After nine years of litigation, EchoStar Communications Corp. reached a settlement Monday with TV-network affiliates over the sale of local programming in distant markets.
The $100 million settlement will be divided among more than 700 independently owned and operated affiliates of NBC, ABC, CBS and Fox. Twenty-five local Fox stations directly owned by Fox withdrew from negotiations with EchoStar last week and are not part of the settlement agreement.
The settlement must still be approved by a U.S. District Court judge in Florida, but the settlement could protect Echo- Star customers from a disruption in service.
“We agreed to pay them to protect our subscribers from a potential shut-off of distant network signals,” said EchoStar spokeswoman Kathie Gonzalez.
Douglas County-based Echo Star is the nation’s No. 2 satellite-TV provider, with 12.5 million customers.
Distant network signals allow customers to receive local programming from broadcasters outside their geographic region. Customers must be unable to receive local programming from their area providers to qualify for distant-network access.
About 800,000 of EchoStar’s Dish Network subscribers get distant network signals, which generate up to $50 million in annual revenue for the company.
In May, the 11th U.S. Circuit Court of Appeals in Atlanta accused EchoStar of violating copyright law by bypassing local stations and airing network programs beamed from cities such as New York and Los Angeles to ineligible households.
Last week, U.S. Supreme Court Justice Clarence Thomas rejected EchoStar’s request to stop a shutdown of its so-called distant-network service.
In its second-quarter conference call this month, EchoStar executives said the company would begin cutting off the distant network signals of some subscribers. If approved, this settlement will eliminate the need to do that.
Wade Hargrove, an attorney representing the independently owned and operated affiliates, said the settlement was reasonable “under the circumstances.” He said it would allow broadcasters to put the litigation behind them.
“We thought the settlement would be consumer-friendly and helpful to subscribers who were not aware they were receiving illegal signals,” he said.
Officials at News Corp. – Fox’s parent company – said they would not settle with EchoStar. News Corp. also has a controlling stake in DirecTV, the largest satellite provider in the U.S. and EchoStar’s chief rival.
“The fact is that EchoStar has willfully and deliberately ignored federal statutes for the past nine years,” said News Corp. spokesman Andrew Butcher. “We see no reason to now negotiate a settlement of the issue, given the courts have again agreed with our decision.”
Despite the settlement agreement, EchoStar was dealt another blow in its patent-infringement suit against digital-video-recorder company TiVo. A federal judge in Texas has delayed a countersuit filed by EchoStar against Alviso, Calif.-based TiVo while the U.S. Patent and Trademark Office reviews patents claimed by EchoStar.
In April, a jury in Marshall, Texas, found that EchoStar had infringed on a TiVo patent by making its own set-top box with DVR capabilities. The judge who presided over that trial ordered EchoStar to pay $89.6 million in damages.
Staff writer Kimberly S. Johnson can be reached at 303-954-1088 or kjohnson@denverpost.com.
