Disney sues Dish Network over free Starz offer

NEW YORK Tue May 3, 2011 6:03pm EDT

NEW YORK (Reuters) - Satellite TV provider Dish Network Corp has been sued by Walt Disney and Starz Entertainment for giving away popular movies, including "Disney's "Toy Story 3" and "Alice in Wonderland."

Disney filed a copyright suit against Dish, while Starz is suing Dish -- the second largest U.S. satellite TV provider with more than 14 million subscribers -- for breach of contract.

Disney distributes many of its top movies to cable and satellite providers under an agreement with Starz Entertainment's premium cable network.

The giant media company and theme park operator says it only gave Starz permission to air the movies with the understanding 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. Both companies said they wrote to Dish in March requesting it cease and desist its Starz giveaway, but Dish refused to do so.

Starz said it received notices of breach of contracts from several of its movie studio partners due to Dish's actions. Starz said it "pleaded" with Dish for months to stop the free offer to help Starz placate its studio partners.

The majority of Hollywood movie content on Starz is from Disney and Sony Pictures. Sony is currently not a plaintiff in the lawsuits 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.

Dish said it will vigorously defend its rights to offer Starz for free.

"Dish Network pays hundreds of millions of dollars for the right to distribute Starz content to our customers, which includes the rights to a number of Disney movies," the company said in a statement."

(Reporting by Yinka Adegoke; editing by Gerald E. McCormick and Andre Grenon)