Dish Network shares soar after TiVo settlement

Conceding that it has finally lost a patent fight with TiVo (Nasdaq: TIVO) and will pay $500 million in settlement fees proved to be a good thing for Dish Network's (Nasdaq: DISH) stock price. The second largest satellite provider in the U.S. posted the largest price gain--$4.75 per share or 19 percent--since 2008 after it agreed to quit fighting TiVo and pay up.

"There just wasn't anything to argue about anymore once we got the court of appeals ruling" that said essentially that TiVo had won the fight, Charlie Ergen, Dish Network chairman-president-CEO said during an earnings conference call. Litigation between the two companies over DVR patents held by TiVo had been going on since 2007 with one side or the other scoring wins along the way.

"It was not an antagonistic litigation. It was a difference of opinion, strong difference of opinion, that the Court of Appeals kind of settled for us and we both won battles," said Ergen.

Winning the battle, as such, removed "a very significant overhang that has been clouding the picture at Dish for years," Sanford Bernstein analyst Craig Moffett said.

It also cleared the air about how Dish's Blockbuster acquisition meshes with TiVo. Blockbuster is a widget on TiVo devices and "we accepted the contract that Blockbuster had with TiVo," said Ergen, who also damped down speculation that Dish would use Blockbuster to challenge Netflix's streaming video business.

"Netflix has got a formidable lead and probably insurmountable lead," Ergen said, adding that Blockbuster could indirectly provide competition by giving studios "a better financial model" for getting their movies out to the public.

For more:
- Bloomberg BusinessWeek has this story
- listen to the earnings call

Related articles:
TiVo finally wins: Dish, EchoStar to pay $500 million settlement
Dish Network acquires bankrupt Blockbuster for $320.6M

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