EchoStar Accuses Disney of Hypocrisy in Dispute over ABC Family Channel

Strategic Insights -

EchoStar Communications Corp. has filed a lawsuit against Disney, accusing the media giant of trying to force the satellite broadcaster to continue carrying the ABC Family channel as part of its service. EchoStar claims that it signed a 10-year agreement in 1995 to carry the channel, which was then controlled by Pat Robertson, but has since changed hands twice and is no longer the same channel. Disney, which acquired the channel in October, is seeking a preliminary injunction to keep the channel on EchoStar's airwaves. The dispute has led to EchoStar dropping Disney's ESPN Classic channel and has sparked a heated debate over consumer interests and media conglomerates.

Key Takeaways:

  • EchoStar accuses Disney of taking a "hypocritical" view of consumer interests by trying to force the satellite broadcaster to continue carrying the ABC Family channel.
  • EchoStar claims that it signed a 10-year agreement in 1995 to carry the channel, which was then controlled by Pat Robertson, but has since changed hands twice and is no longer the same channel.
  • The satellite broadcaster dropped Disney's ESPN Classic channel as part of the dispute, despite a U.S. District Court issuing a temporary restraining order to force it to continue carrying the family cable network.
  • EchoStar filed a lawsuit against Disney last month, claiming the media giant unfairly threatened to oppose its proposed acquisition of rival satellite provider Hughes Electronics Corp. if the companies could not reach terms on a new agreement.
  • Michael Schwimmer, vice president of programming at EchoStar, stated that the company strongly believes it has the right to determine who it does business with and the general makeup of the content.
  • The dispute has sparked a heated debate over consumer interests and media conglomerates, with EchoStar shares gaining 4.66 percent on heavy volume of 4.3 million shares traded on the Nasdaq stock market and Disney shares rising 3.52 percent on volume of 8.5 million shares traded on the New York Stock Exchange.

Statistics:

  • EchoStar shares gained $1.28, or 4.66 percent, to $28.75 on heavy volume of 4.3 million shares traded on the Nasdaq stock market.
  • Disney shares rose 73 cents, or 3.52 percent, to $21.45 on volume of 8.5 million shares traded on the New York Stock Exchange.
  • The U.S. District Court issued a temporary restraining order to force EchoStar to continue carrying the ABC Family channel, with a review of Disney's application for a preliminary injunction scheduled for January 10.
  • The 10-year agreement between EchoStar and the ABC Family channel's previous owners was signed in 1995.

Sources:

  • United Press International
  • COMTEX (http://www.comtexnews.com)
  • EchoStar Communications Corp. statement
  • U.S. District Court temporary restraining order
  • Disney's application for a preliminary injunction