Deal likely to include new carriage pact for AMC Networks

Cablevision/AMC Networks and Dish Network are closing in on a settlement to their bitter legal fight over Voom, according to court documents filed Thursday. Shares of both companies soared on the news.

A deal wouldn’t be a surprise after the judge adjourned court Wednesday until Monday, giving the parties days to hash out a deal. Notes in a court filing specified a “Poss. Settlement” in the case, with no details. In a down market, Dish shares advanced 4.75% to close at $35.74. AMC was up nearly 4% at $45.27.

Susquehanna Research legal analyst Thomas Claps said that means the companies have gone to New York State Supreme Court Judge Richard Lowe to indicate that they are either close to an agreement or have a deal in principle but need to work out the details. Wall Street applauded the news of a pending settlement.

Lowe has been tough on Dish, which was sanctioned over the summer for destroying evidence. AMC’s “The Walking Deal” pulled in massive ratings for its season-three premiere.

A settlement is expected to include a carriage deal for AMC Networks channels (which were previously owned by Cablevision) and a cash component, which will be split between AMC and former parent Cablevision. They had asked for $2.4 billion in damages, but observers say it’s unlikely a settlement award would be that high.

The Cablevision-Dish trial began Sept. 19. At issue is a 15-year contract that Cablevision inked in 2005 with Dish Networks for carriage of a suite of HD channel dubbed Voom. Dish dropped the channels from its satellite platform in 2007, asserting that Cablevision hadn’t lived up to its obligation to invest $100 million in Voom. The legal case has turned on the question of whether Cablevision was obligated to spend $100 million on programming for Voom or whether that investment could cover other costs.

As the lawsuit wended its way into the court, sparring between Cablevision and Dish increased. In June, Dish dropped AMC, IFC, We TV and Sundance Channel from its lineup after the two sides could not agree on new carriage terms. AMC Networks, now a separate entity from Cablevision, maintained that the impasse on the carriage agreement was retaliation on Dish’s part for the lawsuit. Dish has denied that assertion and maintained that the issue has been the fee hikes AMC Networks was seeking.

The blackout on Dish, which has 14 million subscribers, forced AMC Networks to warn investors this summer that an extended dispute would have a significant impact on its bottom line. That uncertainty was a dark cloud hanging over AMC Networks, which is still in its infancy as a publicly traded, pure-play cable entity following its June 2011 split from Cablevision.

Investors and industry observers had been surprised that the litigation over the now-defunct Voom channels made it to a courtroom, all the way to Cablevision chairman Charles Dolan taking the stand on Oct. 2.

Dish Network has faced criticism and sanctions from the court related to its handling of evidence in the case. Dish’s maverick CEO Charles Ergen had been set to take the stand this week. The timing of his skedded testimony, on the heels of Lowe’s scoldings from the bench, may have played a part in prodding the sides toward settlement talks.

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