CORRECTED-UPDATE 1-Dish awarded $4.9 mln in ESPN licensing dispute

Thu Feb 28, 2013 4:25pm EST

(Corrects headline to say $4.9 million, not billion)

By Nate Raymond and Liana B. Baker

NEW YORK Feb 28 (Reuters) - A federal jury on Thursday found sports programmer ESPN liable for only one breach-of-contract claim made by Dish Network Corp and awarded Dish $4.86 million, a mere fraction of the $152 million it had sought.

In a unanimous ruling, the 10-member jury in Manhattan found ESPN liable for breaching a 2005 licensing agreement by allowing rivals to pay lower rates for ESPN Deportes, a Spanish language channel, without extending the same offer to Dish.

But the jury rejected most of Dish's central claims that ESPN, an affiliate of Walt Disney Co, had breached its contract by giving better deals to rival distributors.

The award comes amid growing friction between distributors and program makers throughout the entertainment industry.

Filed in 2009, the lawsuit centered on the terms of distribution agreements that ESPN had negotiated with Dish and its competitors for channels including ESPN Classic, which shows re-runs of older sports events, and ESPN Deportes.

In its rejection of some of Dish's claims, the jury said ESPN was not liable for letting Comcast Corp in 2006 distribute additional packaging tiers and subscriber packages without first notifying Dish and allowing it a chance to have the same deal. Dish said this cost it $78.9 million.

The trial may impact future negotiations between the two companies, whose distribution agreement is set to expire this year.

Dish, controlled by billionaire founder Charlie Ergen, has often used lawsuits to gain leverage in these types of negotiations, analysts said.

Stanton Dodge, Dish's general counsel, in a statement said the company would "remain vigilant in our efforts to ensure that programmers honor their contractual commitments."

ESPN representatives did not immediately respond to requests for comment.

Dish shares closed down 7 cents at $34.90 on late afternoon trading on the NASDAQ, while Disney shares were up 37 cents at $54.85 on the New York Stock Exchange.

The case is Dish Network LLC v. ESPN Inc., et al., U.S. District Court, Southern District of New York, 09-06875. (Reporting By Nate Raymond in New York; Editing by Gary Hill and Leslie Adler)

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