Vivendi Universal S.A. says it is ready to launch a music channel with an "international flavor" for EchoStar Communications' Dish network but claims EchoStar refuses to honor its contractual obligati
NEW YORK -- Vivendi Universal S.A. says it is ready to launch a music channel with an "international flavor" for EchoStar Communications' Dish network but claims EchoStar refuses to honor its contractual obligation to add the new service to the "America's Top 120" package.
The French conglomerate is trying to force EchoStar's hand in a lawsuit filed the week of Jan. 24 in U.S. District Court in Manhattan. The suit asks the court to declare each party's contractual rights under a 2001 investment agreement and to order EchoStar's launch of the music channel. It also seeks damages of at least $75,000.
The suit claims that Vivendi agreed to purchase in 2001 more than 57 million shares of stock in Englewood, Colo.-based EchoStar for about $1.5 billion. As part of the investment agreement, Vivendi could launch five channels featuring certain types of programming during the three years after close of the deal.
The contract provided that EchoStar would pay Vivendi about 10 cents per month per subscriber for each channel, the complaint states.
EchoStar had 6.83 million subscribers at the end of 2001, and more than 11 million customers as of Jan. 31, 2005, according to the company's Web site.
Vivendi sold its shares back to EchoStar in December 2002 for a loss of approximately $500 million, the suit says, but EchoStar's obligation to carry any channels launched before Jan. 22, 2005, continued.
Vivendi notified the company last fall of its intent to launch three music channels. In response, EchoStar claimed it did not have any obligation to include the channels, the suit says.
In the midst of communications between the companies and their lawyers, Vivendi says, it continued developing one of the channels. Sixty percent of its content would feature music video, with the remainder consisting of music video shows and other music-based programming. EchoStar, however, refuses to launch the channel, the suit claims.
Both companies declined to comment.