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Disney and Starz sue Dish Network over Starz giveaway

May 3, 2011 | 12:52 pm

So much for free TV.

Liberty Media's Starz Entertainment and Walt Disney Co. have filed suits against Dish Network over the satellite broadcaster's decision to provide its subscribers a year of the Starz pay TV channel for free.

Dish started giving Starz to its 14.1 million subscribers for a year in February. The company promoted the offer as part of a 30th-anniversary celebration for the satellite broadcaster. Though pay-TV distributors such as Dish often give away premium channels for a weekend as part of a promotional package, a yearlong giveaway is somewhat unprecedented. Starz usually costs Dish subscribers about $13 a month, according to the company's website.

In its suit filed in a Colorado District Court, Starz said its deal with Dish "does not permit Dish to simply give away its channels and content to its enterer subscriber base." Starz accused Dish of giving away the channel to placate customers who might be upset with other rate increases the satellite broadcaster has imposed.

"It is obvious that Dish decided to give away Starz's content and channels in order to preempt and ameliorate complaints about its subscriber-wide increases in rates," the Starz suit said.

The decision to offer Starz for free seems to contradict remarks Dish Chief Executive Charlie Ergen made earlier this year. In February, Ergen told Wall Street analysts that the company doesn't "do a lot with promotional programming on premiums," because he doesn't "like to give away my core business."

However, in this case, the relationship between Starz and movie-rental service Netflix appears to be causing the bad blood with Dish, people familiar with situation said. Starz offers its content, including Disney movies, to Netflix, which Dish sees as a competitor and that is what led to the giveaway, these people said.

As one of the biggest suppliers of content to Starz, Disney said Dish's decision to give Starz away is hurting the value of its movies. Furthermore, Dish's actions are hurting Disney's relationship with other networks and outlets that buy its movies, the company said in its suit, which was filed in U.S. District Court in New York City.

In response to the two suits, Dish said 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." The company also suggested that Disney's anger should be directed at Starz not Dish. "Dish Network does not have visibility to the contract between Starz and Disney, but we will vigorously defend our rights against any attempt to drag our customers into the middle of their dispute.” 

-- Joe Flint


Starz may be getting ratings boost from Dish giveaway

For the record: This post was updated to reflect a new statement from Dish Networks that addressed both the Disney and Starz suits.