A jury trial recently concluded between satellite TV provider Dish Network and sports media giant ESPN. Dish Network originally brought four claims against ESPN for breach of contract, seeking more than $150 million in damages. The dispute centered around an eight year agreement regarding licensing rates for sports broadcasts. Dish Network claims that ESPN breached the “most favored nation” clause of the contract four times over.
A most favored nation clause is common in contracts between sellers and buyers, including those in New York. These clauses usually provide that if a seller offers a better deal to another party, the seller must also offer that deal to the contracting buyer. In short, the buyer will always have access to the lowest price. Most favored nation clauses can be beneficial to both contracting parties if the agreement is properly followed.
Dish Network v. ESPN
ESPN is notorious for demanding a high cost for broadcasting rights. To offer ESPN, a provider has to pay an average of $5.54 per month per cable subscriber. There are additional costs for spin-off channels such as ESPN2, ESPN Classic, ESPNews, and ESPN Deportes, the Spanish-language version. The company is able to demand such high rates because most cable providers consider ESPN to be a must-have channel for their line-ups. However, disputes have been rising more frequently between satellite and cable providers and sports networks over steadily increasing prices.
In 2005, Dish Network and ESPN came to a programming agreement that specified that, if ESPN offered lower prices to any other distributor, the company would have to extend the same offer to Dish Network. The lawsuit filed in New York claims that in 2009, ESPN breached the terms of the contract when it agreed to allow cable rival Comcast to broadcast ESPN Classic for a special rate. Further claims of violations include offering a better deal for ESPN Deportes to DirectTV, as well as having general better pricing deals with Verizon, AT&T, and Time Warner Cable. Dish Network claimed in its pleading that the contract breach cost them upwards of $150 million in potential broadcasting savings.
Verdict Largely in Favor of ESPN
The Wall Street Journal reports that the federal jury in New York decided in favor of Dish Network on only one claim, finding that based on the agreement ESPN should only have been required to match prices on ESPN Deportes. The jury ordered ESPN to pay damages in the amount of $4.86 million. While this may seem like a lot of money, that amount is merely a drop in the bucket for a media giant like ESPN. Furthermore, winning only one out of four claims can hardly be viewed as a victory for Dish Network. Following the verdict, general counsel for Dish, Stanton Dodge, made the statement, “To deliver the best programming at the best value to our customers, Dish will remain vigilant in our efforts to ensure that programmers honor their contractual commitments.”
Contract disputes in court can be complicated and a large amount of money can be at stake. No matter how much money is at stake, however, it is important to contact an attorney who is experienced and dedicated to contract work to help you resolve your disputes. Do not hesitate to call our office to discuss a possible claim.