Chicago Media Action Primer on the Echostar / Viacom Dispute

Posted by Mitchell - March 11, 2004 (entry 160)

(1) What's at issue?

The cable provider Echostar has been in a dispute with Viacom (the media company which owns MTV, CBS, UPN, BET, Comedy Central, and Nickelodeon, plus Simon and Schuster, Paramount Studios, and Blockbuster video). In January, Echostar filed a lawsuit against Viacom claiming that Viacom was engaged in unfair price increases.

At Midnight, March 9, Echostar retaliated further by dropping the signal feeds from all of Viacom's cable networks, once a court order mandating Viacom feeds through Echostar channels expired. As a result, some 9 million Echostar customers don't have channels which they had just one day earlier.

(2) How are consumers and citizens affected?

Some ramifications are obvious. Most consumers and citizens duly paid for the content, fully expecting to get what they paid for. While disputes between companies occur and are inevitable, that shouldn't get in the way of simple choice and contractual obligations.

Other ramifications are less obvious. This dispute speaks to the fact that citizens in this country have little say over their media environment, not only what's shown by who, but also how the media environment should be determined on the whole be shaped--whether the media is the playground ruled by a few bullies, or whether the media is a garden where a robust and diverse bouquet of different participants can thrive.

(3) What should be done?

In the immediate, Viacom and Echostar should amiably and quickly resolve their dispute, perhaps by continuing negotiations, perhaps by arbitration or litigation. Some 9 million consumers of Echostar are denied service which they duly paid for, and the simmering situation threatens the immediate viability of both companies.

In the longer term, the Federal Communications Commission and Congress must act to diversify our media environment. To be sure, Viacom and Echostar did not arise spontaneously out of thin air. Those companies became heavyweights because of direct government policies which allowed a few media giants to own more and more media properties. And when titans clash, it's usually everyday people who pay the price. The FCC and Congress have begun to act in the political sphere, thanks to an unprecendented citizen response, and we hope their efforts will continue and broaden.

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