DISH Credit Rating



Is TiVo toast? Maybe, at the hands of the full panel of judges at the 9th Circuit Court of Appeals (rehearing the case en banc). Which is pretty good news…

Dish Network won a full-court review from a federal appeals court for its ruling in the case involving TiVo. The U.S. Court of Appeals for the Federal Circuit in Washington granted an en banc review to Dish, which it ruled against in March. Friday’s ruling vacates the one issued in March that left Dish owing TiVo damages of around $303 million.

TiVo sued the Dish Network six years ago over using digital video recording technology for which TiVo said it possessed the patents. TiVo won damages of $103 million in that round, and Dish was told to stop using the DVR technology. The satellite TV provider claimed to have created a work-around technology, but TiVo went after Dish again, saying the work-around still violated TiVo patents. A federal court agreed last year, granted TiVo another $105 million and told Dish to disable the DVR function in its set-top boxes. At the time, an estimated 4 million Dish subscribers had DVR-enabled set-tops.

Professional handicappers are chiming in, with Moody’s thinking a win would lift Dish Network’s credit rating

In March 2010, Dish ended up on the losing side of a patent infringement case with TiVo Inc. Dish faced a $400 million judgment and the prospect of either paying TiVo for licensing or turning off its DVR service until it is able to replace its boxes or software at great cost. It appeared as though an en banc hearing was remote, however, the U.S. Federal Circuit Court of Appeals has granted their petition for rehearing en banc which means that the entire 16 member court will rehear the case, effectively appealing the March decision made by only three judges. We believe that the consequences of a more favorable ruling by the larger court could have positive credit ramifications for Dish Network in the near term by virtue of the cash judgment and over the longer-term if it results in Dish being able to continue offering its DVR service without paying a significant licensing fee to TiVo. Dish’s rating outlook is stable.

 With Sling’s technology, Dish Network’s DVRs very competitive. A little more time to find a workaround is good for Charlie.