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Clause & Effect

By ALM Staff | Law Journal Newsletters |
July 31, 2007

Satellite Television/Programming-Exclusivity Agreements. The U.S. District Court for the District of Colorado decided that a satellite channel breached its agreement to exclusively provide its programming to the DISH Network satellite broadcast service. EchoStar Satellite LLC v. Persian Broadcasting Co. Inc. (PBC), 05-cv-00466-PSF-MEH. EchoStar and PBC had executed an affiliation agreement under which PBC agreed to provide its Farsi-language programming to DISH Network in the United States. An exclusivity provision in the affiliation agreement stated: 'Notwithstanding the foregoing grant of exclusive rights, [PBC] shall not be in breach of the exclusivity provision contained in this Agreement, if [PBC] distributes the Tapesh 1 channel to subscribers to its current service offered on the Telstar 5 satellite ('Current Service') (provided that such subscribers shall be limited to those subscribers that are in existence as of the Effective Date) ' until [Sept. 30, 2004] and during such time, [PBC] shall use its best efforts to migrate the [PBC] Customers to the DISH Network distribution platform ' For clarity, the parties agree and acknowledge that notwithstanding anything to the contrary contained in this Agreement, in no event will [PBC] broadcast the Tapesh 1 channel on the Current Service after [Sept. 30, 2004].'

EchoStar filed suit alleging that PBC had materially breached the affiliation agreement in part by continuing to distribute its programming on GlobeCast North America's Telstar 5 satellite after the exclusivity-provision deadline had passed. PBC argued that the exclusivity provision was 'ambiguous, at best, as to whether the broadcasting prohibition extends only to distribution to 'subscribers' or to all distribution on GlobeCast beyond the Sept. 30, 2004 deadline.' Because GlobeCast had no 'subscribers' who paid monthly fees for service, PBC claimed that its agreement with EchoStar allowed PBC to continue to have its programming distributed on Telstar 5.

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