Mouse flips bird
Disney wins round vs. satcaster EchoStar
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Disney's initial victory took place Monday, when a Los Angeles federal district court judge granted Disney an 11th-hour temporary restraining order preventing EchoStar from following through on its threat to drop ABC Family from its satellite, which would've cost the channel 6.4 million subscribers as of Jan. 1.
The stakes are high for both Disney and EchoStar. The satcaster is trying to convince Washington regulators that its proposed merger with DirecTV -- which would create a virtual monopoly in the delivery of TV programming by satellite in the U.S. -- should gain approval for one overriding reason: The merger would toughen the satellite industry so it would be a stronger competitor to the near-monopoly power that cable operators wield. Cable reaches about 70 million households compared to only 17 million or so homes that own satellite dishes. To get approval, EchoStar needs to avoid acting like an arrogant monopolist.
For Disney, the issues are more immediate. If EchoStar drops ABC Family, which the Mouse House bought for the humongous pricetag of $5.2 billion in October, the cable net would lose millions of viewers just at the point when Disney is beefing up the channel's programming with high-visibility movies and series reruns.
Bob Iger, president and chief operating officer of Disney, expressed satisfaction that his lawyers will now get the chance to argue for more permanent relief with regard to ABC Family's carriage on EchoStar. Disney plans to file fresh arguments by Jan. 4 tied to a new court date of Jan. 10.
But EchoStar stopped carriage of another Disney-owned network, ESPN Classic, on Jan. 1, the date the contract ran out. EchoStar "is getting its pound of flesh," Iger said, "but it's the satellite customers that are the losers."
According to industry practice, satellite distributors will typically continue to carry a cable network even after the contract has run out while the parties negotiate the terms of a renewal.
But one of EchoStar's arguments before the court is that it needs the channel space taken up by ABC Family and ESPN Classic for as many as 250 local-TV-station signals that the government required satcasters to pick up on Jan. 1 as part of the must-carry laws.
ESPN Classic's removal from EchoStar raises no legal issues because the contract had run out. But ABC Family is in the courts because the web's in the middle of a 10-year contract signed back in 1995 when Pat Robertson, chairman and CEO of the Christian Broadcasting Network, owned the network, then called the Family Channel.
Contract nixed?
EchoStar claims in its argument before the court that when Rupert Murdoch and Haim Saban (who bought Family from Robertson in 1997) sold the network to Disney earlier this year, the ownership change triggered a clause in the contract allowing EchoStar to terminate the carriage deal and pull ABC Family.
Disney disputes the EchoStar claim, arguing that Intl. Family Entertainment, now a Disney subsid, is the same entity that owned the channel before its sale. In addition, Disney argues, the network is more valuable as a family-oriented service than ever. During the fourth quarter, according to network researchers, ABC Family's lineup of shows delivered the best quarterly rating in the network's history, both among households and adults 18-49.
Money is at the heart of some of the legal charges, with Disney saying that, in exchange for keeping ABC Family on the satellite, EchoStar tried to extract discounts across the board for all of the Disney nets, such as ESPN, the Disney Channel, ESPN2 and Soap Net.
Business as usual?
EchoStar's take is that negotiations like this go on all the time between networks and distributors and that the Disney/ESPN group of networks pulls more money from cable and satellite than any other comparable group of program services, including the MTV nets, Turner webs and Fox cable nets.
Even Pat Robertson has weighed in on the dispute: His hourlong "700 Club" runs twice a day on ABC Family, at 11 p.m. and 10 a.m., Monday through Friday, a stipulation on which he insisted before he agreed to sell the network.
In a Dear Charlie letter dated Dec. 31, Robertson wrote that he's "astounded" Ergen would even think of removing ABC Family from EchoStar.
"I cannot believe," Robertson said, "that someone of your integrity and values would deny your subscribers in the rural counties of America quality family programs while at the same providing them five channels of pornographic material."
