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EchoStar to Pay $100 Million in Affiliate Settlement

Aug 28, 2006  •  Post A Comment

EchoStar Communications, the No. 2 U.S. satellite television provider, agreed to pay $100 million to network affiliate associations as part of a settlement that will let it continue providing rural subscribers local TV channels from far-away stations.

ABC, NBC, CBS and Fox affiliate associations sued nine years ago, claiming EchoStar violated copyright laws and the Satellite Home Viewers Act by allowing ineligible subscribers receive distant signals. A court had ruled in their favor.

The settlement announced Monday comes close to resolving the dispute, but EchoStar warned that Fox Broadcasting’s refusal to sign on for its 25 owned and operated stations could imperil the deal, leaving as many as 1 million of its rural subscribers without access to some major broadcast TV signals.

Fox, whose parent, News Corp., owns EchoStar rival DirecTV, said it didn’t settle because there was little advantage given the court’s earlier ruling in favor of the affiliate associations.

“We won a complete victory in the courts. Winners tend not to settle,” said Andrew Butcher, a News Corp. spokesman. He said the Fox stations’ decision not to settle was in no way related to the competition between DirecTV and EchoStar.

The court ruling reflected EchoStar’s failure to follow the law, Mr. Butcher said. “It thumbed its nose at the courts,” he said.

In May an appellate court panel, citing EchoStar’s repeated violations, told a district court to order EchoStar to cease providing distant stations to rural customers. The judge hasn’t yet entered a final order. Today’s settlement seeks to end the suit before any order gets issued.

EchoStar said the deal means it has now settled with companies owning 800 stations. It previously settled with ABC, CBS and NBC and some individual stations and station groups.

The prospect that the court could leave some rural customers with limited ability to access high-definition signals has drawn the concern of TV set makers. Their trade group, the Consumer Electronics Association, issued a warning.

“Our nation must continue down the path to a completed transition to digital television,” CEA President and CEO Gary Shapiro said in a statement. “To do so, consumers need to be able to receive distant network broadcast HD signals.”

EchoStar said in a statement it had hoped to resolve all the disputes and that Fox’s decision not to settle may derail the entire settlement and that the company may force it to seek legislation to let it continue providing the signals.