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A judge in the Southern District of New York this week refused to stop Dish Network’s sale of one-day “Sling Orange” passes that allow consumers to pay $4.99 to stream ESPN, ESPN2, ESPN3 and the Disney Channel.
As Sportico has detailed, ESPN sued Dish in August for breach of contract, arguing Dish lacks the contractual authority to sell access to its channels in one-day passes, as well as passes for a weekend or week. ESPN has argued that these short-term passes are “fundamentally inconsistent” with the two companies’ licensing agreement, which contemplates subscriptions. Until these shorter pass options, Sling Orange had only offered monthly subscriptions consistent with ESPN’s practices. ESPN demanded a preliminary injunction to stop the new offerings.
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U.S. District Judge Arun Subramanian wasn’t persuaded by ESPN’s arguments and denied the company’s motion.
Subramanian’s order focuses on the plain language of the licensing agreement. As summarized by the judge, ESPN contends this language “allows Dish to distribute its networks only through paid monthly subscriptions.”
Subramanian highlighted the grants-of-rights section to the agreement. This section allows Dish the right to distribute Disney’s networks to “Network Subscribers” through defined “PSS Services.”
“The first question,” the judge wrote, “is whether Sling Orange” counts as a PSS Service. The agreement defines a PSS Service as one involving video programming where subscribers pay for a subscription to stream.
Simple enough.
But what counts as a “subscription” or, more specific to the agreement, a “paid subscription basis,” is a crucial point of contention. The agreement doesn’t define that terminology.
ESPN asserts that a subscription refers to continuous service over a period of time—normally months—that excludes a one-day pass, weekend pass or week pass.
But Subramanian wrote that interpretation “overlooks the full scope” of the grant of rights. The grant defines subscribers “to Disney’s networks within those services who are authorized to receive Disney’s programming.”
Further, the definition of a subscriber includes even users of Dish’s free services. The judge stressed the subscriber definition does not contain a “minimum subscription length” and expansively includes anyone authorized to receive “any level of video programming service.”
As Subramanian sees it, this “broad definition” encompasses one-day passes and the other passes. He added there’s no contractual language showing “an intent to limit subscribers solely to traditional monthly subscribers.” Further, the judge alluded to the fact that ESPN and Dish are sophisticated companies that had the capacity to negotiate terms exactly as they saw fit.
Subramanian also reasoned that an understanding of a “subscription” in modern technology practices is access for a particular time—whether it’s a long stretch or a short period—as opposed to purchase of a “thing” such as a “movie à la carte.”
To illustrate, Subramanian hypothesized the purchase of a trial subscription that expires at the end of the trial period.
“It isn’t recurring,” the judge explained, “but one might reasonably think of it as a subscription.”
Subramanian compared this hypothetical to a consumer who buys a one-day pass. The trial user “might decide to buy more of the product or service in the future, but she isn’t obligated to do so” in the same vein a consumer who buys a one-day pass isn’t obligated to buy another day.
The judge was also unpersuaded that ESPN has shown it would suffer irreparable harm—meaning a harm that can’t be remedied by an award of money damages—without an injunction. ESPN (Disney) says it would suffer harm to its value and brand, its relationships with distributors, its direct-to-consumer streaming service (ESPN Unlimited) and the company’s right to “exclude unauthorized distribution of its networks.”
But Subramanian felt those harms are speculative, and that even if they surface and ESPN proves Dish is responsible, they would be remedied through money damages.
“To the extent Dish invalidly sold passes that diminish Disney’s ad revenue or prevent it from acquiring content,” the judge wrote, “that’s something that could be measured and remedied with money damages.”
ESPN can appeal the ruling to the U.S. Court of Appeals for the Second Circuit. The ruling also doesn’t end ESPN v. Dish—it only addresses the demand for a preliminary injunction—and ESPN could ultimately prevail in the litigation.
“While we were unable to obtain preliminary relief to stop Dish/Sling’s sales of Day Pass, Weekend Pass and Week Pass,” a Disney spokesperson told Sportico, “we look forward to vindicating our position at trial where all the facts and evidence will be presented.”
A Sling spokesperson told Sportico the company is “very pleased” with Subramanian’s ruling.
“We will continue defending our ability to offer customers a new way to stream the content they want, whenever they want it, at a price they can afford,” the spokesperson added.
To celebrate the ruling, Sling TV is offering one-day pass subscriptions, which normally cost $4.99, for $1 to new and returning customers through Nov. 30.
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As Sportico has detailed, ESPN sued Dish in August for breach of contract, arguing Dish lacks the contractual authority to sell access to its channels in one-day passes, as well as passes for a weekend or week. ESPN has argued that these short-term passes are “fundamentally inconsistent” with the two companies’ licensing agreement, which contemplates subscriptions. Until these shorter pass options, Sling Orange had only offered monthly subscriptions consistent with ESPN’s practices. ESPN demanded a preliminary injunction to stop the new offerings.
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U.S. District Judge Arun Subramanian wasn’t persuaded by ESPN’s arguments and denied the company’s motion.
Subramanian’s order focuses on the plain language of the licensing agreement. As summarized by the judge, ESPN contends this language “allows Dish to distribute its networks only through paid monthly subscriptions.”
Subramanian highlighted the grants-of-rights section to the agreement. This section allows Dish the right to distribute Disney’s networks to “Network Subscribers” through defined “PSS Services.”
“The first question,” the judge wrote, “is whether Sling Orange” counts as a PSS Service. The agreement defines a PSS Service as one involving video programming where subscribers pay for a subscription to stream.
Simple enough.
But what counts as a “subscription” or, more specific to the agreement, a “paid subscription basis,” is a crucial point of contention. The agreement doesn’t define that terminology.
ESPN asserts that a subscription refers to continuous service over a period of time—normally months—that excludes a one-day pass, weekend pass or week pass.
But Subramanian wrote that interpretation “overlooks the full scope” of the grant of rights. The grant defines subscribers “to Disney’s networks within those services who are authorized to receive Disney’s programming.”
Further, the definition of a subscriber includes even users of Dish’s free services. The judge stressed the subscriber definition does not contain a “minimum subscription length” and expansively includes anyone authorized to receive “any level of video programming service.”
As Subramanian sees it, this “broad definition” encompasses one-day passes and the other passes. He added there’s no contractual language showing “an intent to limit subscribers solely to traditional monthly subscribers.” Further, the judge alluded to the fact that ESPN and Dish are sophisticated companies that had the capacity to negotiate terms exactly as they saw fit.
Subramanian also reasoned that an understanding of a “subscription” in modern technology practices is access for a particular time—whether it’s a long stretch or a short period—as opposed to purchase of a “thing” such as a “movie à la carte.”
To illustrate, Subramanian hypothesized the purchase of a trial subscription that expires at the end of the trial period.
“It isn’t recurring,” the judge explained, “but one might reasonably think of it as a subscription.”
Subramanian compared this hypothetical to a consumer who buys a one-day pass. The trial user “might decide to buy more of the product or service in the future, but she isn’t obligated to do so” in the same vein a consumer who buys a one-day pass isn’t obligated to buy another day.
The judge was also unpersuaded that ESPN has shown it would suffer irreparable harm—meaning a harm that can’t be remedied by an award of money damages—without an injunction. ESPN (Disney) says it would suffer harm to its value and brand, its relationships with distributors, its direct-to-consumer streaming service (ESPN Unlimited) and the company’s right to “exclude unauthorized distribution of its networks.”
But Subramanian felt those harms are speculative, and that even if they surface and ESPN proves Dish is responsible, they would be remedied through money damages.
“To the extent Dish invalidly sold passes that diminish Disney’s ad revenue or prevent it from acquiring content,” the judge wrote, “that’s something that could be measured and remedied with money damages.”
ESPN can appeal the ruling to the U.S. Court of Appeals for the Second Circuit. The ruling also doesn’t end ESPN v. Dish—it only addresses the demand for a preliminary injunction—and ESPN could ultimately prevail in the litigation.
“While we were unable to obtain preliminary relief to stop Dish/Sling’s sales of Day Pass, Weekend Pass and Week Pass,” a Disney spokesperson told Sportico, “we look forward to vindicating our position at trial where all the facts and evidence will be presented.”
A Sling spokesperson told Sportico the company is “very pleased” with Subramanian’s ruling.
“We will continue defending our ability to offer customers a new way to stream the content they want, whenever they want it, at a price they can afford,” the spokesperson added.
To celebrate the ruling, Sling TV is offering one-day pass subscriptions, which normally cost $4.99, for $1 to new and returning customers through Nov. 30.
Best of Sportico.com
Sign up for Sportico's Newsletter. For the latest news, follow us on Facebook, Twitter, and Instagram.
Continue reading...
