Sky Angel Sued Discovery for at Least $1 Million in Federal Court
Sky Angel opened another front this year in its carriage dispute with Discovery Communications. In January, the online video provider, which sells a video service under the FAVE-TV brand, sued Discovery in a federal court over breach of contract allegations. The same contract has been the subject of a nearly three-year program access proceeding at the FCC’s Media Bureau (CD July 16 p7). Sky Angel alleged that Discovery improperly terminated its carriage agreement with Sky Angel in January 2010, a move that Sky Angel claims has cost it more than $500,000 in lost subscriber revenue. It sued for more than $1 million in damages and “specific performance of the affiliation agreement” in U.S. District Court, Greenbelt, Md.
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Discovery responded to the complaint last week and filed a motion to dismiss it. Discovery said it complied with the termination provision of the carriage contract in question. “That provision, which was bargained for and accepted by both parties -- cannot now form the basis of a claim for relief,” Discovery said in its motion. “This Court should not allow Sky Angel to interpret the termination provision in a way that inserts or alters the Agreement from how it was negotiated and bargained for,” Discovery said. The actual terms of the contract have been redacted from public versions of court filings. But Discovery said Sky Angel’s pleadings have alleged facts that “demonstrate compliance with, rather than breach of the Agreement."
Sky Angel filed unredacted copies of the agreement and its complaint under seal, along with a motion to unseal them. “The redacted version of the Complaint omits from public access key terms and conditions of the Affiliation Agreement, which Sky Angel must present in order to put the factual basis for its causes of action in context,” it said. Even though the contract contained a confidentiality provision, “one of the express exceptions to the confidentiality provision applies to permit Sky Angel to disclose the terms and conditions of the agreement when it is seeking to enforce its rights pursuant to the agreement,” it said. “Sky Angel also believes that the interests of justice warrant this action to be publicly litigated,” it said.
Discovery opposed that request. “The Agreement contains detailed and confidential commercial information pertaining to Discovery’s commercial business” including carriage provisions, financial terms and permitted technologies, it said. Disclosing such information would put Discovery at a disadvantage to its direct competitors and business partners, it said. The company wouldn’t have entered into the agreement without the confidentiality protections, Elisa Freeman, senior vice president of global distribution operations, said in a declaration attached to Discovery’s response to the motion to unseal.