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Weakened ruble hurts Discovery in Russia as it loses case against local cable operator
MUMBAI: With the ruble sliding against the US currency, Russian media companies are walking out of long-term, dollar-denominated contracts.
A casualty of that has been Discovery, which lost a lawsuit against the regional Russian cable operator Volgogaztelekom.
Earlier this year, Volgogaztelekom dropped Discovery’s channels from its cable network despite having a long-term agreement.
Volgogaztelekom contested that it could no longer afford to carry Discovery networks as the ruble had weakened against the dollar. According to Moscow’s arbitration court ruling, the unforeseeable circumstances clause could be applied to the situation. The original contract between Discovery and the cable operator required payments to be made in US dollars.
Discovery disagreed with the judgment.
Not agreeing with the judgment, Discovery told The Hollywood Reporter: “Changes in exchange rates are not substantial circumstances and therefore cannot be a ground for breaking a contract under clause 451 of the Russian Constitution. We have already appealed the judgment.”
Volgogaztelekom had since 2012 a five-year contract to carry Discovery’s channels, including Discovery Channel, Animal Planet and Eurosport back in 2012. But in February, it informed the broadcaster that it is unilaterally terminating the contract as of April and stopped making payments thereafter. Discovery subsequently sued the operator, THR reported.