Carriage tiff offers insight into minds of media giants. (Media & Technology).

Nothing airs an industry's dirty laundry quite like a lawsuit. Just look at Walt Disney Co. and EchoStar Communications Corp., locked in battle over the Family Channel. Both parties are saying things they can't take back, even if they settle their quarrel on the courthouse steps.

The fight concerns EchoStar's attempt to drop the Disney-owned network, recently renamed ABC Family Channel, from EchoStar's Dish satellite-television service on Jan. 1. Disney won a court order barring such action until a hearing for a preliminary injunction, which has been put off until next week.

The court file has swelled to four volumes -- not counting documents under seal. In the public record are sworn statements that attest to a larger battle between program suppliers and distributors, as they press for new advantages in an era of consolidation.

Indeed, Disney and EchoStar set the stage for this battle when each announced a big acquisition in late October. Disney strengthened its clout as a program supplier with the $5.2 billion purchase of Fox Family Worldwide Inc., owner of the Family Channel.

Four days later, EchoStar announced its agreement to buy Hughes Electronics, owner of rival satellite service DirecTV from general Motors Corp. The deal will create a powerful distribution company with 17 million subscribers if it clears regulatory hurdles.

The Family feud shows how these giants throw their weight around, behaving in a way that might be deemed unsuitable on the channel itself. From inception, it has been programmed with innocuous fare and "The 700 Club," a religious news and talk program often hosted by Christian Coalition founder Pat Robertson, although later owners have added children's shows and striving-to-be-hip shows such as "Jennifer Lopez in Concert."

Retaliation?

EchoStar is flexing its muscles to obtain lower prices, according to Disney. The Family dispute is a pretext for EchoStar's effort "to punish Disney for what EchoStar perceives to be unfair rate increases on unrelated channels' Disney said in a court filing.

There has been industrywide grumbling about annual price hikes for ESPN, the sports network that is one of Disney's most popular. EchoStar carries a half-dozen networks owned by Disney, including SoapNet and the Disney Channel, although it dropped ESPN Classic when a distribution agreement expired Dec. 31.

EchoStar says it wants to drop the Family Channel because of changes in its ownership and programming, and diminished ratings.

Peter Murphy, Disney's senior executive vice president and chief strategic officer, vowed to "march on Washington" to thwart EchoStar's proposed purchase of DirecTV, EchoStar Vice President Michael Schwimmer declared in a sworn statement.

In a court filing, Murphy said he never threatened such a march. But the case file includes an e-mail he wrote to Disney President Robert Iger, in which he recalled an earlier contract dispute with Time Warner Inc.'s cable-TV division. In that instance, Disney responded by lobbying fiercely against America Online Inc.'s plan to acquire Time Warner.

"This is analogous to our situation with AOL-TW -- rather than solve a relatively small problem when they had a $100 bil deal pending, they chose to fight the small fight too," Murphy wrote. "Talk about not seeing the forest for the trees!!!!!!!"

Iger forwarded Murphy's comments in an e-mail of his own to EchoStar Chairman Charlie Ergen, one day before Disney filed its lawsuit. Iger's action was interpreted by EchoStar executives as a "repetition" of the "explicit verbal threats" made by Murphy two days earlier in a telephone conversation, Schwimmer said in his sworn statement.

Chance to bail

EchoStar contends that it can opt out of a 10-year agreement to distribute the Family Channel to its 6.4 million subscribers because a change of ownership occurred.

International Family was sold in 1997 to Fox Family Worldwide Inc., a venture formed by News Corp. and Haim Saban, founder of Saban Entertainment Inc. and a creator of the live-action Power Ranger series. EchoStar continued to carry the Family Channel, although it filed a lawsuit asserting that its agreement had been breached. That case was dismissed after Disney acquired Fox Family.

Disney argues that EchoStar is still bound by the original distribution deal, because the assets are still owned by International Family Entertainment Inc., which changed ownership only "indirectly."

The Family dispute could set a record for disingenuous claims. EchoStar has argued that if it drops the Family Channel, loyal viewers could still find the network on rival DirecTV -- without addressing the fate of that service if the EchoStar merger goes through.

Disney suggested in a Jan. 9 news release that EchoStar is behaving ungratefully, because Disney was "one of the few programmers" willing to do business with EchoStar when it began service in the mid-'90s.

Cable and satellite subscribers, of course, should be only moderately amused by the Family feud. It's cold comfort to think that the monthly bill may climb, in part' to pay for the Disney-EchoStar dispute. Like a boxing match, a corporate dust-up might be better suited for pay-per-view.