VOOM Claims $1-Billion-Plus Damages in DISH Case

NEW YORK, June 3: Rainbow
Media’s VOOM HD Networks suite of channels says it stands to lose more than $1
billion after being dropped by satellite platform DISH Network, according to a
suit filed with the New York State Supreme Court.

The 15-channel bouquet was
dropped by DISH in the middle of last month. VOOM is seeking damages for breach
of a multi-billion-dollar 15-year distribution agreement with DISH. The suit
was first filed in January and subsequently amended with the courts late last
week.

The carriage deal was
first signed between VOOM and DISH in 2005, mandating that the platform pay
VOOM $3.25 per month per subscriber receiving the HD networks in the first
year, rising to $6.43 per month in the last year of the contract. As part of
the deal, VOOM says it was to invest up to $100 million annually in the
portfolio, rising to $500 million, “while operating at an operating loss.” The
suit maintains that with DISH’s 1.3 million high-definition subs projected to
hit 11 million by the end of the contract, “VOOM HD was expected to start
turning a profit as early as 2009, and generate billions of dollars” over the
course of the carriage deal.

VOOM says that DISH
informed it of its intention to terminate the agreement in January. VOOM notes
that DISH “had been dissatisfied with its payment obligations…and tried to
fabricate a basis for avoiding its commitments to VOOM HD.” VOOM refers to
these claims of breach as “patently baseless and were conceived merely as a
pretext for pressuring VOOM HD to relinquish its valuable and enforceable
contract rights.”

As part of its rationale
for terminating the agreement, DISH claims that VOOM did not meet its
investment requirement of $100 million for a 21-channel bouquet. As VOOM scaled
back to a 15-channel bouquet, the investment requirement fell to $82 million.
VOOM says it spent $102.9 million on the bouquet in 2006, and another $114
million in 2007.

VOOM says it has brought
the breach of contract suit “to recover the well in excess of $1 billion of
damages that it will suffer as a result of [DISH’s] wrongful and improper
termination” of the affiliation deal.

—By Mansha Daswani