Reprieve for Disney’s ABC Family

A federal judge Monday granted Walt Disney Co. a temporary restraining order to block satellite-TV provider EchoStar Communications Corp. from dropping Disney’s ABC Family channel.

The decision came as EchoStar, the nation’s second-largest satellite firm, threatened to stop broadcasting the channel at midnight Monday to its 6.5 million subscribers.

The order grants Disney a reprieve until Jan. 10, when the court will review Disney’s request for an injunction to block EchoStar’s move. The dispute stems from a contract battle over the former Fox Family channel that analysts say highlights the challenge Disney faces in seeking rate hikes from cable and satellite-TV operators for ESPN and other channels.

“We think it’s important to keep the channel alive. But it’s not permanent,” said Disney President Bob Iger. “We still face a battle of sorts unless they are interested in sitting down and negotiating.”

Disney filed a lawsuit in mid-December seeking to enjoin EchoStar from dropping the ABC Family Channel, which Disney bought in November as part of a $5.2-billion deal with News Corp.

EchoStar said that a clause in its contract allows it to drop the channel when there is a major change of ownership. It also cited weak ratings at ABC Family and the need to make room for additional channels because of new federal rules that require satellite providers to carry all local broadcast channels in their markets.

But Disney contends EchoStar was using the threat as a negotiating ploy to lower fees and had no justification for quitting the 10-year contract, set to expire in 2005.

Judge Gary Feess of the U.S. District Court of Los Angeles said “the balance of the hardships weighs heavily in [Disney’s favor] because ... of the harm ABC Family is likely to face should [EchoStar] cease its distribution.”

Disney executives had a mixed reaction to the news, noting that EchoStar was still planning to drop Disney’s ESPN Classic channel at midnight on Monday. EchoStar delivered the sports channel to about 4 million customers, but sources said the satellite company objected to Disney’s proposed rate hikes for ESPN Classic.

“We think it’s a shame, but there’s nothing we can do about it from a legal standpoint,” Iger said.

A spokeswoman for EchoStar said the company believes it has the right to drop ABC Family.

EchoStar also is trying to win government approval for a takeover of its larger satellite rival, Hughes Electronics Corp. which owns DirecTV.

EchoStar has claimed in court filings that Disney threatened to lobby against the deal if EchoStar failed to carry ABC Family.

Iger said Disney has not yet decided whether to fight the merger. “One can only wonder how [EchoStar] would behave if they get even larger.”

ABC Family shows a mix of children and family shows and some Christian programming, which dates to when televangelist Pat Robertson’s Christian Broadcasting Network owned the channel.

EchoStar’s action triggered an angry response from Robertson, whose talk show, “The 700 Club,” is still broadcast on ABC Family.

“I know how important the merger with DirecTV is to you,” Robertson wrote in a letter to EchoStar Chairman Charles Ergen. “Is beating up on a channel that features religious programs worth the potential loss of the deal of your lifetime?”

Disney’s stock fell 23 cents Monday to close at $20.72 on the New York Stock Exchange, while shares of EchoStar rose 17 cents to $27.47 on Nasdaq.