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Disney and Starz sue Dish Network over yearlong Startz giveaway

Satellite broadcaster Dish started giving pay channel Startz to its 14.1 million subscribers free in February as part of its 30th anniversary celebration. Disney and Starz file separate lawsuits.

May 04, 2011|By Joe Flint, Los Angeles Times

So much for free TV.

Liberty Media's Starz Entertainment and Walt Disney Co. have filed suits against Dish Network Corp. over the satellite broadcaster's decision to give its subscribers a free year of the Starz pay-TV channel.

Dish started giving Starz to its 14.1 million subscribers in February. The satellite broadcaster promoted the offer as part of its 30th anniversary celebration. Although pay-TV distributors such as Dish often give away premium channels for a weekend as part of a promotional package, a yearlong giveaway is somewhat unprecedented. Starz usually costs Dish subscribers about $13 a month, according to the company's website.

In its suit filed Tuesday in U.S. District Court in Colorado, Starz said its deal with Dish "does not permit Dish to simply give away its channels and content to its entire subscriber base." Starz accused Dish of doing this to placate customers who might be upset with other rate increases the satellite broadcaster had imposed.

"It is obvious that Dish decided to give away Starz's content and channels in order to preempt and ameliorate complaints about its subscriber-wide increases in rates," the Starz suit said.

The decision to offer Starz free seems to contradict remarks that Dish Chief Executive Charlie Ergen made this year. In February, Ergen told Wall Street analysts that the company doesn't "do a lot with promotional programming on premiums" because he doesn't "like to give away my core business."

In this case, the relationship between Starz and movie-rental service Netflix Inc. appears to be causing the bad blood with Dish, people familiar with situation said. Starz offers its content, including Disney movies, to Netflix, which Dish views as a competitor. That is what led the satellite broadcaster to retaliate by giving the pay channel away to its entire customer base, these people said.

As one of the biggest suppliers of content to Starz, Disney said Dish's decision to give Starz away was hurting the value of its movies. Furthermore, Dish's actions are damaging Disney's relationship with other networks and outlets that buy its movies, the company said in its suit, which was filed Tuesday in U.S. District Court in New York.

In response to the two suits, Dish said it "pays hundreds of millions of dollars for the right to distribute Startz content to our customers, which includes the rights to a number of Disney movies, and our current distribution of Disney content on Starz is permitted under our contract with Starz."

The satellite broadcaster also suggested that Disney's anger should be directed at Starz, not Dish. Dish said it had never seen the contract between Starz and Disney, but, "we will vigorously defend our rights against any attempt to drag our customers into the middle of their dispute."

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