Disney sues Dish Network over free Starz offer

Tue May 3, 2011 1:46pm EDT

* Movies including Toy Story 3 available for free on Dish

* Dish is devaluing movie content, says Disney

* Dish has refused to stop free Starz offer - Disney

NEW YORK, May 3 (Reuters) - Walt Disney Co (DIS.N) filed a copyright suit against satellite television operator Dish Network Corp (DISH.O) for distributing popular movies including Disney's "Toy Story 3" and "Alice in Wonderland" on a free tier for Dish subscribers.

Disney distributes many of its top movies on cable and satellite providers through an agreement with Liberty Media Corp's LINTA.O LSTZA.O LCAPA.O Starz channel, a premium network similar to Time Warner Inc's (TWX.N) HBO or CBS Corp's(CBS.N) Showtime.

The giant media company and theme park operator says it only granted Starz permission to air the movies with the understanding that Starz would be on a premium tier with distributors.

Disney claims in the suit that in February Dish began providing millions of subscribers free access to Starz through to January 2012 in violation of its agreements with both Disney and Starz. It said it wrote to Dish in March to cease and desist its Starz giveaway but Dish refused to do so.

Dish was not immediately available for comment.

The majority of movie content on Starz is from Disney and Sony Corp's (6758.T) Sony Pictures. Neither Starz nor Sony is a plaintiffs in the lawsuit against Dish.

Disney said Dish's actions devalue its movies and undermine its "windowing" strategy. Hollywood studios and TV show makers use windowing to try to maximize the value of their content by offering it to consumers through differently timed "windows" such as theater, DVD rentals and premium pay-TV.

The suit was filed at the U.S. District Court Southern District of New York. Case No. 11 CIV 2973.

Dish is the second largest U.S. satellite TV provider with more than 14 million subscribers. On Monday it settled a six-year long patent legal battle with TiVo Inc (TIVO.O). (Reporting by Yinka Adegoke, editing by Gerald E. McCormick)