Dish Damages Expert Not Allowed to Testify

Another blow in $2.4B Voom trial

By Jon Lafayette -- Broadcasting & Cable, 10/16/2012 11:24:41 AM

The judge hearing the case of AMC Networks' Voom high definition programming services versus Dish Network ruled on Tuesday that Dish's expert on damages won't be allowed to testify during the trial.

According to Thomas Claps, an analyst for Susquehanna Financial Group, who has been following the trial closely, ruling by Judge Richard Lowe III is "another significant blow to Dish."

According to Claps, Dish wanted to rebut Voom's claim that it has lost $2.4 billion in profits. But due to this ruling, and prior sanctions against Dish, they won't be able to have an expert question that claim.

AMC claims that Dish, then Echostar, breached its agreement to carry the Voom programming service, which has been discontinued.

On Monday, newly produced internal Dish emails appeared to weaken Dish's position and support AMC's assertion that Dish was aware that overhead expenses should be counted toward the $100 million Voom was required to spend in 2006 on its service.

According to Claps, AMC produced an email exchange between Michael Schwimmer, the lead negotiator for Dish on the Voom deal,  and Dish chairman Charlie Ergen, then also the CEO, from April 27, 2005. This email exchange highlights that the $500 million spending cap referenced in the affiliation agreement is tied to the $500 million equity investment referenced in the LLC agreement.

"This is critical because Annex A to the LLC agreement delineates a list of permissible expenditures that count toward this $500 million equity investment, and overhead expenses are specifically referenced (i.e., salaries, benefits, general administrative costs, inter-company allocations, etc.," Claps says. "Thus, this email exchange further strengthens Voom's claims that Dish was fully aware, and acknowledged, that overhead expenses should be counted toward its $100 million spending requirement in 2006."

Claps says he expects the case to be settled. Part of that settlement could be carriage of AMC Networks' cable channels, which have been off Dish since earlier this year.