The United States District Court, Eastern District of Texas ordered contempt sanctions against the satellite TV firms.

Tivo said “We are pleased by the Court’s ruling to impose contempt sanctions of approximately $200 million against EchoStar for its continued violation of a court-ordered permanent injunction, and to award TiVo its attorney fees and costs incurred during the contempt proceedings. This brings total damages and sanctions in this case to approximately $400 million through July 1, 2009, plus attorney fees, and is exclusive of potential further damages and sanctions.”

The matter is not over. Echostar and Dish will continue the appeal process, which could go on for years.

According to MarketWatch, In April 2005, a Texas jury found in favor of TiVo, and a judge subsequently issued a permanent injunction against EchoStar, ordering it to pay $94 million in damages, to stop selling its DVRs and to turn off about 4 million of the devices.

In August 2006, after EchoStar filed an appeal, a federal appeals court in Washington stayed the permanent injunction.

In January 2008, after another EchoStar appeal, the U.S. Court of Appeals for the Federal Circuit unanimously ruled that TiVo be awarded full damages, and that the injunction ordering EchoStar to stop deploying its DVRs be reinstated.

But EchoStar continued to deploy its DVRs, claiming that it had made an adjustment to its software that didn’t infringe on TiVo’s patents. TiVo subsequently asked that EchoStar be held in contempt of the injunction.

In June 2009, after a hearing, the U.S. District Court for the Eastern District of Texas again found in TiVo’s favor, ruling that EchoStar’s software “workaround” still infringed on TiVo’s patents. That court also found EchoStar to be in contempt of court and ordered that the injunction it first issued four years ago be fully enforced.

Douglas A. McIntyre

Amgen (AMGN) Started as Buy at RBC.
Brightpoint (CELL) Raised to Buy at Citigroup.
Echelon (ELON) Raised to Neutral at Piper Jaffray.
Echostar Holdings (SATS) Raised to Buy at Citigroup.
Kroger (KR) Started as Buy at Deutsche Bank.
QLogic (QLGC) Raised to Outperform at RBC.
MBIA Inc. (MBI) Cut to Underweight at JPMorgan.
PETsMART (PETM) Cut to Neutral at JPMorgan.
Sprint Nextel (S) Cut to Underweight at Piper Jaffray.
YUM! Brands (YUM) Cut to Neutral at UBS.

JON C. OGG
AUGUST 11, 2009

Reuters:   The Justice Department is probing big tech employee recruiting.

Reuters:   Medical bills underlay 60% of American bankruptcies.

Reuters:   The US will offer its new financial regulatory plan on June 17.

Reuters:   Chinalco may revise its Rio Tinto (RTP) bid.

Reuters:   United (UAUA) is asking Boeing (BA) and Airbus to provide 150 new plans.

Reuters:   Wal-Mart (WMT) will add 22,000 employees at US stores.

Reuters:   Morgan Stanley (MS) may be among the first to exit the TARP.

Reuters:   Touchscreen PCs may be more hype than reality.

Reuters:   Creeping rates, volatility, and risk could derail the financial recovery.

WSJ:   Bernanke warned that the deficit must be reduced.

WSJ:   Banks are trying to escape off-balance-sheet accounting rules that could make them raise more money.

WSJ:   Executives often sell shares in their companies right before their prices go down.

WSJ:   Homebuilders see signs of stabilization.

WSJ:   Merck (MRK) plans to sell its animal health assets.

WSJ:   Electronics companies are now selling screens that are thinner than those released just a few years ago.

WSJ:   Icahn claimed board seats in his fight with Biogen.

WSJ:   Data Domain (DDUP) took at $1.9 billion order from NetApp (NTAP) over one from EMC (EMC).

WSJ:   Dish Network (SATS) won a stay of a court victory by Tivo (TIVO).

WSJ:   GM may become profitable but only because of billions of dollars in upfront investment by taxpayers.

WSJ:   Temasek lost big on its investment in Barclays (BCS).

WSJ:   The market is wondering if Pepsi (PEP) will stand by its original offer for its bottlers.

WSJ:   Southwest (LUV) pilots rejected a new contract.

WSJ:   News Corp (NWS) appointed a new president.

WSJ:   Adobe (ADBE) is trying to crack the handset market.

NYT:   Taiwan tech firms are seeking to expand into global markets.

NYT:   More and more Americans cannot afford prescription medicines.

NYT:   Rising interest rates on world debt could hurt growth across the globe.

NYT:   Regulators will announced their plans for derivatives.

NYT:   Investors in developing markets see optimism.

NYT:   In its restructuring, GM will try to learn from its successful global operations.

NYT:   Selling troubled mortgage assets would force banks to take large write downs.

NYT:   Manchester United will replace AIG (AIG) as its sponsor.

FT:   Clear Channel investors may force a debt restructuring on the company.

FT:   AIG (AIG) may break up its aircraft leasing company.

Bloomberg:   GM’s bonds indicate investors think its market value will eventually be greater than Ford’s (F).

Bloomberg:   The International Air Transport Association says global airline losses will be worse than expected.

Douglas A. McIntyre

Tivo’s business suffered when the DVR function was adopted by cable and satellite-TV set-top boxes, and the originator of the technology languished, as is so often the case.

Tivo got a measure of revenge by enforcing patents on its devices and the company began to collect licensing fees from the large firms that used knock-offs of its boxes. EchoStar (SATS), the satellite TV firm, tried to create a “work around” to the Tivo technology as a way to save licensing costs. The plan did not work.

Today, a court found that EchoStar was still improperly using Tivo’s technology and awarded the company $103 million. That is not much money for the firm that created the DVR and got trampled in the land rush to market it to consumers. But, Tivo’s shares were up 38% after hours to $9.65.

Douglas A. McIntyre

DISH (DISH) earned $0.48 EPS on a 1% decline in revenues to $2.92 billion.  This is under estimates of $0.49 EPS and $2.96 billion in revenue, but the miss here is so close that in today’s market it might be considered a win.  DISH also lost 102,000 net subscribers by its own count.

EchoStar Corp. (SATS) is where this gets convoluted.  It posted a rather large loss at -$7.73 EPS on $496 million in revenue.  $247 million of the loss was a goodwill write down of $247 million for the purchase of Sling Media and $216 million in investment losses.  We do not have enough estimates on this one for it to really count, but consensus were about $563.3 million.

Neither stock has traded this morning.

Jon C. Ogg

"Somebody, Help Me!!! Please!!!"

If you thought that the SIRIUS XM Radio Inc. (NASDAQ: SIRI) situation couldn’t get more complex, it could. It has.  Reports of it getting ready for bankruptcy, and then getting a controlling debt investment from EchoStar Corp. (NASDAQ: SATS) and Charles Ergen only made matters worse.  And now this morning comes reports that SIRIUS XM is in talks with Liberty Media Interactive (NASDAQ: LINTA).

Dare we bother throwing in that an activist shareholder is still trying to go after the company?  John Malone could come to the rescue here.  But with all the restructuring that has been seen in Liberty and with all of the issues in the media world right now, he might have more than hesitation.  And raising cash to do this with other people’s money is less of an option today.

Liberty is already majority owner of DirecTV (NYSE: DTV), and it already has a relationship with SIRIUS via XM.  The structure of this gets extremely complicated.  There is no talk yet of what the dollar amounts might be, what happens to existing shareholders of the common stock andwhat happens with upcoming debt maturities.

We listed Mel Karmazin as a CEO that needs to go.  We were credited as using price as the only metric for the call, and that could not have been further from the truth.  Karmazin’s buyout of XM took far longer than expected and the companies both stayed on a path that did not make them financially viable.

If SIRIUS goes into Chapter 11, common stockholders will get more comfort that their share certificates will sell on eBay and they can make money on the shipping and handling in the auction.  They are already trading as though they are nothing more than a warrant with a strike price that is almost impossibly out of the money.

Satellite radio’s future, at least as far as the SIRIUS XM of today, is challenging.  The service will survive.  But the common holders have more than just a few worries.

Jon C. Ogg
February 12, 2009

Tivo has been able to get a few licks in with the competition by taking them into court for patent infringement. The fighting over IP issues has gotten so bad that it extends to suits over what each company says in public about the others.

According to The Wall Street Journal "Dish Network Corp (DISH). and EchoStar Corp (SATS). filed a lawsuit against TiVo Inc. in response to what it said were statements by TiVo that the satellite television companies’ new digital-recording software infringes one of TiVo’s patents."

An outstanding use of shareholder money.

Douglas A. McIntyre