HBO settles with EchoStar

After a fight over how content should be distributed over satellite that led to a U.S. District lawsuit and complaints to the Federal Communications Commission, Home Box Office, Inc. and EchoStar Communications (NASDAQ:DISH) have buried that hatchet. Among other things, HBO claimed that Echostar owed it $90 million.

In place of the fight, the companies have agreed to a long-term agreement for the EchoStar DISH Network to carry HBO and Cinemax.

Time Warner Inc. (NYSE:TWX)'s fourth quarter earnings announcement made it clear how important its cable network business -- which includes HBO -- is to both revenue and operating profit. The network content unit and cable division were the stars of the quarter.

There is bound to be some friction behind Time Warner's relationship with both Echostar and DirecTV Group (NYSE:DTV). The satellite businesses compete directly with TIme Warner Cable for home TV users, but the TWX TV content unit cannot afford to walk away from the revenue that the satellite companies give it.

Interesting conflict.

Douglas A. McIntyre is a partner at 24/7 Wall St.