Dish Net dissing ABC Family

Ergen's EchoStar wants to dump the channel Disney just bought from Fox

Walt Disney Co.'s ABC Family is fighting to hold onto a large chunk of satellite subscribers, dueling with Charles Ergen's EchoStar Communications Inc. to halt the satellite provider's plans to dump the net from its Dish Network tomorrow (Jan. 1). That's the same day the new ABC channel unveils its new January lineup.

The two are now trading legal blows in Los Angeles federal court. EchoStar filed papers late last Thursday reaffirming plans announced in late October to terminate ABC Family's carriage deal, which runs through August 2005, because of change in the channel's ownership.

EchoStar says Disney execs tried to negotiate a new deal for ABC Family and ESPN Classic (that net's carriage is up Jan. 1 with no plans for renewal, either). When EchoStar refused, a statement from EchoStar's head of progamming Michael Schwimmer contends, Disney execs threatened to oppose EchoStar's proposed merger with DirecTV. Schwimmer's statement recalls Disney Senior VP and Chief Strategic Officer Peter Murphy saying "Disney had 'its weapons' and was prepared to 'march on Washington D.C.'"

The papers say Murphy's boss, Disney prez and COO Robert Iger, then sent an e-mail Dec. 16 to Ergen reaffirming Disney's desire to close a deal. No deal, Ergen said, and the next day Disney sued to block EchoStar's plans to drop the channel.

ABC Family is currently on Dish's basic "America's Top 50" tier, where the net picks up about 6.4 million subs. Disney purchased the former Fox Family from News Corp. and Saban Entertainment last October for $5.2 billion. But EchoStar says ABC Family is not the channel it agreed to carry.

"When we did the deal in 1996 it was for the Family Channel with Pat Robertson," said an EchoStar representative. "We bought an apple and now we're holding an banana." EchoStar unsuccessfully tried to pull the plug on the Family Channel after Fox bought it for $1.9 billion in 1997. Though Robertson still has a program on the channel, under Fox and now Disney, it no longer has constant religious programming. ABC, in part, will use its new channel to repurpose ABC broadcast-network shows, such as Alias;
it's also picked up an NBC Jennifer Lopez special to show in January. It's unlikely the Robertson version of the channel would ever feature the sexy singer, except perhaps as an example of the hellish handbasket pop culture has become.

ABC Family has other carriage concerns. Time Warner Cable has already pulled the channel off its Florida systems, taking away about 800,000 subs, and ABC Family's carriage deals with Charter Communications and Cablevision are reportedly up.

"We believe EchoStar is attempting to use the threat as leverage to renegotiate lower license fees," said an ABC Family insider.

EchoStar has grumbled that ABC Family's subscriber fees are too high and its ratings are too low to warrant carriage. EchoStar also claims it needs to clear more channel space—an assertion that has taken on new meaning since Vivendi Universal injected $1.5 billion into EchoStar in exchange for an 11% stake and a commitment to start five new channels.

DirecTV has also reportedly told Disney it too is pulling the channel after New Year's, stripping millions more subs. If merged, the DBS systems would reach a combined 16.7 million. That's "something about a monopoly that really concerns programmers," said a Disney source.