Charlie Ergen of Dish—which has yet to sign a carriage agreement with AMC, home to the huge hit “ The Walking Dead” — is making like a dead man walking as his court case sours against rival Cablevision. (Bloomberg)
Charlie Ergen had one of the worst days a media executive could have.
Not only did his Dish Network yesterday suffer a huge broadside blow in its $2.4 billion legal battle with Cablevision — but “The Walking Dead,” the hit series from AMC, the former subsidiary of Cablevision, banished from Dish four months ago, scored record basic-cable ratings in its season premiere.
The legal and reputational body blows absorbed by Dish will increase the pressure on the 59-year-old executive to settle his long legal battle with Cablevision, analysts said.
In fact, some analysts said if Ergen doesn’t settle his trial and Dish’s reputation continues to get sullied, the satellite-TV company’s application with the Federal Communications Commission to gain a new designation for his satellite spectrum could be affected.
The tempest started yesterday morning in Manhattan state court when Cablevision lawyers surprised the courtroom with evidence that Dish had way more HD customers than it previously claimed to have — 8.3 million versus 5.3 million.
In fact, a Cablevision forensic analysis of Dish company hard drives found that they had been cleaned before the trial.
“The evidence is mounting against Dish, and it continues to be on the wrong side of each significant trial ruling,” wrote Thomas Claps, a litigation expert for Susquehanna Financial Group.
Cablevision is suing Ergen’s EchoStar-Dish for backing out of a 15-year deal to carry the Voom HD programming service.
Cablevision was to have earned $3.25 from every Dish HD customer paying $20 to get Dish’s HD package. It is claiming damages of $2.4 billion.
Dish’s legal eagles claim they had the right to shut down Voom because Cablevision didn’t spend $100 million on programming.
Dish has been consistent throughout the battle — in court papers and testimony — that the $100 million had to be spent on programming.
In fact, a Dish witness Friday told the jury as much.
Cablevision countered that the cash could be spent on things other than programming.
The key issue came to a dramatic head yesterday when Cablevision lawyers unearthed a “smoking gun” 2005 Dish e-mail from the former lead negotiator of the Voom deal, Michael Schwimmer, mandating simply that Cablevision invest in the “Venture.”
The day was perceived by industry watchers as so bad for Dish that many started speculated on how much it would take for Cablevision to settle — with estimates ranging from $500 million to $1.2 billion.
Cablevision had no comment, and Dish’s lawyers did not return calls.
Such a settlement is likely to include the restoration of AMC Networks to Dish’s 14 million subscribers.
Even without Dish, AMC cable channel scored 10.9 million viewers with the season-three premiere of zombie cult show “Walking Dead.”
“The damages here are substantial — and worse if it turns out that Dish under-reported its HD numbers,” said Craig Moffett, telecom analyst at Bernstein Research.
“This is a huge development. To suggest it is a material misrepresentation is an understatement,” he said.