DISH -VS- VOOM - A Settlement has been reached!
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[h=1]AMC Networks CEO Tells Court He Didn’t Hide VOOM Budget From Dish Network[/h] By DAVID LIEBERMAN, Executive Editor | Tuesday October 2, 2012 @ 7:13pm
AMC chief Josh Sapan was under the gun today as Day 3 of the VOOM trial focused on a key question: Did AMC and its former parent, Cablevision, hide from Dish a budget that would have clearly given the satellite company the right to end its 15-year agreement to carry the now-defunct VOOM suite of HD channels? AMC’s $2.5B suit alleges that Dish breached the contract in 2008 when it dropped VOOM. But Dish says AMC and Cablevision already violated the deal by failing to invest at least $100M a year in VOOM — something the budget would have revealed.
Read the rest at http://www.deadline.com/2012/10/amc-networks-dish-josh-sapan-voom/
AMC chief Josh Sapan was under the gun today as Day 3 of the VOOM trial focused on a key question: Did AMC and its former parent, Cablevision, hide from Dish a budget that would have clearly given the satellite company the right to end its 15-year agreement to carry the now-defunct VOOM suite of HD channels? AMC’s $2.5B suit alleges that Dish breached the contract in 2008 when it dropped VOOM. But Dish says AMC and Cablevision already violated the deal by failing to invest at least $100M a year in VOOM — something the budget would have revealed.
Read the rest at http://www.deadline.com/2012/10/amc-networks-dish-josh-sapan-voom/
You assume that "the service" means "the business" when that is unclear. To continue the analogy that is like the contract says "spend $xx on the restaurant's service" and then getting the reply, "OK, we spent a little less than that, but made up for it buying the wait staff company cars. That still counts as service."
Dish filed a letter and 15 or 20 exhibits with the court - all are sealed since they assert privilege. Offhand, I don't understand why the letter to the court would be sealed, but they've asserted privilege on almost everything to date so why change now. Anyway, Voom filed a letter with the court yesterday that has been posted online (attached). Voom basically contends there are two documents, which Dish is withholding by asserting privilege, that may prove Dish execs knew that the spend provision included other expenses besides programming. These are in addition to the documents and appendices that were exchanged (submitted by Voom to the court) and agreed to during the due-diligence phase prior to entering the contract. Interesting read...
Yes and no. Since "the service" does not specify only the food, then, yes, any expenditure for "the service" would be acceptable.
Obviously, giving employees cars for personal use could certainly be argued is not a legitimate expense. However, cars used for food delivery to customers, or to pickup of ingredients from markets, or for advertising and marketing purposes, etc, could easily be justified.
I don't necessarily assume "the service" means "the business", although an argument can easily be made for it, depending on how far one wants to consider what is a legitimate business expense. But, it is most certainly clear that "the service" is not limited to "programming". Otherwise, it would have specifically stated "programming". Dish's attorneys cannot be so stupid to have drawn up a contract that didn't specifically state that, if that's what they intended.
BTW, is there evidence that some of that $103M of Voom budget was spent on non-business related items?
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I have not read the arguments, so this is only my take. I assume the agreement was about VOOM delivering programming to Dish, therefore the service stipulated in this agreement could be interpreted as the service of providing the programming, cost associated with refurbishing the VOOM executive offices would not be part of it.
If the language of the agreement is not clear, then the other communications between VOOM and Dish could possibly clarify the term.
If the language of the agreement is not clear, then the other communications between VOOM and Dish could possibly clarify the term.
No. The audit confirmed that the 102.9M was spent on the VoomHD business and this issue has never been raised into question. The only point of contention was that EchoStar claims the term "the service" refers to programming only while AMC says it includes programming and all customary overhead expenses (salaries, marketing, etc.).
It's important to understand there are really several documents that must be treated as a whole when assessing this business contract...especially since the court ruled 'the service' was ambiguous and they would need to evaluate other evidence as to what the parties reasonably understood 'the service' to mean and how spending would be tallied:
1. The Affilitation Agreement in which "the service" is not defined, thus ambiguous.
2. The Partnership Agreement that gave EchoStar a 20% equity in Voom HD Networks LLC (or whatever they were called), which was executed at the same time of the Affiliation Agreement. Voom has argued the two documents are intertwined since one would not exist without the other.
3. Annex B to the Partnership Agreement defines "the service" and all the other terms and conditions within.
4. As I recall, Annex B is the same document Voom-EchoStar agreed to while operating under the pre-affiliation agreement (prior to the Affiliation and Partnership Agreements).
Of course, I may be completely wrong...
From Voom's perspective, 'the service' was defined in Annex B of the Partnership Agreement that was executed in conjunction with the signing of the Affiliation Agreement. I would assume there were two separate legal documents since Rainbow Media/AMC had an option to purchase EchoStar's 20% equity, at fair market value, in Voom HD LLC once the $500M spend requirement was met. Hence, they could quickly close the Partnership Agreement while both parties continued to operated under the 15-year Affiliation Agreement. Anyway, one of Voom's many agruments is that EchoStar knew what 'the service' meant since Annex B was incorporated into the Partnership Agreement, which was extracted from the pre-affiliation agreement (April 2005 - November 2005). I don't recall if I have seen Annex B, but I have seen Annex B terms summaried and presented to the court. I'll have to dig it up when I find time to look through 431 exhibits.
jacmyoung said:
The problem is this was, in fact, a complex partnership, distribution and service agreement. Personally, I'm stumped as to why two multi-billion dollar companies would not reiterate the terms and definitions or incorporate Annex B into the Affiliation Agreement? You wonder what they are paying their contacts attorneys to do..
If that is indeed the case, then Voom/Rainbow/AMC/Cablevision/Whatever will win, and Dish will lose. It's that simple.
Now, the two parties are going to have to think about what's more advantageous to them, let the case play out to what will most likely be a decision in Voom's favor, but will leave AMC 14 million viewers in the whole? Or, settle for a dollar amount that could save Dish substantial cash, but would mean giving in and bringing back the despised AMC? It is really in both of their best interests to settle.
Charlie is a pragmatist. But, he also seems to let personal feelings get in the way of business decisions. So, it'll be a tough one to handicap. But, the longer he lets the case run, and more it looks like an AMC win, the less leverage he will have in possible settlement negotiations.
riffjim4069 said:3. Annex B to the Partnership Agreement defines "the service" and all the other terms and conditions within.
4. As I recall, Annex B is the same document Voom-EchoStar agreed to while operating under the pre-affiliation agreement (prior to the Affiliation and Partnership Agreements).
Of course, I may be completely wrong...
How was "service" defined in Annex B then?
Realize that Dish perhaps deliberately left some terms ambiguous, just for possible future use in a court battle (or dispute) such as right now. Then, they can "play dumb" and use it to claim exactly what they are claiming as the $100million was to be spent on programming, and nothing but!
That is sometimes an effective strategy, but I don't think it's going to work considering how this is all playing out. It's clear Voom really has their paperwork and ducks all lined up in a neat little row, and Dish is doing everything they can to obfuscate or side-track everything based on supposed "unclear language".
Charlie is a poker player, but he's running a shell-game this time instead, and hoping he palmed the pea good enough to help their court case. Unfortunately for him, it doesn't appear to be working in this case.
That is sometimes an effective strategy, but I don't think it's going to work considering how this is all playing out. It's clear Voom really has their paperwork and ducks all lined up in a neat little row, and Dish is doing everything they can to obfuscate or side-track everything based on supposed "unclear language".
Charlie is a poker player, but he's running a shell-game this time instead, and hoping he palmed the pea good enough to help their court case. Unfortunately for him, it doesn't appear to be working in this case.
"Realize that Dish perhaps deliberately left some terms ambiguous, just for possible future use in a court battle (or dispute) such as right now."
perhaps dish did this, however, voom lawyers are paid professionals and should have caught it though.
perhaps dish did this, however, voom lawyers are paid professionals and should have caught it though.
You'll have to excuse me since I can only find some snippets from Voom regarding the Affiliation Agreement and the LLC Agreement (aka Partnership Agreement) to include Annex A and B. I'm sure parts of these documents are somewhere on my old laptops but I don't feel like looking for 'em. Anyway, the attachment is what Voom had to say about the subject so take it at face value. However, it is the meat and potatoes of their argument and I highlighted the more important areas. Unfortunately, Dish has said very little to say about this case and just about all of their ecourt filings are marked secure from public access. I'm eagerly waiting to hear what Dish has to say about the the service and spend requirements.
We got to remember that this is Vooms week to show there side. We will see only Vooms evidence which will lead us to think Voom is winning. Mid next week we will hear Dishes evidence for the first time which has been marked privileged from the press. Only next week will we hear the dish facts for the first time plus we will hear Charlie speak. After Charlie I am sure both sides will try to reach a deal of some kind base on who is loosing.
I have now lowered my prediction to Dish paying Voom only $300 million with a fair deal to carry all AMC channels with on demand for 5 years and A deal to carry Monsters HD only for $1.00 per sub in the HD Blockbuster pack
I have now lowered my prediction to Dish paying Voom only $300 million with a fair deal to carry all AMC channels with on demand for 5 years and A deal to carry Monsters HD only for $1.00 per sub in the HD Blockbuster pack
riffjim4069 said:
So VOOM laid out all they had, and you probably read a good chunk of it in the past, if not all, and you still can't say for sure what the "service" really was? What do you recall those pieces of Annex B said about the "service"?
Not what the VOOM's interpretation was, but what did the Annex B say? If you can't say much, then VOOM did not offer us more than Dish. Just because one is louder means little to me.
Now I am not saying Dish did it right. Given its reckless history, it could well be wrong. Just that we have so far heard nothing, despite your constant claims that you heard a lot.
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primestar31 said:
You do realize you can have as many ducks in a neat row as you want, if indeed the language was unclear, you just have to eat your own ducks?
There is a reason why the language of a contract has to be clear, otherwise it is not an enforceable contract.
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There is no ambiguity regarding what Annex A and Annex B says and Voom's attorney provided direct quotes. This is part of the intrinsic evidence the court said was required to establish what both parties reasonably knew and were expected to know about 'the service' during execution of the affiliation agreement. Voom filed the Affiliation Agreement with the court, in tact, and in later correspondence with the court, as I recall, they quoted entire paragraphs from LLC Agreement and Annex A/B. I cannot say for sure what is in the LLC Agreement since I don't believe it was ever posted publicly. However, unless Voom is altering their quotes of this agreement (which I highly doubt), it is clear to me that the service consisted of much more than just programming and licensing, and it provided details as to how expenses were to be categorized and allocated.
Additionally, there were numerous other documents exchanged during the due-diligence phase that further supports Voom's argument. I used to have a list of them somewhere, but I lost track of them over the years. You can read 'em if you wish (they are problem linked somewhere in this thread) but I certainly don't have time to peruse them.
I suppose Dish could introduce a signed letter into evidence from Charles Dolan stating the spend requirement would only apply to Voom programming. Sr. is a little old ya know. If so, Dish wins! Anything less and they are most likely going to lose this case. Of course, as I sit here writing in October 2012 (this case was filed in May 2008)...well, I'm a little troubled as to why we haven't seen Dish's evidence supporting their side of the argument. The "we thought it meant only programming" doesn't past the credibility check.
Waiting for Dish to produce a smoking gun...and you're free to post what Dish has introduced into evidence regarding the subject.
