I've been thinking about this very topic all morning (all week actually), as surfing the EPG, and not being able to land on a Voom channel, sucks!
This is how I see it...
1. E* agreed to carry the Voom channels for 15 years.
2. E* agreed to pay Voom $x per subscriber.
3. Voom agreed to spend $x per year on programming up to $x amount.
4. E* moves Voom to a package that has less subscribers, thus allowing E* to pay Voom less.
5. Voom files a lawsuit.
6. E* counters that Voom is not spending required amount on programming.
7. Voom loses lawsuit.
8. E* removes 10 channels, then removes remaining 5 channels 24 hours later.
Has whether Voom has been spending the required amount per year been settled in court? Or is it only the issue of moving Voom to a less subscribed package that has been settled?
It seems to me that E* has to continue to pay Voom a per-subscriber fee for the number of dishHD Ultimate subscribers whether E* is airing the channels or not.
I would love it if a lawyer who is at least familiar with the terms of the original carriage agreement could weigh in on this, because unless E* can prove (or has already proven) that they can cancel their contract with Voom, I dont think this is over with yet. (at least the legal/financial wrangling).
Regarding #7 Rainbow Media (aka VOOM) only lost a temporary injunction to prevent EchoStar (aka Dish Network) from pulling the VOOM HD Network channels. Whether EchoStar violated the affiliate agreement is still being contested. Althought Dish Network terminated the affiliate agreement, I doubt you will see either party disclose its contents pending litigation. I posted the following elsewhere, but it certainly needs to be reposted over here: (first paragraph of two was about Dish Network losing their lawsuite against News Corp (aka DirecTV/NDS).
This is somewhat surprising based on what the judge said early into the trial, "the case could be worth more than $1 billion." It certainly looked liked E* would be getting $200 million or more in damanges. I guess the jury members were former/current Dish Network customers bitter about having their CourtTV, Lifetime, distant locals and VOOM channels yanked from their lineup without warning, as well as paying for HD only to receive HD-Lite.
I guess E* will be having to pay TiVo $150 million out of their own pocket soon...not to mention facing additional litigation by TiVo with DirecTV (owners of ReplayTV) joining the suite. Charlie could be in for a VOOMin'.
Speaking of VOOM and billion dollar litigation...Rainbow Media (aka VOOM HD Networks) could potentially receive a huge payday if EchoStar is found to have broken their affiliate agreement with VOOM in violation of cure provisions. Based on their past performances in court, I would not put my money on the E* litigation team. VOOM may have lost the the preliminary injunction to keep the channel on Dish Network, but that doesn't mean they won't beat EchoStar in front of a jury.
"The Voom-EchoStar 2005 carriage deal, which Voom described as a “multi-billion dollar, 15-year contract,” called for EchoStar to pay a subscriber fee of $3.25 a month per HD customer in the first year of deal, with annual increases until it reached $6.43 a month in the pact’s final year."
- EchoStar claims VOOM did not meet the $100 million spending limit; VOOM claims they did.
- EchoStar claims they can terminate the affiliation agreement for VOOM breaching the Spending Limit; VOOM says even if they did breach the Spending Limit, there are "Cure Provisions" in the affiliation agreement to remedy the situation.
Additionally, by my records VOOM was supposed to be a 21 channel package. Wasn't it EchoStar who limited it to only 15 channels? If so, were there provisions in the affiliation agreement to address this? Does someone have old "Charlie Chat" footage where he mentioned his decision to scale back or keep VOOM HD at 15 channels? Lot's of interested stuff regarding this case...
In April 2005, subsidiaries of Cablevision and CSC Holdings entered into agreements with EchoStar Communications Corporation (?EchoStar?) relating to the launch and operation of the business of Rainbow HD Holdings, LLC, the Company?s VOOM 21 high-definition television programming service. Under those arrangements, EchoStar will initially distribute a portion of the Rainbow HD programming service and, beginning in 2006, if the contemplated transactions have been completed, will carry all 21 of the channels included in the Rainbow HD programming service. In connection with the arrangements, EchoStar would be issued a 20% interest in Rainbow HD Holdings, the Company.
May 12, 2005
Cablevision has agreed to spend at least $100 million per year to fund the 21 high-definition channels that are all that's left of the failed Voom satellite TV service. The commitment was disclosed in a quarterly financial filing by Cablevision Systems Corp., which shut the Voom service April 30 but decided to keep operating the channels and pitching them for cable and satellite TV providers to carry. The spending minimum, which is capped at $500 million, is part of a 15-year deal under which EchoStar Communications will offer the channels to its Dish Network customers. EchoStar gets a 20-percent stake in those channels under the deal, the filing disclosed. If Cablevision reduces the number of HD channels, it can cut the spending to as low as $38 million per year. If it falls short of the minimums, EchoStar can drop the channels.
"It's an awful lot of money for Cablevision to continue to spend for these networks," said Craig Moffett, an analyst at investment firm Sanford C. Bernstein & Co. Cablevision has said it invested about $1 billion in Voom, which attracted only 48,000 customers. It estimates the shutdown will cost as much as an additional $155 million, plus $45.8 million for settling liabilities.
Voom's sole satellite is being sold to EchoStar for $200 million.
Copyright 2005 Newsday Inc.
