AMC Networks is facing Dish Network in a $2.4 billion trial over a failed programming deal that may also determine whether the satellite network’s viewers will get to see AMC shows such as “Mad Men.”
AMC’s former owner, Cablevision Systems, sued Douglas County-based Dish in 2008, claiming it wrongfully terminated a 15-year contract involving a now-defunct high-definition TV-programming service called Voom. While the trial in state court in New York will decide only breach-of-contract claims, Dish’s decision to drop all of AMC’s channels in July shadows the case. Jury selection is scheduled to begin Thursday.
Dish, whose 14 million satellite-TV subscribers accounted for 13 percent of AMC’s subscriber base, said it dropped AMC’s four networks because the shows didn’t deliver the ratings to justify their price. AMC claims the move was due to its lawsuit.
“We’ve been off the platform for a couple of months now, and we think we’re off because of litigation and not because of anything related to what our prices are for programming,” AMC chief executive Joshua Sapan said during an investor conference in Manhattan on Sept. 12.
The decision by Dish to drop AMC may be a bargaining ploy to win an out-of-court settlement of the lawsuit and avoid paying damages.
“Both sides have a lot of motivation to settle,” Aditi Bagchi, a professor of law at Fordham Law School, said in a phone interview. “Maybe they will renegotiate the terms on which Dish will carry AMC’s channels.”
Bagchi, who teaches contract law, said the “scale of the damages is astronomical” and may be difficult to prove in court.
“The question is what the settlement price will be,” Vijay Jayant, an analyst with ISI Group in New York, said in an interview. He estimated that New York-based AMC’s earnings before interest, taxes, depreciation and amortization will fall 25 to 30 percent as a result of Dish’s dropping the networks.
Dish spokesman Bob Toevs said in an interview that the company’s decision to drop AMC was “an entirely separate matter” from the lawsuit.
“The channels were essentially a handful of popular shows,” he said. “For us, the equation didn’t work.”
