Business
exclusive

Dish seeks to stiff ESPN out of fees during sports moratorium: sources

Charlie Ergen’s satellite TV company Dish Network is picking a fight with Disney over the millions of dollars it pays for ESPN programming at a time when there are no sporting events, The Post has learned.

Dish Network, the nation’s fourth largest TV provider, wants to wiggle out of the $80 million to $100 million fees it’s supposed to pay ESPN for April broadcasting rights, one source said. The fees are due at the end of the month and Dish has told ESPN that it plans to use that money instead to lower the monthly bills of its roughly 12 million subscribers, the source added.

“Charlie Ergen is trying to get out of the ESPN contract by claiming force majeure,” a second source told The Post, referring to a contract clause that frees the parties from obligations due to an extraordinary event.

Disney’s ESPN has rebuffed the request, the second source said, but it’s unclear whether it will be able to enforce the payment. Plus, the Bristol, Conn-based sports network could soon be deluged with demands for discounts, according to analyst Rich Greenfield.

“US multichannel video subscribers effectively paid ESPN $650 million in April to watch one original series with literally no live sports on TV or for their talk show hosts to even talk about,” the LightShed Partners analyst said in a Tuesday analyst report.

“The multibillion dollar question becomes: what is stopping distributors from invoking force majeure? We believe there has to be a tipping point where enough sports have not occurred that distributors will refuse to pay sports network programmers.”

Greenfield in his note said he’s heard “multiple” multichannel video subscribers have been trying to wiggle out of their April affiliate fees to ESPN, without revealing names.

Dish, which declined to comment, has the most TV subscribers after Xfinity, DirecTV ad Spectrum.

“While the next steps are unclear, it’s evident that Disney/ESPN expect to collect their $10/month from 80+ million subscribers, regardless of when sports content comes back, even if that does not occur until late summer, at best,” he said referring to the average fees charged in New York alone. “Not a good look for The Walt Disney Company. This should make for some very interesting Q1 2020 earnings calls in the weeks ahead.”

The battle over fees comes at a tough time financially for Disney, which has closed its theme parks and slowed film production due to the coronavirus pandemic, which has also slammed the brakes on sporting events. Disney has furloughed tens of thousands of park workers and implemented pay cuts for executives, including executive chairman Bob Iger, who will be forgoing his salary until the crisis passes.

ESPN, meanwhile, has cut executive pay by 20 to 30 percent and has asked 100 of its highest-paid commentators to accept 15 percent pay cuts over the next three months.

“We are asking about 100 of our commentators to join with our executives and take a temporary salary reduction,” the sports network said in a statement earlier this month. “These are challenging times and we are all in this together.”

Disney, which reports earnings on May 6, didn’t return a request for comment. It’s stock, down 26 percent this year, ended the day flat at $106.21 a share.