Dish Network 1999 Annual Report Download - page 25

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During 1998, the national networks and local affiliate stations challenged, based upon copyright
infringement, PrimeTime 24's methods of selling network programming to consumers. Historically, we obtained
distant broadcast network signals for distribution to our customers through PrimeTime 24. The United States
District Court for the Southern District of Florida entered a nationwide permanent injunction preventing PrimeTime
24 from selling its programming to consumers unless the programming was sold in accordance with certain
stipulations in the injunction. The injunction covers distributors as well. The plaintiffs in the Florida litigation
informed us they considered us a distributor for purposes of that injunction. A federal district court in North
Carolina also issued an injunction against PrimeTime 24 prohibiting certain distant signal retransmissions in the
Raleigh area. The Fourth Circuit Court of Appeals recently affirmed the North Carolina Court's decision. We have
implemented Satellite Home Viewer Act compliance procedures which materially restrict the market for the sale of
network channels by us.
In October 1998, we filed a declaratory judgment action in the United States District Court for the District
of Colorado against the four major networks. We asked the court to enter a judgment declaring that our method of
providing distant network programming does not violate the Satellite Home Viewer Act and hence does not infringe
the networks’ copyrights. In November 1998, the four major broadcast networks and their affiliate groups filed a
complaint against us in federal court in Miami alleging, among other things, copyright infringement. The court
combined the case that we filed in Colorado with the case in Miami and transferred it to the Miami court.
In February 1999, CBS, NBC, Fox and ABC filed a “Motion for Temporary Restraining Order, Preliminary
Injunction and Contempt Finding” against DirecTV in Miami related to the delivery of distant network channels to
DirecTV customers by satellite. Under the terms of a settlement between DirecTV and the networks, some DirecTV
customers were scheduled to lose access to their satellite-provided network channels by July 31, 1999, while other
DirecTV customers were to be disconnected by December 31, 1999. Subsequently, PrimeTime 24 and substantially
all providers of satellite-delivered network programming other than us agreed to this cut-off schedule.
The networks are pursuing a Motion for Preliminary Injunction in the Miami Court, asking the Court to
enjoin us from providing network programming except under very limited circumstances. In general, the networks
want us to turn off programming to our customers on the same schedule agreed to by DirecTV.
A preliminary injunction hearing was held during September 1999. The Court took the issues under
advisement to consider the networks’ request for an injunction, whether to hear live testimony before ruling upon
the request, and whether to hear argument on why the Satellite Home Viewer Act may be unconstitutional, among
other things. The Court did not say when a decision will be made, or whether an additional hearing will be
necessary prior to ruling on the networks’ preliminary injunction motion.
If this case is decided against us, or a preliminary injunction is issued, significant material restrictions on the
sale of distant ABC, NBC, CBS and Fox channels by us could result, including potentially a nationwide permanent
prohibition on our broadcast of ABC, NBC, CBS and Fox network channels by satellite. The litigation and the new
legislation discussed above, among other things, could also require us to terminate delivery of network signals to a
material portion of our subscriber base, which could cause many of these subscribers to cancel their subscription to
our other services. While the networks have not sought monetary damages, they have sought to recover attorney fees
if they prevail. We have sent letters to some of our subscribers warning that their access to distant broadcast network
channels might be terminated soon and have terminated ABC, NBC, CBS and Fox programming to many customers.
In November 1999, Congress passed new legislation regarding the satellite delivery of network
programming and it was signed into law by President Clinton. This new law has the potential of reducing the
number of customers whose network channels EchoStar may otherwise be required to terminate as the law
“grandfathers” in many subscribers.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No items were submitted to a vote of security holders during the fourth quarter of 1999.