Bloomberg News

Dish Ordered to Turn Over Data in AMC Trial on Contract

October 12, 2012

Dish Network Corp. (DISH:US) was ordered by a New York judge to turn over documents to AMC Networks Inc. (AMCX:US) as a trial continues over AMC’s claim that Dish wrongfully terminated their high-definition television programming contract.

State Supreme Court Justice Richard Lowe issued his ruling today in Manhattan while the jury was out of the courtroom. A state appeals court denied Dish’s request to withhold the documents.

Cablevision Systems Corp. (CVC:US), AMC’s former owner, sued Dish in 2008 over a now-defunct HD satellite TV service called Voom, claiming Dish breached their 15-year contract to offer the service to its 14 million TV subscribers. AMC, based in New York, seeks $2.4 billion in damages.

AMC rested its case today and Dish began presenting its evidence to the jurors.

In 2011 Lowe granted AMC’s motion for sanctions against Dish over its destruction of evidence. He said Dish should have anticipated a suit and begun saving e-mails when it notified Voom it might terminate the contract. Dish said the e-mails were automatically deleted. Before jurors deliberate, Lowe will tell them that Dish destroyed the evidence.

Documents Presented

After the trial began, Dish was accused again by AMC of withholding evidence. Dish argued that the communications at issue were between an attorney and his client and should be protected from disclosure. Lowe ordered that the documents be presented to him privately. Dish appealed.

Although Dish gave the documents to the judge, AMC claims there are still missing files related to an audit Dish undertook of Voom’s finances.

“We want access to those hard drives and see whether there were manual deletions,” Orin Snyder, a lawyer for AMC, told the judge today.

“Mr. Snyder is incorrect when he says we have not provided the files,” Charles Kerr, a lawyer for Dish, said to the judge.

Dish said it terminated the Voom contract because Cablevision didn’t spend the required $100 million a year on programming. Cablevision claimed that Voom spent $103 million in 2006. Dish said that figure included corporate overhead expenses of at least $12 million and that the contract stipulated that the money be spent on programming. The legal issue is a dispute over the meaning of the contractual phrase “on the service” in relation to spending.

Voom Concerns

Dish’s first witness, Michael Schwimmer, the former head of programming for the company and its lead negotiator on the Voom contract, said the requirement that $100 million be spent on the service was added to the pact because of concerns about Voom.

There had been reports that Charles Dolan, the chairman of Cablevision, disagreed with James Dolan, the chief executive officer of the company, about Voom, Schwimmer said.

“Jim Dolan, the son of Chuck Dolan, was not in favor of continuing to fund the Voom service and wanted to shut it down,” Schwimmer testified. “His father was trying to keep it alive.”

“We wanted to know whether the money would be there to support the channels,” Schwimmer said.

Asked by Dish’s lawyer what he meant by “service,” Schwimmer responded, “I’m talking about the programming feed -- what the customer can see.”

Lowe today also ordered that Dish provide data on subscriber numbers. Snyder claimed that Dish disclosed HD customer totals that according to analysts were too low. He said those numbers could reduce potential damages.

“If what Mr. Snyder asserts is anywhere near accurate, it’s the heart of the plaintiff’s damages case,” the judge said.

The case is Voom v. Echostar, 600292-2008, State Supreme Court of New York (Manhattan).

To contact the reporter on this story: Don Jeffrey in New York at djeffrey1@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.


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Companies Mentioned

  • DISH
    (DISH Network Corp)
    • $65.84 USD
    • 0.69
    • 1.05%
  • AMCX
    (AMC Networks Inc)
    • $60.75 USD
    • 0.10
    • 0.16%
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