Get ready to pony up if you bet that there’d be a settlement before AMC Networks’ $2.5B breech of contract suit against Dish Network goes to trial. Lawyers are scheduled to pick jurors tomorrow in a case that AMC says motivated Dish to drop the company’s channels in June. (Dish says AMC’s channels cost too much.) Beginning Thursday jurors will see a parade of media big shots explain whether Dish had a right in 2008 to terminate its 15-year deal to air the Voom Networks suite of HD channels. They were launched by Cablevision, but the Voom business entity was included with AMC last year when the cable company spun off its former networks unit. Cablevision founder Chuck Dolan is due up on Thursday followed by AMC chief Josh Sapan and, on Monday, Cablevision CEO Jim Dolan. Dish Chairman Charlie Ergen is expected to testify around October 3 when the defense presents its case.
The trial will revolve around a seemingly arcane question: Did Voom spend at least $100M on the service in 2006? Dish had a right to scrap the deal if Voom didn’t. AMC says it did if you include $12.4M in corporate overhead. Dish says no: the “service” only includes programming. The contract is vague on the definition, so the jury will have to make inferences based on other terms. But Dish enters the case with a potentially enormous handicap. New York Supreme Court Judge Richard Lowe III has found that Dish destroyed several emails pertinent to the case. One big question is whether he will tell jurors that they “may” infer that the emails would have helped AMC and hurt Dish, or whether they “must” reach that conclusion.
Several Wall Street analysts expected the companies to settle. And they still might: Susquehanna Financial Group legal expert Thomas Claps noted yesterday that Dish is vulnerable both because of the evidence destruction findings, and because AMC has a “stronger case” in the key debate over the definition of the $100M spending threshold. Meanwhile, AMC might warm to a deal that would return its channels to Dish’s 14.1M subscribers before October 14 when AMC’s series The Walking Dead returns for its third season.
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