EchoStar Distant Networks Have Hill, Court Attention
A legislative remedy for EchoStar’s distant network troubles proposed by Sen. Stevens (R-Alaska) as an amendment to the Defense Appropriations Act was rejected Thurs., as the bill sailed through the Senate 98-0. Democrats launched the opposition that blocked the move, Hill sources said. Stevens’ amendment would have codified the settlement EchoStar recently reached with all broadcasters still litigating against it, except Fox (CD Aug 29 p1). The EchoStar-Fox standoff -- the latest twist in an 8-year-old legal proceeding -- now has the attention of several lawmakers, including Sens. Allard (R-Colo.) and Salazar (D- Colo.) from EchoStar’s home state.
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The Fox Network and 25 stations that Fox owns have refused to compromise with EchoStar on distant networks, citing what they say are years of EchoStar disregard for distant network rules and thousands of ineligible distant network subscribers. A nationwide injunction against EchoStar’s provision of out-of-market networks, which would cut off around 800,000 subscribers, can’t come soon enough for Fox: The firm asked U.S. Judge William Dimitrouleas to hand down the injunction over a week ago. “It’s extraordinary that after 8 years of deliberately ignoring federal statutes, EchoStar is now running to Congress to solve the problem. If EchoStar had acted legally in the last decade, as its competitor DirecTV did, it wouldn’t face these problems now,” a News Corp. spokesman said.
Lawmakers and industry onlookers have blamed Fox’s connection to DirecTV, through parent News Corp., for the standoff. A loss for EchoStar would be a win for DirecTV, they've said. Allard and Salazar this month urged a Senate Judiciary Committee inquiry into the matter. In a letter to Chmn. Specter (R-Pa.), the Colo. senators said Fox’s refusal to settle “raises serious questions about whether the News Corporation, using Fox Network and DirecTV, has engaged in behavior that would threaten the viability of the satellite TV market.” Congress “must ensure Fox’s decision to pull out of negotiations was not motivated by a desire to ensure that DirecTV wins the market share that will be abandoned should EchoStar be forced to turn off distant signals,” the letter said.
News Corp. claims the senators are way off. “We started this action against EchoStar years before we owned DirecTV,” said a News Corp. spokesman: “It’s ridiculous to suggest that DirecTV and Fox are the bad guys.”
EchoStar CEO Charles Ergen has “been on the Hill all week” raising the distant networks issue, sources said. Broadcasters other than Fox have also been active, we're told. EchoStar’s current compromise is with ABC, NBC, CBS and Fox affiliates. If approved by the courts, EchoStar would yank illegal distant network subscribers, add 10 local markets to its 2006 roster and pay $100 million. “The broadcasters involved also have a vested interest in making sure the settlement happens,” said a broadcast source: “They're equally motivated to try and preserve the settlement.”
EchoStar and the affiliate associations are working under a Sept. 12 deadline. They have until Tues. to “show cause” why the U.S. Dist. Court, Miami, shouldn’t immediately impose the nationwide permanent injunction. An attorney for the ABC, CBS, NBC and Fox affiliates said the group “will file early next week to explain why the court should reject Fox’s motion, and to explain why the court shouldn’t enter the nationwide injunction, but should accept the settlement instead.” EchoStar and the affiliates will file separate briefs, the attorney said. Fox will probably file an argument similar to the one it recently made, the attorney said: No one other than the 11th Circuit and the U.S. Supreme Court can change the 11th Circuit’s injunction mandate.
It’s unclear how quickly the judge will rule after Tues., sources said. The court isn’t obligated to accept a partial, or even a full, settlement. Meantime, congressional action could reinforce the settlement agreement now in place, sans Fox. “It shouldn’t take an act of Congress to settle a case, but congressional actions have been reinforcing our position that parties should be able to settle cases if they want to,” the affiliates’ attorney said.