Under terms of the settlement, EchoStar agreed to expand its industry leading local network channel by satellite service from approximately 165 markets, to 175 markets by the end of 2006, offering over 95 percent of the U.S. population more fully effective competition to cable. EchoStar also agreed to pay the Affiliate Associations $100 million to protect its subscribers from the potential shut off of their distant network channels.
Distant channels are ABC, NBC, CBS and Fox network channels that originate from a market outside the community in which the subscriber lives. The litigation does not involve, and there is no danger, that consumers could lose their local ABC, NBC, CBS or Fox network channels, or any of the other great programming available from EchoStar's DISH Network. While EchoStar has over 12 million subscribers, less than one million of those customers receive distant network channels. As part of the settlement, EchoStar agreed to re-qualify its distant network subscribers and terminate those channels later this year to the small percentage of customers who are not eligible to receive them today.
During the nine year course of litigation, EchoStar previously settled with hundreds of TV stations and station groups, including the ABC, NBC and CBS networks. With today's announcement, EchoStar has reached settlements with almost 800 total stations. EchoStar had hoped and expected to resolve the dispute with all remaining litigants, but late last week Fox Network declined EchoStar's universal settlement offer and pulled out of the discussions. Consequently, litigation with approximately 25 Fox owned-and-operated stations continues. Though unlikely, it is possible Fox's last minute tactic could derail the entire settlement and force EchoStar to seek legislation to protect its subscribers from disruption.
The settlement is contingent on confirmation by the Federal District Court in Florida.
EchoStar Communications Corporation (Nasdaq:DISH) serves more than 12.46 million satellite TV customers through its DISH Network(TM), the fastest growing U.S. provider of advanced digital television services in the last five years. DISH Network offers hundreds of video and audio channels, Interactive TV, HDTV, sports and international programming, together with professional installation and 24-hour customer service.