DISH Network Denied Preliminary Injunction in Rate-Setting Case

The Northern District of Illinois issued an opinion in a contractual dispute for the rates that DISH Network must pay to retransmit television stations from defendant Cox Media Group; the court denied DISH’s motion for a preliminary injunction Monday.

DISH Network asked the court for a preliminary injunction so it could continue to retransmit the 13 Cox stations at the rates it had agreed to with Cox Media per their March 2019 three-year agreement. DISH Network had similar station retransmit agreements with defendant Northwest. In February 2019, defendant Terrier Media entered into separate agreements to acquire the Cox and Northwest stations; these agreements raised retransmission prices. Under the Cox Media agreement, if Terrier Media had a preexisting retransmission agreement with DISH, the Cox Media stations would be subject to that agreement, if not they would be subject to the Cox Retransmission Agreement. Similarly, the Northwest Retransmission Agreement stated that “notwithstanding any preexisting agreement, the Agreement’s terms will govern any ‘After-Acquired Station.’” Subsequently, to allegedly keep favorable rates, Terrier acquired NBI to take control of Northwest and then it transferred ownership of Camelot Media Buyer, a subsidiary of Terrier, to NBI; Camelot would then acquire the Cox stations. Thus, the Cox stations were then subject to the Northwest retransmission rates. However, DISH argued that the Cox transaction closed before the Northwest transaction, so Terrier “did not have a preexisting retransmission agreement when it acquired Cox and the Cox retransmission Agreement’s rates remain in effect.” The parties went to court over this disagreement.

In considering the injunction, the court must determine DISH’s likelihood of success on the merits for its seven asserted claims. The first four claims consider “whether the Cox stations are after-acquired stations subject to the Northwest retransmission agreement.” Dish argued that the Cox Retransmission Agreement should control because Terrier allegedly acquired the Cox stations before acquiring the Northwest stations, so there was no preexisting retransmission agreement. DISH added that the Northwest stations became After-Acquired Stations subject to Cox’s Retransmission Agreement. The court stated that the defendants satisfied the cause to be delivered by initiating the wire transfer, so it does not matter that Cox received the money first. DISH also argued that the transactions occurred simultaneously, but the court did not find this argument convincing.

DISH claimed that the court should treat these as a single acquisition transaction, however, the court stated that “DISH offers no reason to rewrite the express terms to which it agreed.” Lastly, DISH asserted that the parties did not agree for the Station Change in Control provision to “permit an entity to acquire two sets of stations and then elect the retransmission agreement with more favorable terms.” The court stated that DISH should have been aware that the Northwest acquisition could have closed first while it was negotiating, thus the court concluded that “DISH cannot now credibly claim that it was blindsided by Defendants’ use of the provision.” The court does not question the close of these deals, finding that the were executed as contemplated and as permitted under both stations’ retransmission agreements. Thus, DISH has not shown a likelihood of success on the merits of its contract claims.

The court then turned to DISH’s breach of duty of good faith and fair dealing, tortious interference, and unfair competition claims. DISH alleged that the defendants “frustrated DISH’s right to retransmit the Cox stations and then launched a PR campaign to conceal their plan.” The court finds the allegation that defendants launched a concealment claim to be unsuccessful because DISH was internally discussing the effect of the acquisition prior to signing the agreements. The court added that DISH has not shown evidence that the defendants acted unlawfully. The court found the breach of agreement and tortious interference claims unlikely to succeed. The court noted that DISH’s implied covenant claims are based on the same facts as its breach of contract claims, thus this is unlikely to succeed. The court added that DISH’s unfair competition claim is also not likely to succeed because it did not “adduce any evidence that Defendants acted in bad faith.” Consequently, DISH has not demonstrated a likelihood of success on these claims.

The court stated that DISH’s failure to demonstrate a likelihood of success is enough to deny the motion, but it noted that DISH also failed to show that it will suffer irreparable harm before the final resolution of its allegations . The court noted that DISH could retransmit the stations as the Cox agreement is in effect until 2022. As a result, DISH “only faces potential copyright liability if it is wrong that the Agreement remains in effect.” Furthermore, DISH “cannot credibly claim both that it has a likelihood of success on the merits (i.e., that the Cox Retransmission Agreement is valid and enforceable) and that the copyright damages constitute a ‘likely’ source of irreparable harm.”

The court noted that DISH could also negotiate with Terrier to avoid a blackout and the court pointed out that DISH “itself has routinely imposed blackouts over the past five years.” As a result, the court found that DISH failed to adequately show that it will suffer irreparable harm. Subsequently, the court found that DISH failed to show that a preliminary injunction is warranted. Thus, DISH’s motion for a preliminary injunction was denied.

DISH is represented by Steptoe & Johnson LLP. Cox Media is represented by Riley Safer Holmes & Cancila LLP. Terrier Media is represented by Sidley Austin LLP.