Dish Network 2013 Annual Report Download - page 167

DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
F-57
In addition, on February 21, 2013, the Fox plaintiffs filed a second motion for preliminary injunction against: (i) us
seeking to enjoin the Hopper Transfers feature in our second-generation Hopper set-top box, alleging breach of their
retransmission consent agreement; and (ii) us and EchoStar Technologies seeking to enjoin the Sling placeshifting
functionality in our second-generation Hopper set-top box, alleging copyright infringement and breach of their
retransmission consent agreement. On September 23, 2013, the California court denied the Fox plaintiffs’ motion
and on October 22, 2013, the Fox plaintiffs filed a notice of appeal. The Fox claims are set for trial on January 13,
2015.
New York Actions. Both the ABC and CBS parties filed counterclaims in the New York action adding copyright
claims against EchoStar Technologies, and the CBS parties have filed a counterclaim alleging that we fraudulently
concealed the AutoHop feature when negotiating renewal of our CBS retransmission consent agreement. On
November 23, 2012, the ABC plaintiffs filed a motion for a preliminary injunction to enjoin the Hopper set-top
box’s PrimeTime Anytime and AutoHop features. On September 18, 2013, the New York court denied that motion.
The ABC plaintiffs appealed, and oral argument on the appeal began on February 20, 2014 before the United States
Court of Appeals for the Second Circuit. The ABC and CBS claims are set to be trial-ready on April 17, 2015.
We intend to vigorously prosecute and defend our position in these cases. In the event that a court ultimately
determines that we infringe the asserted copyrights, or are in breach of any of the retransmission consent
agreements, we may be subject to substantial damages, and/or an injunction that could require us to materially
modify certain features that we currently offer to consumers. In addition, as a result of this litigation, we may not be
able to renew certain of our retransmission consent agreements and other programming agreements on favorable
terms or at all. If we are unable to renew these agreements, there can be no assurance that we would be able to
obtain substitute programming, or that such substitute programming would be comparable in quality or cost to our
existing programming. Loss of access to existing programming could have a material adverse effect on our
business, financial condition and results of operations, including, among other things, our gross new subscriber
activations and subscriber churn rate. We cannot predict with any degree of certainty the outcome of these suits or
determine the extent of any potential liability or damages.
Lightsquared/Harbinger Capital Partners LLC (LightSquared Bankruptcy)
As previously disclosed in our public filings, L-Band Acquisition, LLC (“LBAC”), our wholly-owned subsidiary,
entered into a Plan Support Agreement (the “PSA”) with certain senior secured lenders to LightSquared LP (the
“LightSquared LP Lenders”) on July 23, 2013, which contemplated the purchase by LBAC of substantially all of
the assets of LightSquared LP and certain of its subsidiaries (the “LBAC Bid”) that are debtors and debtors in
possession in the LightSquared bankruptcy cases pending in the United States Bankruptcy Court for the Southern
District of New York (the “Bankruptcy Court”), which cases are jointly administered under the caption In re
LightSquared Inc., et. al., Case No. 12 12080 (SCC).
Pursuant to the PSA, LBAC was entitled to terminate the PSA in certain circumstances, certain of which required
three business days’ written notice, including, without limitation, in the event that certain milestones specified in the
PSA were not met. On January 7, 2014, LBAC delivered written notice of termination of the PSA to the
LightSquared LP Lenders. As a result, the PSA terminated effective on January 10, 2014, and the LBAC Bid was
withdrawn.
On August 6, 2013, Harbinger Capital Partners LLC and other affiliates of Harbinger (collectively, “Harbinger”), a
shareholder of LightSquared Inc., filed an adversary proceeding against us, LBAC, EchoStar, Charles W. Ergen
(our Chairman), SP Special Opportunities, LLC (“SPSO”) (an entity controlled by Mr. Ergen), and certain other
parties, in the Bankruptcy Court. Harbinger alleged, among other things, claims based on fraud, unfair competition,
civil conspiracy and tortious interference with prospective economic advantage related to certain purchases of
LightSquared secured debt by SPSO. Subsequently, LightSquared intervened to join in certain claims alleged
against certain defendants other than us, LBAC and EchoStar.