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Cynthetiq · 03-11-2004, 07:16 AM

here's what came across my desk while I was out of the office...

Quote:

-----Original Message-----
From: Freston, Tom
Sent: Tuesday, March 09, 2004 6:00 PM
To: M_MTVN__ALL
Subject: EchoStar Update

MTVNETWORKS
A VIACOM COMPANY

DATE: March 9, 2004 COPY:

TO: MTV Networks Staff and Freelancers

FROM: Tom Freston

SUBJECT: ECHOSTAR

By now you’ve probably read or heard the news about EchoStar/Dish Network and its president, Charlie Ergen, yanking our channels plus CBS and BET, our “sister” networks, off of his satellite service last night. This is an unprecedented level of “channel yanking” in our business.

So what’s going on?

Well, the first thing you already know. Our relationship with our viewers is the most important thing to all of us at MTV Networks. We are very sad to see that relationship severed by EchoStar.

You should also know that over the years we have successfully partnered with virtually all the other cable and satellite distributors who deliver our channels to their subscribers – except EchoStar.

Like DirecTV, EchoStar/Dish Network delivers television programming by satellite to a large chunk of the country’s television viewers – about nine million of them. We’ve been trying to do a deal with them for months, they have repeatedly smacked down our efforts. Instead of reaching an agreement, they chose to sue us and remove our channels, as well as CBS and BET. The bottom line, if you subscribe to The Dish, you’re missing a LOT of your favorite channels today. (CMT, TV Land and Spike TV are still up because their deals have not expired.)

We’re confused and dismayed by this situation. EchoStar recently raised its rates to subscribers by as much as $3.00 a month. But they refuse to pay us a less than 6 cent increase per month we were asking for ALL of our channels including CBS and BET. When Americans watch TV, they spend over 20% of their time with the affected networks -- yet our fees are less than 5% of what EchoStar gets from its average customer. Consider that distributors pay over $2.00 a month to ESPN for that ONE service. MTV Networks spends over $1 billion on programming each year. Our increases in programming costs go way above the increases in license fees that we ask from our distributors.

EchoStar is a particularly contentious customer. We did have a deal negotiated in January but they reneged on it. We have not been able to subsequently negotiate a deal that made sense for us. A few other things about EchoStar:

• They’ve been found liable for copyright infringement and for stealing CBS’s signal for five years.

• They have a long history of filing frivolous lawsuits, and spent much of their time in court the last several months instead of joining us at the bargaining table. They tried to get a court to issue an injunction against MTVN – and they lost.

• EchoStar pays its bills long after their due date. They are, probably, our “latest” payer.

• EchoStar likes to play the role of the “mom and pop” operator against the big programming giant. In reality they are huge and powerful. With almost 9 million customers, they are the 4th biggest distribution company in the U.S.

DirecTV and the major cable companies are actively working to get EchoStar subscribers onto a service where they can see our networks.

We have strong networks with loyal audiences and we feel confident that the viewers who lost us will find us shortly elsewhere.

I just wanted you to know the facts behind this situation and to know that we are working hard to connect with our EchoStar/Dish network viewers in any way we can.

In the meantime, if you get any calls from EchoStar subscribers looking for their favorite channels, please let them know that we have set up a call center to help them and transfer them to ext. 2608.