Cablevision founder testifies on Dish deal

Cablevision Systems Corp. founder Charles Dolan testified Monday that his company invested millions in a long-term high-definition television contract that Dish Network Corp. abruptly severed once free programming became available elsewhere.

"We had an agreement. We spent what for us were very precious financial resources," Dolan told jurors under direct questioning in state Supreme Court in Manhattan.

Dolan, 85, chairman of the Bethpage company, spent two and a half hours on the witness stand, kicking off testimony in Cablevision's $2.4 billion breach-of-contract lawsuit against Dish.

Cablevision's former unit, Voom HD, filed the suit in 2008, accusing a Dish affiliate, EchoStar Corp., of breaking a 15-year agreement to broadcast Voom's high-definition channels over its satellite network. Cablevision, which owns Newsday, says it lost the money when the agreement fell apart.

Dish, based in Englewood, Colo., says it lawfully terminated the contract because Cablevision failed to spend a required $100 million annually to develop Voom's programs.

During cross-examination, Dolan acknowledged that Dish chairman Charles Ergen complained at one point about the quality of Voom's channels. But the Cablevision chairman said he presumed the criticism was in jest. Ergen is expected to testify later.

The initial 2005 deal between the companies came as high-definition television was in its infancy. When Cablevision agreed to a long-term deal, it assumed it would lose money for the first five years, said Dolan.

Dolan said he was confident that the deal would ultimately have been profitable for both Cablevision and Dish.

By 2007, the high-definition television market had blossomed, and Dish could go elsewhere for programming, Dolan said.

Cablevision argues the contract allowed it to spend the $100 million on salaries, marketing and other expenses. Dish says every cent should have been for programming.

Before the trial began, Judge Richard B. Lowe III admonished Dish for destroying emails related to the case. Monday, he ordered the company to show him additional documents that attorneys have refused to turn over to Cablevision, saying there were privileged legal communications.

"Considering the track record of your company, you sort of lack credibility," Lowe told Dish's attorneys.