SBJ/January 7 - 13, 2002/This Weeks Issue

Walt Disney, EchoStar bicker after ESPN Classic, ABC channel get dropped

The Walt Disney Co. and Dish Network parent EchoStar Communications are engaged in a nasty war of words and legal maneuvers over Dish Network's plans to drop ESPN Classic and the ABC Family Channel from its service.

EchoStar, which will gain a near monopoly on digital satellite television service if its proposed merger with DirecTV parent Hughes Communication goes through, dropped ESPN Classic after its contract for the channel expired at the end of last year. Disney got a temporary restraining order to keep the ABC Family Channel on the Dish Network, but the court is to review Disney's application for a preliminary injunction Thursday.

EchoStar says it is no longer obligated to carry the channel, formerly known as the Fox Family Channel, because it changed names and ownership.

After the injunction was issued, Disney put out a press release Dec. 31 in which Disney president and chief operating officer Bob Iger said, "Disney shares the view of many consumer groups and state and local regulators that a monopoly satellite distributor can and will exercise power in ways that stifle competition, innovation and consumer choice."

EchoStar fired back last Wednesday, releasing a statement that called Disney "heavy-handed," "hypocritical" and "self-serving." It said Disney is "a giant media conglomerate" that was imposing rate increases for its channels that were well above the rate of inflation.

"By far the No. 1 contributor to this vicious cycle is Disney's ESPN," the statement said, noting that ESPN has raised its rates by a compounded 20 percent each year from 1998 to 2001, 10 times the rate of inflation.

"EchoStar simply cannot carry every service a programming behemoth like Disney wishes to force upon EchoStar at costs which bear little relationship to the value they provide to consumers," the statement said.

EchoStar said it informed Disney of its intention to drop the channel before its plan to merge with Hughes was announced.

In an additional release separate from Disney's, ESPN President George Bodenheimer said "it appears EchoStar is pursuing other goals at the expense of its current and future subscribers and the overall quality of its programming distribution service." He went on to say that "despite this action ... we're confident that ESPN Classic will ultimately be restored."

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