Echostar calling. What they (and BBC Panorama) really think of NDS.

We have received a comment from Echostar’s PR company, Bob Gold and Associates that our blog “Has Cisco got its sums wrong?” contains some factual errors.

Linda Haugsted of Bob Gold & Associates has asked us to clarify a number of points. It appears that Ms Haugsted has taken issue with our comment that: “[NDS] recently won an $18m lawsuit against Echostar, clearing NDS of allegations of piracy”.

She has requested that we clarify the situation as follows:

  1. EchoStar did not pay damages (compensation for injury due to the wrongful conduct of another), as stated in the post-judgment press statements of NDS. EchoStar paid litigation costs, not damages, per a Memorandum Order by the Ninth Circuit Court, Aug. 4, 2010.
  2. NDS was not the ‘sole prevailing party’ in the litigation. On May 15, 2008, a U.S. District Court jury in California found for EchoStar on three of its six claims: two asserting violations of the California Penal Code and one asserting violations of the Federal Communications Act. Those jury findings were not impacted by subsequent appeals. Further, U.S. District Court Judge David Carter found in favor of EchoStar on its claim that NDS engaged in unfair business practices under California State law, awarded EchoStar damages, and entered a permanent injunction preventing NDS from engaging in certain defined acts of piracy against EchoStar going forward ­ both in the State of California as well as through the United States.  That ruling was not impacted by the subsequent appeals and the permanent injunction remains in place.
  3. In light of the jury and District Court Judge’s findings cited above, NDS was not ‘fully vindicated of all allegations of piracy.’ Each of the three statutes that the jury found NDS violated all involved unlawful acts of circumvention or piracy, and the Court’s ruling that NDS violated California’s Unfair Competition Law was based on the jury’s findings of liability for those 3 piracy claims.

We thank Ms Hausted for her clarification, which I guess goes to show that there is not much love lost between Echostar and NDS!

Since writing and posting the article, there has been a BBC Panorama programme broadcast that calls into question NDS’ approach to anti-piracy, and all but accuses the company of being complicit in the hacking of competitive systems and the downfall of UK pay-TV platform, ON Digital.

As one might expect, NDS have been quick to respond to the allegations, and NDS Executive Chairman Abe Peled has published an open letter to BBC Panorama that may be found on the web (http://www.broadbandtvnews.com/2012/03/29/nds-letter-to-bbc-panorama/). In addition, NDS’ lawyers Allen & Overy LLP have been in touch with the BBC  requesting ‘redress to our client for the false allegations’.

Whatever the outcome of NDS’ spat with the BBC, it must be considered that NDS could now be classified as ‘troubled’, and it’s reputation has been harmed by, if not its own actions, then certainly how those actions have been interpreted by several different broadcasters and broadcast platforms (e.g. BBC, Canal+, Echostar, ITV).

Cisco has announced its intention to buy NDS as it will provide access to a market (broadcasters and platform operators) in which Cisco is not strong.

One has to ask the question whether the acquisition is wise given the recent bad press for NDS. Mud sticks, and if Cisco were to continue with the acquisition, they may well find themselves wrapped up in acrimonious litigation with the very customers that are trying to attract.

It’s difficult to imagine that Cisco’s investors will be eager to be associated with such a troubled reputation, and we await developments with interest.