Dish Network takes ESPN to trial over licensing deal

Mon Feb 11, 2013 7:15pm EST
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By Nate Raymond and Liana B. Baker

NEW YORK (Reuters) - Dish Network Corp went to trial against ESPN Inc on Monday over claims the sports programmer owes it more than $152 million after breaching a contract by offering better deals to rival distributors.

The lawsuit in U.S. District Court in Manhattan pits the No. 2 U.S. satellite company against the sports affiliate of media group Walt Disney Co.

Adding another wrinkle, the distribution deal at issue is set to expire this year, meaning the case might potentially impact talks for a future contract. Dish, controlled by billionaire founder Charlie Ergen, commonly uses lawsuits to gain leverage in these types of negotiations, analysts said.

With more than $8 billion a year in fees and ad sales, according to research firm SNL Kagan, ESPN reigns as the giant of the sports network market.

In 2012, it charged cable and satellite companies an average of $5.15 per subscriber per month, which makes it the most expensive channel, according to SNL Kagan. The research firm said ESPN Classic, a channel central to the lawsuit, charged programmers a separate fee of 19 cents per month.

Dish and its larger satellite rival DirecTV have been vocal about rising sports programming fees and how the cost is passed on to consumers.

The lawsuit that went to trial before a jury on Monday centers on terms ESPN negotiated with Dish and its competitors to distribute channels, including ESPN Classic, which shows game reruns, and ESPN Deportes, a Spanish language channel.

In the lawsuit, filed in August 2009, Dish accused ESPN of breaching a clause in their 2005 agreement that required the sports programmer to offer the same terms as it did to competitors.   Continued...

The sign in the lobby of the corporate headquarters of Dish Network is seen in the Denver suburb of Englewood, Colorado April 6, 2011. REUTERS/Rick Wilking