DISH -VS- VOOM - A Settlement has been reached!

[riffjim4069]

E*? V*? - Who is pulling the wool over our eyes?

Well, after reading the good stuff, 38 counterclaims, starting on page 17, all I can conclude without have access to sensitive documents and artifacts is that EchoStar and VOOM are polar opposites. They are like a married couple who, in a twisted way, actually deserve one another!

They can't agree on the number of channels, how much is required to meet the Spend Limit, how costs and expenses are allocated, penetration/distribution numbers, etc. The only thing they seem to agree on is the fact both parties paid a bunch of expensive lawyers to draft an Affiliation Agreement...that apparently cannot be decoded by any of the Corporate schmucks at VOOM or EchoStar, so they now hired another bunch of high-priced lawyers to disagree on what the first bunch of lawyers were paid to put into legal ease.

This situation reminds me of what a good friend told me about dating, "it's a contest to see which party can pull more wool over the eyes of the other, but eventually both parties realize they got the short-end of the stick."

So whose story do you believe, how do you assign blame, and who is pulling the wool over our eyes?

 

[mike123abc]

Well, after reading the good stuff, 38 counterclaims, starting on page 17, all I can conclude without have access to sensitive documents and artifacts is that EchoStar and VOOM are polar opposites. They are like a married couple who, in a twisted way, actually deserve one another!

They can't agree on the number of channels, how much is required to meet the Spend Limit, how costs and expenses are allocated, penetration/distribution numbers, etc. The only thing they seem to agree on is the fact both parties paid a bunch of expensive lawyers to draft an Affiliation Agreement...that apparently cannot be decoded by any of the Corporate schmucks at VOOM or EchoStar, so they now hired another bunch of high-priced lawyers to disagree on what the first bunch of lawyers were paid to put into legal ease.

This situation reminds me of what a good friend told me about dating, "it's a contest to see which party can pull more wool over the eyes of the other, but eventually both parties realize they got the short-end of the stick."

So whose story do you believe, how do you assign blame, and who is pulling the wool over our eyes?

Yep, so I expect the court to have to work on this for a while. It is expected that they would each claim the opposit when going to court. If they claimed the same thing there would be nothing to go to court about.

 

[riffjim4069]

Yep, so I expect the court to have to work on this for a while. It is expected that they would each claim the opposit when going to court. If they claimed the same thing there would be nothing to go to court about.

I can certainly understand how two parties can disagree when making verbal or simple contracts. However, E* is a major MSO and V* is run by a major programmer/distributor, and they have lawyers who negotiate distribution deals on a daily basis. There should be no abiguity in this contract. Either the lawyers are worthless (should be sued) or one of more parties are telling bald-faced lies.

 

[Peter Parker]

Page 17 paragraph 10 says the Nov 17 2005 agreement was 10 channels. Echostar is clearly claiming the agreement which included the 100 million (page 18 paragraph 13) for programming was for 10 channels.

NO read it again. It says that on the date it was signed the service was 10 channels. That si true because on that date Echostar was the only customer and was carying 10 channels undr the terms of the earlier agreement. . It does not say that the service had 10 channels during the period the agreement was in effect nor does it say that the agreement covered 10 channels. . It may sound like splitting hairs but it is impossible to say that they carried 15 channels when there are 10.

it is legalese but I see that ll the time. I think that ALL of the filings on BOTH sides should not be taken at ace value and this filing does not convince me of anything different.

 

[Peter Parker]

I can certainly understand how two parties can disagree when making verbal or simple contracts. However, E* is a major MSO and V* is run by a major programmer/distributor, and they have lawyers who negotiate distribution deals on a daily basis. There should be no abiguity in this contract. Either the lawyers are worthless (should be sued) or one of more parties are telling bald-faced lies.

Believe me if two sides want to litigate they can. This is not to say that the lawyers are not worthless. Just to say that this does not prove it.

 

[mike123abc]

So, once again, the new upcoming VOOM channels seem to be:

9473 TRESR: Treasure HD (Auctions, collector items)
9475 WORLD: WorldCinema HD (Foreign movies)
9477 WSPOR: WorldSport HD (Soccer, basketball, and other sports from around the world)
9485 GAMEP: GamePlay HD (Cyber Games)
9486 FAMLY: FamilyRoom HD (Family movies)

They did not arrive until January 2006, months after the November final contract. This is probably why Dish is arguing that 100 million was for 10 channels, later possibly 15 instead of VOOM arguing it was for 21 channels reduced to 15. Dish wants to be sure the number is 100 million not the reduced 80 some million VOOM is claiming.

 

[Peter Parker]

the onl problem with that argument would be that th DISH carriage of those channels was clearly part of the nov 2005 aggreement. DISH does not have to prove that it was for 10 channels to win. thy win if the y prove that it was for 15 and the use of the term "Spend" means it has to directly spent on programming that including indirect expenses is not appropriate. In fact on page 7 E* specifically states that it carried 15 channels under the agreement.

The judge even referred to those arguments in his initial ruling.

Maybe we have to agree to disagree on this but I think that the DISH wording was deliberate here both in terms of what they said and what they did NOT say.

but neither side will answer our questions. Although I can't imagine why nt/ Don't they know who we are?

 

[Fitzie]

Thanks to Riffjim4069 for posting the E* counterclaim to V*s claims. I can only wish that we had access to the original agreement and the subsequent letters and emails that went back and forth between E* and V*.

Having read both the amended complaint and E*s response, I have not seen anything of a factual nature that appears to be untrue on either side. V* claims that when the service started (in 2003?) there were 21 channels; E* responds that when they agreed to carry the service in 2005, they agreed to carry 10 channels. When the subsequent agreement was made in Nov. 2005, they were still carrying the 10 channels, but subsequently and in accordance with the agreement (see p. 17 of the counterclaim) V* launched 15 channels. Both sides agreed that $100 million was to be spent on the "service," but V* claims that the $100 could be reduced by a reduction of the number of channels launched from 21 to 15. I didn't see E* address that point although it could have been in one of the denials.

Both sides agree that the actual amount spent on the service was about $59.1 million. V* claims that it spent about $43 million in central office costs (i.e., Cablevision costs) that it should be able to count; E* did not address that point directly (unless as one of their denials that showed no details) but stated that at time of the audit V* asserted it had spent $12 million in CVC costs on the service which V* then refused to document.

It is usual in these kinds of cases for each side to state its case as positively as it can, hoping that some of the "spin" will be adopted by the judge as part of his rationale in finding for that side. As a point, in the V* amended claim, it was stated that during discussions V*s representatives stated that some of Cablevision's central office costs were allocated to V*. This is a total irrelevancy, unless it could be shown that the Cablevision costs were related to improving the V* service. That was the purpose for E*trying to determine what the alleged $12 million CVC allocation was actually spent for; if in fact it had been spent to improve the service, the total amount then would putatively be increased from $59.1 million to $71 million--an amount still far from the $100 million, but closer to the $84 million V* claims as the actual amount ($100 million minus offsets as a result of reduction from 21 channels).

The implication of what I have read thus far is that V* really intends to claim in court that they were only between $29 million and $13 million short, and that this shortage was curable. E*s position seems to be that they are between $41 million and $29 million short, and that the shortage is not curable per the contract. By rejecting V* request for an injunction, the Judge has sided with E*, and as I recall his statement did so by stating directly that he felt V* was unlikely to prevail on the merits of the case at trial.

Regards,
Fitzie

 

[riffjim4069]

By rejecting V* request for an injunction, the Judge has sided with E*, and as I recall his statement did so by stating directly that he felt V* was unlikely to prevail on the merits of the case at trial.

Regarding the motion for temporary injunction, the judge focused on 3 specific requirements and he ruled that VOOM did not meet their burdon of proof. It sounds quite bad for VOOM, but after reading the Amended Complaint and discovering what a sweet pseudo-exclusive deal they had with E* (i.e. 2005 HD premium rates through 2020 - up to $6.25 per subscriber, guaranteed penetration rate of 93% of HD customers (upwards of 13 million customers by 2010), VOOM would have to offer E* the same deal if they sold channels individually to other U.S. providers or for less money or in anything but the basic/essential tier) I get the feeling they were sandbagging a little bit. They really didn't want to lose their status quo 15-year agreement with E* (became lazy and didn't market the VOOM product), and it appears they would rather pursue this issue in court vice marketing the VOOM HD product. Rainbow Media has been very successful at schlocking their wares (AMC, IFC, WE, etc.), but they have had no motivation to mass-market VOOM. Love 'em or hate 'em, we all know there is a demand for channels like Monsters, Equator, RAVE, World Cinema, and others.

A couple of questions:

1. After reviewing the terms of the sweet deal they had with E*...why would VOOM not meet the spend requirement when the deal with E* would pay $$$ in future years?

2. Assuming V* failed to meet spend and programming requirements outlined in Section 10 and Section 4 of the Affiliation Agreement, why would they waste their time and money pursuing a lawsuit they can't possibly win?

Whether you side with E* or V*, the bottom line is that V* could have been marketing the VOOM HD channels since April 2005 if it weren't for the Affiliate Agreement.

 

[riffjim4069]

VOOM versus EchoStar Timeline...

Depositions to begin starting: 7/30/2008
Compliance Conference (Court Appearance): 10/23/2008
Plaintiff shall provide expert reports by: 2/13/2009
Defendant shall provide expert rebuttal by: 3/13/2009
Depositions of experts shall be completed by: 4/17/2009
Depositions to end: 4/17/2009
Note of issue shall be filed: 5/14/2009

Plaintiff estimates trial will take: 15-20 days
Defendent estimates trial will take: 15-20 days

Of course, all E-filing will be void of documents containing Confidential Information or Attorney's Eyes Only...but perhaps we can get a crack SatelliteGuys reported to sit in on the trial.

 

[Ilya]

So, a year from now we should know the court's decision.

 

[Ilya]

I think now would be a good time to strike a new deal (if it is possible at all) and settle it once and for all: on one hand all complaints have been filed, so lawers on both sides can estimate their odds, and on the other hand, nothing irreversible has been done yet on either side: VOOM production has not been shutdown yet and E* still has the bandwidth available. A few months from now this won't be the case...

 

[Bradp56]

It would be smart for Voom to try to work out any deal they can now before they screw themselves.

 

[riffjim4069]

It would be smart for Voom to try to work out any deal they can now before they screw themselves.

If VOOM continues with the lawsuit, they have no motivation to break up VOOM15 nor reach carriage agreements with other providers since it will only hurt their case...how can they claim E*'s terminating the affiliate agreement caused them a billion dollars when they are stricking programming agreements. E* signed a bad contract! V* signed too good of a contact and decided to milk E* was competitvely market their wares. If I were to mediate a deal:

1. Affiliation Agreement gets shredded.
2. E* gets non exclusive access to VOOM15, at competitive rates (not 2005 HD prices): 10 channels in DishHD Essentials and 5 channels in DishHD Ultimate.
3. E* relinquishes 20% equity in VOOM HD Networks LLC.
4. V* gets to market their wares (break up the 15 channel lineup) to DirecTV and other Cable TV providers.
5. E* is to receive "best offer" match should VOOM reach a programming agreement for the entire VOOM15 lineup with others.

 

[Spatch]

If VOOM continues with the lawsuit, they have no motivation to break up VOOM15 nor reach carriage agreements with other providers since it will only hurt their case...how can they claim E*'s terminating the affiliate agreement caused them a billion dollars when they are stricking programming agreements. E* signed a bad contract! V* signed too good of a contact and decided to milk E* was competitvely market their wares. If I were to mediate a deal:

1. Affiliation Agreement gets shredded.
2. E* gets non exclusive access to VOOM15, at competitive rates (not 2005 HD prices): 10 channels in DishHD Essentials and 5 channels in DishHD Ultimate.
3. E* relinquishes 20% equity in VOOM HD Networks LLC.
4. V* gets to market their wares (break up the 15 channel lineup) to DirecTV and other Cable TV providers.
5. E* is to receive "best offer" match should VOOM reach a programming agreement for the entire VOOM15 lineup with others.

Dream on, none of that is going to happen.

Voom screwed themselves. They should have spent what was required of them. Then they pulled the 5 channels from Dish, to what end? If they would have kept the channels on they would at least be able to stay alive. Now it looks like come July they will be non-existent.

Also, since when was Voom a Dish exclusive.

 

[Peter Parker]

i would agree that selling to other providers hurts VOOM---after all they said in their filings that this is unlikely and the damages ar e partially based on that.


i am, less convinced that the carriage was EVER exclusive. although the DISH argument that they were entitled to lower rates if negotiated elsewhere seems to be what prevented other carriers from negotiating other deals. If different carriage rates were negotiated then the Nov 2005 agreement is effectively canceled. But why E* would give up ownership I can't say that ownership came earlier not with the affiliation agreement.

not sure where you a re going with some of the rest of this Jim. Are you suggesting that e* would carry all 15 channels or something less? I a m not sure that e* is interested in all 15 at any price. I suspect that they would want a wholesale restructure of VOOM or just the 5 they carried for a short time.

not sure about the comment that we know there is a market fr the VOOM channels. VOOM never hada lot of takers either a s a standalone service or now. Maybe that is because they were not willing to take the risk of any other deals reducing the Echostar deal or maybe it just means that there were no takers. we have no evidence that proves either statement.

 

[Peter Parker]

A couple of questions:

1. After reviewing the terms of the sweet deal they had with E*...why would VOOM not meet the spend requirement when the deal with E* would pay $$$ in future years?

2. Assuming V* failed to meet spend and programming requirements outlined in Section 10 and Section 4 of the Affiliation Agreement, why would they waste their time and money pursuing a lawsuit they can't possibly win?

Whether you side with E* or V*, the bottom line is that V* could have been marketing the VOOM HD channels since April 2005 if it weren't for the Affiliate Agreement.

There are several possible answers. one might be that VOOM simply could not afford the requirement. In that case the violation was not something they could easily avoid. But it would be a vilation and they would ahve to face the consequences of it.

another would be that there is controversy over what the requirement is and VOOM interpreted it a particular way and may lose a legal battle attached to that. In that case the violation would be preventable but it certainly was not a willful violation just a consequence of a "mistake' (and yes it is possible that the courts will rule in their favor but they have not done so yet.

A third possibility would be that even VOOM knows they violated it but thinks that the suit may encourage Echostar to settle. This may shock you but not all litigants file or pursue cases with the expectation that they will win. Some expect to gain something or cut their losses through a settlement.

maybe I am misreading you but you seem to be saying that VOOM would not possibly do anything like this so echostar must be in the wrong. i think that both sides are capable of doing things in a less than ideal way and both sides might be doing what they perceive to be in their financial best interest.

 

[Fitzie]

Geronimo has outlined a logical set of alternative possibilities as to why Voom would not comply with the agreement with E*. Simply put, a) they couldn't afford it, or b) they misinterpreted the requirement, and/or c) either of the previous or something else, and they're simply trying to scavenge what they can now.

I believe it was closer to answer "a" than anything else. For those who followed the Rainbow saga in the newspapers, it is known that there was a terrific battle amongst those in charge at Cablevision as to whether the company should give up on Voom or battle through to success. The "let's give up" crowd won the battle, and Voom was gone except for E*s last ditch rescue. The requirement for an additional investment of $500 million in Voom must have been galling for the "give up" crowd, and it seems logical to me that it was that group that got to call the shots on the shortage. If my memory serves me well, it was Chuck Dolan's son who was on the other side of the battle.

As to why they are now suing Dish, well, what else can they do? I'm guessing that the Dolan Jr. crew have hogtied Dolan Sr., and will not let him do anything else with Voom.

RiffJim's set of 5 settlement provisions would probably make Voom viable, but is there any particular reason Dish should give up its ownership percentage? Didn't they actually purchase that interest?

Regards,
Fitzie

 

[Peter Parker]

The E* equity was part of the purchase of the satellite and uplink. So yeah they paid for it. As a practical mater though it is worthless until VOOM is profitable. AS one poster points out they wer not expected to be until 2009 but they do not seem to have made significant progree toward that goal.

 

[HDRoberts]

One thing I don't get is why no where in the affiliation agreement does it give the starting number of channels. It seems a big part of the lawsuit is rather or not the $100M was for 10, 15, or 21 channels. Shouldn't it say somewhere something to the effect of "Echostar agrees to carry X number of channels in Y package for Z dollars per subscriber per month." That's even more questionable that just saying $100M for Voom "service", not specifying just programming or portions of overhead, etc. Its almost like the lawyers deliberately wrote the contract to have differing interpretations.

I also found it interesting the Dish alleges that Voom refused to let them audit their overhead cost figures. That should set off some alarms about what they were including.