Dish Network Goes to Court to Defend Their Right to Give Subscribers Free Starz Programming
Dish Network won the latest legal round in its ongoing battle with the Walt Disney Company and Starz Entertainment over the company’s decision to provide Dish subscribers with 3 months of Starz programming free. The recent June 3rd ruling by a New York court denied a motion that would have prevented Dish from continuing its current one-year promotion.
Surprisingly enough, the feud all started over a birthday present. Dish Network is currently celebrating its 30th anniversary. As a gift to subscribers, Dish Network announced earlier this year that it would offer customers free access to all seven Starz channels for an entire year, starting in February 2011. Disney, who has a distribution deal with Starz, immediately filed a motion in court to bar Dish Network from offering this deal to its customers.
The problem? Disney, like most major studios, employs a complicated film release strategy – slowly spoon feeding their content to various markets to increase their profits. First their films are released in theaters, then to hotel on-demand and hotel pay per view. Next, they’re released on DVD and home video on-demand. Premium cable channels (such as Starz, Showtime, and HBO) get their chance at bat. Finally, their content is released on regular (i.e. non-cable) broadcast networks.
In its suit, the entertainment giant alleges (among other things) that the Dish Network offer to give Starz (and all Disney content distributed on Starz) away for free turns the premium cable provider into a “basic network” – subsequently changing the order of Disney’s distribution system (and challenging their system of calculating profits.)
Attorneys for the studio charge that by offering its content for free, the satellite provider is decreasing the value of Disney’s entertainment content, and causing friction between the studio and other media outlets who carry their films (and who likely would have a hard time competing with Dish’s one-year free offer.)
Promotions offering free channels are common in the industry but the current, one year offer from by Dish Network is virtually unprecedented in its scope. According to a May 4, 2011, Los Angeles Times article, Dish Network has stated that it “pays hundreds of millions of dollars for the right to distribute Starz content to our customers, which includes the rights to a number of Disney movies, and our current distribution of Disney content on Starz is permitted under our contract with Starz.”
Shortly after Disney’s suit was filed, Liberty Media Corp, the parent company of Starz Entertainment, sided with Disney, filing their own suit against the promotion.
The court’s recent ruling allows Dish to continue offering its Starz promotion – for the time being. According to a June 3, 2011, Bloomberg Businessweek news article, Dish has said it “…will vigorously defend our rights against any attempt to drag our customers into the middle of their dispute.”
Though the recent motion was denied, the suit remains an ongoing case. More legal challenges are expected in the days and months to come.