Judge Prevents EchoStar Dropping Disney Channel

02 January 2002

A US District Court judge in Los Angeles last week imposed a restraining order on EchoStar Communications – America’s second largest satellite broadcaster – preventing it from removing Walt Disney Company’s ABC Family channel from its service.

Disney filed the lawsuit on December 18, arguing that EchoStar’s threat to drop the channel was in breach of a 1995 contract. The row between the two is regarded by analysts as indicative of rising tension between producers of entertainment and distributors who have to pay fees for television programming.

ABC Family, formerly Fox Family, was acquired by Disney as part of the purchase of Fox Family Worldwide last summer [WAMN: 23-Jul-01]. The channel has an agreement to run on EchoStar’s DISH Network, which boasts over six million subscribers, until August 2005, but the satellite operator claimed the contract contained a clause allowing the pact’s termination should ownership change hands.

Imposing the restraining order, Judge Gary Feess ruled: “The balance of hardships weighs heavily in [Disney’s] favour because of the nature of the harm ABC Family is likely to face should [EchoStar] cease its distribution.” The court will decide on January 10 whether to issue a preliminary injunction.

EchoStar stood by its threat, citing a fall in ratings for the channel and a lack of bandwidth caused by increased carriage of local stations to meet federal requirements [WAMN: 31-Dec-01].

Such arguments were given short shrift by Disney president/chief operating officer Bob Iger, who countered: “It’s more about fees than anything else.” EchoStar, he argued, was more concerned with renegotiating its payments than conserving bandwidth.

However, there was no reprieve for ABC Family’s Disney-owned stablemate ESPN Classic, which was removed by EchoStar yesterday after its contract expired at the end of the year.

News sources: Financial Times; Wall Street Journal