EchoStar Christian Channels a No-No - Broadcasting & Cable

EchoStar Christian Channels a No-No

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A federal appeals court has upheld a $2 million plus arbitration panel judgment against satellite TV company EchoStar for breach of contract.

In 2003, the panel awarded $2,438,178 dollars to Dominion Video Satellite for breach of a longstanding lease agreement over EchoStar's 2002 launch of some Christian channels on its satellite service.

EchoStar and Dominion have something of a symbiotic relationship, at least businesswise. According to court papers supplied by Dominion, the two have a programming exclusivity agreement that prevents EchoStar from carrying Christian programming.

That is because, back in 1996, Dominion, which broadcasts 20 channels of Christian programming  as the Sky Angel network, struck a deal in which it leased satellite capacity for eight transponders from EchoStar, then subleased six of them, with the accompanying FCC license rights that EchoStar lacked, back to Echostar.

So Echostar, which had the capacity but not enough FCC licenses, and Angel, which had the licenses but not enough capacity, both benefited. But to prevent EchoStar from competing for Angel customers, the deal included a provision that kept EchoStar from carrying Christian programming.

But in 2002, EchoStar launched several predominantly Christian channels on its DISH Network. Dominion got a preliminary injunction, and the two have been battling it our in court ever since.

The Tenth Circuit Court of Appeals rejected EchoStar's argument that, because the Congress had in the invervening years mandated that satellite broaodcasters reserve 4% of their channel capacity for noncommercial and educational programming, and because its Christian programs are educational, federal law preempted Dominion's claim. "Neither the legislation nor the regulation explicitly or by implication preempts the enforcement of the programming exclusivity provision of the agreement," said the court.

The court also said EchoStar failed to make the case that enjoining it against broadcasting Christian programming was a content-based speech restriction, or that the new FCC public-interest requirement was a sufficiently changed circumstance to excuse the breach under the "impossibility of performance defense."

The court also pointed out that EchoStar's claims had already been raised and rejected three times, by a district court twice and the arbitration panel.

"In sum," said the court, "none of the arguments advanced by EchoStar are grounds for vacating the arbitration award. Furthermore, we find EchoStar's appeal of the confirmation of the award to be frivolous, and agree with Dominaion that EchoStar has deprived it of the primary benefit gained by submitting to arbitration: 'to avoid the expense and delay of court proceedings.'"

The court also upheld a district court imposition of $62,686.02 in court costs on Echostar.

An EchoStar spokesman had no comment at press time.

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