....

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#2 OFFLINE   sigma1914

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Posted 28 February 2013 - 04:47 PM

$4.86 million is a drop in a bucket to ESPN. ;) Especially when their value is $4 BILLION.

ESPN is worth $40 billion according to a research report this summer from Wunderlich or barely ten times earnings before interest, taxes, depreciation and amortization of $3.9 billion. Disney as a whole is currently worth $84 billion (Hearst owns a 20% stake in ESPN with Disney owning the rest)

http://www.forbes.co...rth-40-billion/
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#3 OFFLINE   phrelin

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Posted 28 February 2013 - 04:54 PM

$4.86 million is a drop in a bucket to ESPN. ;) Especially when their value is $4 BILLION.

Also true for Dish which has an annual gross revenue of $14.3 billion. And certainly wasn't the win that Dish wanted, but it is probably enough to make the Disney/ESPN folks a little more cautious.

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#4 OFFLINE   James Long

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Posted 28 February 2013 - 05:04 PM

DISH won? Cool. It isn't a lot of money but there are some principles involved.

#5 OFFLINE   fudpucker

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Posted 28 February 2013 - 05:08 PM

DISH won? Cool. It isn't a lot of money but there are some principles involved.


I'm guessing, since ESPN won 3 of the 4 breach of contract claims and the punishment on the one they did lose was pretty tiny, ESPN will take this as a win.

Edited by fudpucker, 01 March 2013 - 10:44 AM.


#6 OFFLINE   Stewart Vernon

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Posted 28 February 2013 - 06:52 PM

A win is better than a loss... but most importantly, if things continue to move forward... maybe we will see the return of those lost HD feeds + ones like ESPNUHD come sooner rather than later.

It might even help if each side can claim a "win" so that neither has an upper hand to be stubborn in coming to an agreement.

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#7 OFFLINE   lwilli201

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Posted 28 February 2013 - 06:59 PM

Only the lawyers will see any of that money.
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#8 OFFLINE   donalddickerson2005

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Posted 28 February 2013 - 08:32 PM

DISH won? Cool. It isn't a lot of money but there are some principles involved.

OK so dish won but the thing no one is talking about is that ESPN and dish are in NEW contract negotiations so buyer beware dish may LOSE ESPN soon.
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#9 OFFLINE   bluegras

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Posted 28 February 2013 - 08:59 PM

now i hope the two would get along so we can get these HD feeds back
ABCFamilyHD,ESPNUHD,ESPNNEWSHD,DisneyHD,DisneyXDHD,Disney JuniorHD

#10 OFFLINE   RAD

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Posted 28 February 2013 - 09:24 PM

now i hope the two would get along so we can get these HD feeds back
ABCFamilyHD,ESPNUHD,ESPNNEWSHD,DisneyHD,DisneyXDHD,Disney JuniorHD


I thought there was another trial going on about Dish not paying for the HD feeds of those channels?

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#11 OFFLINE   James Long

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Posted 28 February 2013 - 10:06 PM

OK so dish won but the thing no one is talking about is that ESPN and dish are in NEW contract negotiations so buyer beware dish may LOSE ESPN soon.

There are always negotiations going on between carriers and some provider ... and even if it gets to the point where ESPN leaves DISH later this year they will be back. It is just the nature of the business ... and while some will claim DISH loses more channels than anyone else NO carrier is immune from contracts expiring and channels being temporarily lost. No no, not one.

It is better to have these cases out of the way before the deadlines. One less thing to talk about in the negotiations.

#12 OFFLINE   donalddickerson2005

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Posted 28 February 2013 - 10:09 PM

There are always negotiations going on between carriers and some provider ... and even if it gets to the point where ESPN leaves DISH later this year they will be back. It is just the nature of the business ... and while some will claim DISH loses more channels than anyone else NO carrier is immune from contracts expiring and channels being temporarily lost. No no, not one.

It is better to have these cases out of the way before the deadlines. One less thing to talk about in the negotiations.

Correct but all the others are locked up for years to come. If abc-espn wants to mess over dish all they have to do is not renew. How many people would switch to DirecTV or cable if that was to happen.
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#13 OFFLINE   n0qcu

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Posted 28 February 2013 - 10:14 PM

Correct but all the others are locked up for years to come. If abc-espn wants to mess over dish all they have to do is not renew. How many people would switch to DirecTV or cable if that was to happen.


Some probably will leave but there will be others that wont even miss any of the abc/espn channels
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#14 OFFLINE   James Long

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Posted 28 February 2013 - 10:35 PM

Correct but all the others are locked up for years to come. If abc-espn wants to mess over dish all they have to do is not renew. How many people would switch to DirecTV or cable if that was to happen.

About as many as would switch to DISH because of some problem they see with DirecTV or cable.

ESPN leaving DISH would be temporary ... ESPN needs DISH's 14 million customers paying for their networks. Subscribers and ad revenue based on market penetration (how many homes they are in) is how ESPN makes their money. ESPN needs DISH. It is a symbiotic relationship.

#15 OFFLINE   donalddickerson2005

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Posted 28 February 2013 - 10:44 PM

About as many as would switch to DISH because of some problem they see with DirecTV or cable.

ESPN leaving DISH would be temporary ... ESPN needs DISH's 14 million customers paying for their networks. Subscribers and ad revenue based on market penetration (how many homes they are in) is how ESPN makes their money. ESPN needs DISH. It is a symbiotic relationship.

Using your logic why doesn't dish and cable have Sunday ticket.
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#16 OFFLINE   James Long

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Posted 28 February 2013 - 11:09 PM

Using your logic why doesn't dish and cable have Sunday ticket.

For the same reason why the HBO channels are not in AT120 / Entertainment level packages. The NFL decided that they would make more money selling that content to less people at a premium.

The NFL would not be able to pull in the high dollars per subscriber if every carrier could get the package. And while one might argue that ESPN could convert to a premium, they would have to raise their rates more than the 2012 estimated $5 or 2017 predicted $8. Those rates are dependent on ESPN keeping or growing their subscriber count. The more subscribers they lose, the more money they have to get from the subscribers they keep.

If a non-DISH subscriber wishes that DISH lose ESPN forever then they are simply wishing that their own prices be increased. :D

As far as DISH goes, they do better financially in quarters where they lose subscribers (run the numbers :)). When a customer doesn't renew DISH does not have to keep paying ESPN and the other channel providers for that customer. Yet ESPN has to keep paying for their content and production even when they lose subscribers. Plus ESPN can take a hit from advertisers who buy based on market penetration and viewership, and from content providers who want their sports seen on all providers. Long term - Not being on DISH would hurt ESPN.

Edited by James Long, 28 February 2013 - 11:14 PM.


#17 OFFLINE   phrelin

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Posted 28 February 2013 - 11:52 PM

The day sports fans start advocating to include HBO in all tiers for a mere $7.00 a month increase in their bills, I'll start considering that ESPN in all tiers is just fine. Otherwise, I'm puzzled why someone thinks my subsidizing their entertainment interest is ok while they don't subsidize mine. HBO has about 30 million subscribers in the United States including me, so it's not exactly of minor interest like the basket weaving channel.

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"Always poke the bears. They sleep too much for their own good."

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#18 OFFLINE   James Long

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Posted 01 March 2013 - 12:14 AM

The day sports fans start advocating to include HBO in all tiers for a mere $7.00 a month increase in their bills, I'll start considering that ESPN in all tiers is just fine. Otherwise, I'm puzzled why someone thinks my subsidizing their entertainment interest is ok while they don't subsidize mine. HBO has about 30 million subscribers in the United States including me, so it's not exactly of minor interest like the basket weaving channel.

30 out of 100 million isn't bad ... but the key is that selling HBO as a premium is what HBO has done with their programming since the beginning and the way that they as a company choose to market their programming. They have been able to create a nice suite of channels with that marketing plan.

And others have also chosen the "sell to less for more per subscriber" method of pricing their channels. It is a valid choice.

ESPN has chosen the other path ... the "be in every home and charge as many people as possible" distribution plan. It is a valid and more popular choice. There are very few premium channels/packages and a lot of channels pushing to be in as many homes as possible.

ESPN is not one of my go to channels ... the only time I watch it is when they put something there that normally I watch on other sports channels. I wish they were not the poster child for high priced channels ... but they got there by getting in at the base level and fighting to stay there.

I defend ESPN's choice to be one of the core basic channels on cable and satellite. I defend HBO's choice to be a premium channel package. Both are locked into their current strategies enough that if ESPN decided to go premium and HBO decided to go basic they both would end up losing.

Some strategies work better for some channels than others.

#19 OFFLINE   sregener

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Posted 01 March 2013 - 05:07 AM

Using your logic why doesn't dish and cable have Sunday ticket.


Because DirecTV bribed the NFL for exclusive rights. Oh, wait, that's called a contract payment, not a bribe. And DirecTV did it because they believed (and still do, apparently, since they keep re-upping the contract) that enough people will choose DirecTV simply because they have NFL Sunday Ticket to justify the cost. Ad revenue from Sunday Ticket is a small part of the NFL's payment for programming. It is a huge part of ESPN's.

#20 OFFLINE   LtMunst

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Posted 01 March 2013 - 07:41 AM

Some probably will leave but there will be others that wont even miss any of the abc/espn channels


I think in this case it would be a lot more than some. No family with kids under 10 would be able to go without the Disney channels for an extended period. Also, even casual sports fans would be annoyed with the loss of ESPN. The only sport I watch regularly is college football for 3 months out of the year. ESPN is probably more than half of that. Not having that would be a real nuisance.

I would not expect a long term loss of either the Disney Channels or ESPN...but let's not kid ourselves that Dish could just do without them. This is not AMC or Lifetime....Dish would lose millions of customers.
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