A California district court has refused to dismiss a lawsuit filed by Herring Networks, parent of One America News Network (OAN) and AWE (A Wealth of Entertainment), alleging AT&T reneged on a promise of carriage in exchange for Herring's help in getting the AT&T-DirecTV deal approved by government regulators.
"We are very pleased with this decision upholding all our claims and keeping the parent company, AT&T, Inc., in the case as a defendant," said Skip Miller, attorney for Herring. "The business of our client has been egregiously harmed, by over 100 million dollars, and we look forward to putting the case on to a jury. In addition, we will be seeking punitive damages from AT&T based on our tort claims." Herring said the alleged breach cost it $100 million.
Herring filed suit against AT&T and AT&T Services alleging breach of contract fraud and more, saying when they renewed their carriage deals with U-verse they were led to believe that would include an expanding U-verse footprint, which it said did not happen.
Herring also says that AT&T Services proposed that "[i]f Herring publicly supported defendants throughout its acquisition of DirecTV, including by lobbying the FCC, defendants would ensure that DirecTV carried Herring’s networks on its platform."
Herring says it was promised $20 million to $25 million per year—i.e., $0.12 per subscriber for 85% of DirecTV’s subscribers—in licensing fees from DirecTV, including a five-year term, as with Herring’s existing U-verse agreement with AT&T, but that that did not materialize.
Herring says it fulfilled its part of the lobbying bargain, including being directed by AT&T's lobbyists in that effort. "[D]efendents [AT&T] arguably frustrated plaintiffs [Herring] ability to tender its channels by allegedly reneging on the DirecTV Promise and refusing to carry plaintiffs networks," said the court.
It also contends that AT&T's move to migrate U-verse subs to DirecTV is undercutting Herring's license fee, which was based on the number of U-verse subs. "[B]y shifting subscribers from U-verse to DirecTV, defendants are undermining Herring’s bargained-for benefit under the U-verse Agreement," Herring told the court.
AT&T Services sought dismissal for failure to state a claim, and both AT&T and AT&T Services filed for dismissal for lack of jurisdiction.
But the court said it had jurisdiction and that herring had "adequately pleaded" its claims and it would not dismiss any of them.
That means barring a settlement, the suit will go to trial.
AT&T has called the suit baseless. "We have offered to carry both channels [AON and AWE] on DirecTV at reasonable, market-based terms," it said back when the suit was filed. "This lawsuit is simply a ploy by Herring to negotiate a slanted deal.”