EchoStar Distant Networks Deal Stirring More Trouble
In a last-ditch bid to win back thousands of subscribers it could ultimately lose owing to today’s distant networks shutdown deadline, EchoStar touted an 11th-hour deal with C- band satellite operator National Programming Systems (NPS). The agreement, the first of its kind, came as the 11th U.S. Appeals Court, Atlanta, denied EchoStar’s last request for delay. The deal had broadcasters in a fury. Networks involved in the litigation demanded late Wed. that EchoStar and NPS prove to U.S. Dist. Judge William Dimitrouleas their plan isn’t a “sham.” The arrangement’s survival depends on the courts.
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EchoStar agreed Nov. 29 to lease one of its satellite transponders to NPS, which has said it will use it to transmit distant TV network affiliate signals to EchoStar subscribers. NPS essentially will aim to win back EchoStar subscribers eligible for distant network delivery, it said. But the satellite firm will “be resoliciting these customers just like any other third party,” an NPS spokesman told us: “This won’t be a transfer of EchoStar customers.” EchoStar officials said their company will sell NPS bandwidth aboard EchoStar 7 but otherwise will not be involved. NPS, in business since 1985, has about 57,000 customers, mostly rural, in the dwindling C-band satellite market. That market has about 93,000 subscribers nationwide, the NPS spokesperson said.
The EchoStar/NPS deal defies a nationwide injunction, broadcasters said. After losing distant networks litigation and exhausting legislative options, EchoStar arranged for a 3rd party to do exactly what the injunction bars, broadcasters argued in an emergency motion filed late Wed. in the district court. “Under this scheme, EchoStar customers will continue to be able to receive distant network signals delivered by satellites owned by EchoStar, using satellite frequencies licensed by the FCC to EchoStar, and using satellite dishes provided by EchoStar,” CBS and affiliate groups told the court.
NAB backed the affiliates’ court filings at our deadline Thurs. The NPS-EchoStar deal isn’t a solution, but a “serial copyright abuser’s refusal to comply with numerous court verdicts and federal statutes,” the group said: “EchoStar demonstrates again its arrogant and flagrant contempt for the rule of law. We're hopeful the courts recognize this latest stunt for what it is.”
EchoStar isn’t trying to dodge the law, it told the court in a response filed Thurs. The DBS provider has disconnected over of its 850,000-odd distant networks subscribers, it said. It told the court it would “be completely out of the business of providing distant network channels” by today (Fri.). Arguing for consumer rights, EchoStar said though the Satellite Home Viewer Improvement Act (SHVIA) was intended to protect broadcasters’ copyrights, it also was designed to guard subscribers. “When a local broadcaster chooses not to invest in the equipment necessary to deliver its signal off air, consumers have the statutory right to choose to receive a distant signal,” the DBS operator said.
Little-known NPS, with hq in Indianapolis, introduced itself to the Hill in a Thurs. letter to lawmakers. “National Programming Service, LLC, as an independent company, plans to lease a transponder and legally provide this alternative to consumers,” it said: “These subscribers will become our customers and be able to regain their Network stations in a hassle free manner.” NPS told lawmakers it will serve only qualified customers, determined eligible to receive distant networks under “the broadcaster approved Decision Mark system.” The C-band company also said it isn’t an EchoStar affiliate, though it said it does have an independent retailer agreement with EchoStar to sell Dish Network Systems.
The EchoStar/NPS deal means Congress won’t have to stay involved, NPS officials said. EchoStar has pushed for a law to end its self-induced distant networks debacle. Sen. Leahy (D-Vt.) introduced a bill on the matter before Congress adjourned for Thanksgiving, but the move came too late to head off an injunction-driven shutdown (CD Nov 17 p4). “Calls received in Congressional offices can be referred to us to determine if they qualify to become our customer,” NPS said in its letter to lawmakers: “We would appreciate any help you could provide in encouraging the Broadcasters to accept ths alternative as a way to serve legitimate customers.”
“EchoStar’s scheme with NPS is flatly barred by the Permanent Injunction,” the broadcasters said in court papers. The nationwide distant networks injunction against EchoStar applies not only to Dish Network, but to “all persons in active concert or participation” with it, they said.
NPS generated the distant networks transmission idea and approached EchoStar, not the other way around, an NPS official and court papers said. “EchoStar was hoping for relief from the court or a settlement first,” the NPS official said. NPS may uplink whatever it wants with no obligation to use any EchoStar leased capacity for distant networks, the court-filed lease contract states. NPS will pay $150,000 a month for a transponder -- EchoStar’s rate for leasing satellite capacity to other companies, it said. The C-band company shares no officers, directors, employees or offices with EchoStar, and its customer service, billing and backhaul operations are independent of EchoStar’s, the contract said.
“This is now in the hands of the court to decide,” said EchoStar CEO Charles Ergen.