The emails were discovered over the weekend and disclosed in court today — and they’re “hurting [Dish Network] in a big way,” according to an account from George Reed-Dellinger of advisory firm Washington Analysis. Susquehanna Financial Group’s Thomas Claps, who’s also monitoring the case, calls it “the most damaging evidence to date” against Dish in AMC‘s $2.5B breach of contract suit involving the satellite company’s 2008 decision to drop the now-defunct VOOM HD channels. It’s so important that Claps says Dish “may re-think its strategy” to have Chairman Charlie Ergen testify — and might be more motivated to negotiate a settlement with AMC that would return its channels to the No. 2 satellite provider before the end of the month when the jury is expected to reach its verdict. Dish dropped AMC in June.
The emails that AMC’s team found on Dish’s hard drives seem to cast a new light on an issue that central to the trial: Did VOOM’s backers (Cablevision and AMC, which the cable company spun off last year) live up to a condition in their carriage contract that required them to invest at least $100M a year in the fledgling networks? Dish says they didn’t — giving it the right to drop the channels – because the $100M requirement applied just to domestic programming, not overhead or overseas expenses.
But a 2005 email exchange between Ergen and his chief negotiator with VOOM, Michael Schwimmer, includes an appendix to the agreement with permitted expenditures and “overhead expenses are specifically referenced,” Claps says. Another email exchange when the agreement was completed in 2007 shows the execs agreeing that VOOM backers had to spend $100M a year on the venture — not just programming. “Schwimmer’s own words on April 27, 2007 are now directly inconsistent with his testimony” that the agreement was just about programming, Reed-Dellinger says.