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Voom files against Echostar

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Lightbulb Voom files against Echostar

Chris Forrester,

Voom, along with its 15 HDTV channels, has just been thrown off Echostar’s Dish network. On May 28 Voom HD Holdings filed its 30-page argument against Echostar Satellite and in particular the deal it had in place with Echostar for a “multi-billion dollar, 15-year distribution” arrangement.

The action is in the US Supreme Court, and Voom pulls no punches in its allegations, stating that Echostar’s termination of its $3.25/sub/month deal was “improper and wrongful”. Those fees rose to $6.43 a month by the end of the 15 year period. Moreover, the affidavit argues that under the terms of its agreement with Dish, Voom had spent $100m annually of a pre-agreed $500m overall investment and had spent more than $300m to date including $102.9m in 2006, and $114m last year.

Voom explains that it expected these investment levels to pay off handsomely, given that Echostar’s HD subscriber base had expanded from about 20,000 at the end of 2005 to about 1.3m by the end of last year, with an expectation that by the end of the contract Echostar would have about 11m subs in place. Voom HD was looking to see its operation start turning a profit by next year, and “generate billions of dollars in revenue over the life of the agreement”.

Voom bluntly alleges that Echostar wrongfully threatened to terminate the agreement last November, announced a unilateral change in the way Voom’s channels were distributed, before deciding in January this year that it was going to terminate the agreement. That happened on May 13.

Voom explains that since the middle of 2007 Echostar had been dissatisfied with its payment obligations, “and tried to fabricate a basis for avoiding its commitments to Voom HD….and that Echostar needed to change the deal it had struck.”

Echostar has yet to file its counter-argument.






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