GigaOM » Charlie Ergen

Dish’s Ergen: we prefer working with broadcasters over Aereo

Jeff John Roberts — Thu, 09 May 2013 18:38:08 +0000

Charlie Ergen, the mercurial chairman of satellite TV provider Dish Network, said Thursday that he would prefer to work with incumbent televisions players to continue a dual-stream revenue model rather than striking up a new partnership with upstart mobile-TV company Aereo.

The comments came during a Thursday call on Ergen and other Dish executives took questions about the company’s latest earnings results, which fell short of analysts’ expectations.

While most of the call was dedicated to Dish’s high stakes bid for Sprint, which would give it the chance to offer mobile-broadband-TV packages, analysts also asked Ergen about his company’s ongoing spat with broadcasters. In recent months, Dish has incensed the networks by selling “the Hopper,” a popular product to skip commercials, and touched off rumors that it might buy Aereo, which allows viewers to watch TV on their phones for $8 a month.

On today’s call, however, Ergen sounded more conciliatory.

“We admire what [Aereo is] doing. We indirectly get a benefit as it puts downward pressure on retransmission consent fees.. But all things being equal, we’d prefer to work with the broadcasters,” he said. The broadcasters are equipped to do something themselves. We’re more likely to work with existing partners.”

The rhetoric is part of a complicated dance between pay TV providers, including Dish, and content owners over the spiraling cost of programming; in this struggle, services like the Hopper and Aereo have become a source of leverage for Dish.

On the call, Ergen repeated his call for smaller cable “bundles” and more a la carte offerings.

“At the end of the day, if the bundle price gets too high, [consumers] will find other ways to do it — they’ll use small antennas, they’ll steal programming.”

Ergen added that he believes the traditional dual stream model for TV, consisting of subscription and advertising revenue, will continue thanks to new mobile opportunities. In particular, he said that mobile viewing opened the prospect of valuable local-based ad targeting that will result in tailored ads being delivered to the living room, tablets and smartphones.

He added that some “forward looking broadcasters” were already on board in exploring new bundle opportunities with Dish.

“I’ve never met a programmer or broadcaster that was against making more money.”

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Dish Network wants to buy Sprint for $25.5 billion

Om Malik — Mon, 15 Apr 2013 11:03:25 +0000

Dish Network, the satellite pay-tv company, has decided it wants to buy Sprint Corp and has offered $25.5 billion for the beleaguered third-place wireless carrier. It is offering $7 a share, or about $4.76 a share in cash and about $2.24 in Dish stock. That’s 13 percent or about $5.4 billion higher than the $20.1 billion offered by Softbank of Japan.

The cash component of Dish’s proposal is an 18 percent premium over the $4.03 per share implied by the SoftBank proposal while the equity portion represents approximately 32 percent ownership in the combined Dish/Sprint versus SoftBank’s proposal of a 30 percent interest in just Sprint, Dish claimed in a press release. Dish CEO and chairman Charlie Ergen said:

“The DISH proposal clearly presents Sprint shareholders with a superior alternative to the pending SoftBank proposal. Sprint shareholders will benefit from a higher price with more cash while also creating the opportunity to participate more meaningfully in a combined DISH/Sprint with a significantly-enhanced strategic position and substantial synergies that are not attainable through the pending SoftBank proposal.”

Dish is trying for a complete makeover from its slow growing pay-TV business and has been acquiring spectrum to build a nationwide LTE network, though from the looks of it, it will take it a long time to actually roll out the network. It recently asked the FCC for a four year extension to build out its network.

Here is the Dish website where its outlines the entire proposal and have explained its bid in detail.

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Does Dish want to buy Aereo? Broadcasters would love to know

Janko Roettgers — Thu, 04 Apr 2013 23:51:25 +0000

Here’s the latest chapter in the broadcaster’s fight against Aereo, the New York-based startup that is streaming over-the-air television over the internet: Fox, Univision, PBS and others are trying to figure out what exactly the company has been discussing in its talks with Dish Networks, which were first reported by the Wall Street Journal last week. The broadcasters subpoenaed Aereo as part of the discovery process for their lawsuit against the company, according to a Hollywood Reporter story from yesterday.

The motion seeks to uncover “any ‘actual, contemplated, considered, or proposed’ business arrangements” between Aereo and Dish as well as “offers or expressions of interest by Dish in acquiring Aereo’s assets,” according to passages quoted by the Reporter. Of course, Dish doesn’t want any of those discussions to be public, which is why the company is now trying to quash the subpoena.

Dish’s Charlie Ergen has been very vocal in his support for new TV business and distribution models, going as far as saying that “a lot of customers can live with Netflix and an… antenna, and YouTube.” Dish could possibly use Aereo to build a cheaper TV bundle by bypassing retransmission payments to local broadcasters — or maybe just lower these payments by threatening such a course.

Make sure to check out our paidContent Live conference in New York this month if you want to learn more about Aereo’s potential to shake up the TV industry – I’ll be interviewing Aereo CEO Chet Kanojia on stage, and will make sure to quizz him about Dish as well.

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Dish chairman says Hopper ad-skipper is about tech, not leverage over broadcasters

Jeff John Roberts — Tue, 12 Feb 2013 03:14:39 +0000

Dish Networks Chairman Charlie Ergen denied that the satellite TV company’s Hopper DVR — which lets users wipe out commercials — is simply a tool to pressure broadcasters to lower transmission fees. ”We don’t want to pay retransmission money but it’s not a leverage game. It’s really that tech has changed,” Ergen told an audience at the California media event Dive Into Media.

The Hopper DVR lets users record television and then instantly fast-forward past all the commercials. Today, Dish put out a new ad (yes, there’s some irony here) that offered an “in memorium” for TV commercials — the concept is that sitting through commercials is something people did in the past but no more.

The Hopper’s ability to skip ads is the subject of a heated legal dispute between Dish and broadcasters. So far, courts have refused to issue a preliminary injunction to shut down the service for copyright reasons. ”The lawsuits going on today will ultimately decide the fate of commercials. Be careful what you wish for. If broadcsaters win, they’ll outlaw the DVR,” warned Ergen at the event. He says the service is legal under the law because it doesn’t erase the commercials, but simply lets consumers skip past them.

Some people in the Industry have suggested the fight over the Hopper is really a way for Dish to pressure broadcasters to lower retransmission fees — the money they charge Dish for the right to broadcast their over-the-air shows. While Ergen denied the Hopper is a leverage device, event host Peter Kafka pressed him on why the Hopper only fast-forwards past broadcast shows and not cable ones. Ergen claims this is due to technology limitations related to the way shows are streamed.

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Dish’s Charlie Ergen: “I think people are cutting the cord”

Janko Roettgers — Tue, 12 Feb 2013 03:16:52 +0000

Cord cutting is real, argued Charlie Ergen, Chairman and co-founder of Dish Network at All Things Digital’s Dive into Media conference in Dana Point, California Monday. “think people are cutting the cord,” Ergen said, arguing that kids in college never use cable, and that they won’t suddenly start paying once they leave school. “There is a reason that tobacco companies give away free cigarettes at colleges,” he joked.

Ergen also reiterated his position that a la carte programming would be better for consumers, as well as the industry itself. “We are still for a la carte, because the Internet is a la carte today,” he said. People could just watch Netflix, or even pirate content online, and service providers would have to compete with this new reality. “A lot of customers can live with Netflix and an… antenna, and YouTube… and they’d be pretty happy,” he said.

However, Ergen cautioned the audience at Dive into Media that a la carte won’t become a reality anytime soon. “It’s gonna go there slowly,” he said, arguing that the major broadcasters won’t break the bundle willingly. It would be more likely that the bundle would be broken by outside forces like Amazon and Netflix.

Speaking of Netflix: Ergen was quite bullish when asked about the future of the video service. “I think they will be successful,” he said, adding that the launch of Netflix’s first original series House of Cards was “brilliant.”

He said that it would be possible for both Amazon and Netflix to succeed with their respective services – but it was quite clear that Ergen is rooting for Netflix: “I’m a fan,” he said, adding: “I feel stupid that we didn’t think of it first, but I’m a fan.”

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Dish challenges Sprint’s takeover of Clearwire with unsolicited bid

Kevin Fitchard — Wed, 09 Jan 2013 00:41:48 +0000

Dish Network has often been invoked as possible savior/partner of ailing WiMAX provider Clearwire, but when the Clearwire accepted Sprint’s $2.2 billion buyout offer in December that seemed to dispel in notions of a Clearwire-Dish 4G union. Not so fast.

It appears that Dish wants in on any possible deal and might even be angling to purchase the WiMAX operator completely. On Tuesday, Clearwire announced that Dish made an unsolicited offer of $3.30 a share to buy part or all of the company as well purchase a quarter of Clearwire’s spectrum and enter into a network sharing agreement.

On the low end Dish would accept a 25 percent share as long as its interests were protected on the board, but according to the proposal it would be willing to acquire all of the company’s shares, paying a price roughly 11 percent greater than Sprint’s $2.97-per-share offer.

What does all this mean? If you ask spectrum policy analyst Tim Farrar, he’d say this is posturing in a high stakes game of chicken played out by some of the biggest companies in the telecom industry. He pretty much called this scenario last month, when Sprint first made overtures to Clearwire.

According to Farrar, Sprint wasn’t really interested in acquiring Clearwire; Sprint didn’t want anyone else to buy Clearwire, in particular Dish. By submitting a low-ball offer Sprint would either get Clearwire on the cheap or at least tie up the company for months as shareholders debated the offer, which would have the same effect as blocking any Clearwire-Dish deal.

So is Dish now calling Sprint’s bluff? That could be the case, but when I reached out to Farrar he said Dish has little chance on the success. Dish may be offering a higher price, but it doesn’t necessarily mean it’s offering a better overall deal, he said. What this will do is give Clearwire’s shareholder’s motive to challenge the Sprint deal. To put it another way, Dish chairman Charlie Ergen may just be out for a little payback. According to Farrar:

“… it’s hardly surprising that Charlie Ergen is seeking revenge by intervening in Sprint’s proposed Clearwire takeover. It’s hard to see how DISH could win, when Sprint already controls a majority of Clearwire’s equity, but Ergen has given Clearwire’s minority shareholders a lot more ammunition for their fight against the Sprint offer. The court battle by the minority shareholders could take months to resolve, and it seems that Sprint is determined to fight, because there is little chance that offering a few cents more per share would placate the shareholders.”

What happens next? Who knows. I’ll be the first to admit I have no idea what these companies are angling at, and I would be highly skeptical of anyone who says otherwise, unless they happened to be in the Sprint, Dish, Clearwire or Softbank inner circles.

It will be an interesting (and very confusing) next few months.

Dish photo courtesy of (CC BY 2.0) Flickr user Dave Lindblom.

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Sprint, Clearwire, Softbank, Dish: Who’s playing whom?

Kevin Fitchard — Fri, 14 Dec 2012 21:01:07 +0000

Thursday’s big revelation that Sprint was seeking to buy out Clearwire sent shockwaves throughout the industry. Taking over Clearwire would return a vast trove of airwaves to Sprint’s direct control, which would leave its sitting pretty on top of the U.S. spectrum heap. But it didn’t take long before the grumbling started.

Investors aren’t very happy with Sprint’s low-ball offer. And now Reuters is reporting that Sprint’s would-be owner Softbank won’t go along with any acquisition that valued Clearwire at more than $2.97 a share, which is just seven cents more than what Sprint has offered. If Reuters’ sources are correct then Softbank doesn’t see the value in Clearwire that everyone else seems to see.

Softbank’s $20.1 billion deal to take control over Sprint is of vastly more importance to Sprint than taking over its non-neglected WiMAX provider. Why start negotiations with Clearwire that would result in a price Softbank is sure to reject?

Spectrum policy analyst Tim Farrar believes Sprint isn’t interested in buying Clearwire – at least not yet. Rather he believes Sprint’s bid is just one maneuver in a very complex chess game that pits carriers against one another over spectrum and in which Softbank, Clearwire, Dish Network and AT&T are all players.

You can read Farrar’s full analysis for yourself on his blog, but what it boils down to is this: Sprint wants to block any deal between Dish and Clearwire to operate a shared network using Dish’s newly minted 4G spectrum. By making an offer that Clearwire’s strategic investors – Intel, Comcast and Bright House – would likely consider, Sprint and Softbank could hold up any Dish-Clearwire pact in the works, at least until Softbank’s acquisition of Sprint closes. From Farrar’s blog:

It’s surely not a coincidence that this offer came on the same day that [Dish Chairman] Charlie Ergen received approval from the FCC for terrestrial use of his AWS-4 spectrum, with Dish Stating that “will consider its strategic options and the optimal approach to put this spectrum to use for the benefit of consumers”. After all DISH appears to have had a potential deal with Clearwire on the table for several months, held up only by delays in the FCC’s approval (which were largely caused by Sprint’s intervention via efforts to gain access to the H-block), and has bought $750M of Clearwire’s debt.

If Sprint successfully blocks a Dish-Clearwire deal, what happens then? Well, after the Softbank deal closes, the new company could decide whether to pursue Clearwire in earnest. But Farrar thinks the most likely outcome is that Dish would be forced into the arms of AT&T, which has been eyeballing the satellite broadcaster’s nationwide LTE band. If AT&T buys Dish’s spectrum, then it would have to divest some of its current licenses, which Sprint could then pick up.

It sounds crazy to me, too, but I’ll bet Farrar is more right in his analysis than wrong. There are so many rumors and so much innuendo circling Sprint, Clearwire and Dish that I can’t tell up from down anymore. It’s obvious that Sprint has some ulterior motive – it didn’t just suddenly fall in love with the idea of controlling Clearwire after four years of letting the WiMAX operator languish. We can’t accept any of these deals at face value.

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Pay TV’s big breakup, Day 40: Dish says it’s fine, but AMC admits it’s hurting

Daniel Frankel — Thu, 09 Aug 2012 17:38:18 +0000

Charlie Ergen and his Dish Network spent their Wednesday earnings call explaining to investors why they don’t need AMC Networks channels.

But a day later, during its own second quarter Come to Wall Street address, AMC Networks struck a contrarian tone: Not being in Dish’s 14 million homes since July 1 didn’t affect Q2 earnings, but Q3 will be a very different matter.

“Although Dish Network’s termination has reduced the company’s total subscribers by approximately 13 percent, the impact on our (cash flow) and operating income, if it continues, will be materially higher,” the company said in its Thursday earnings release.

Also read: Day 27 of the Dish vs. AMC standoff – where’s the subscriber revolt?

As for AMC’s second quarter performance, it wasn’t too shabby, with the company reporting a 53 percent spike in profit to $41.5 million on a 12.2 percent increase in revenue to $327.6 million.

Key revenue drivers remain ad sales and purchases of AMC’s critically lauded series, including Mad Men, Breaking Bad and Walking Dead on disc, download and streaming.

Relative to other cable conglomerates, AMC Networks gets a smaller portion of its revenue from pay TV affiliate fees — an amount that totals only around $418 million a year, according to a memo put out last week by Lazar Capital analyst Barton Crockett.

Also read: Why Breaking Bad didn’t scare Dish, but Walking Dead will

With shows like Walking Dead becoming mainstream audience hits — the zombie series’ second-season premiere scored the biggest audience ever for a basic cable series last October — AMC is trying to significantly increase its carriage fees in renewal talks.

But the conglomerate, spun off from Cablevision last year, claims it never even got to plead its case with Dish before the satellite carrier pulled its AMC flagship channel, along with the smaller IFC and WE TV, off its service on June 30.

AMC still insists that Dish is trying to drum up leverage for a separate legal matter — Cablevision and AMC are suing Dish for $2.5 billion for dropping the now-defunct Voom HD channels in 2008. Dish was ruled to have destroyed evidence in the case, which goes to trial in September.

Also read: AMC – “Dish never even talked rates with us”

If this is indeed factoring into settlement negotiations, Dish is doing little to reveal any progress made.

On Wednesday, Dish co-founder and chairman Ergen ramped up the rhetoric as only he can. Turns out the Englewood, Co.-situated Ergen family isn’t a fan of AMC series, even though they’ll collectively be up for 34 Emmys next month.

“I’ve had satellite television for as long as satellite television has been around, and there’s never been one minute that I know of anybody in my family, or anybody who’s came to my house, has ever watched one second of any of those channels,” Ergen told investors Wednesday.

“They’re critically acclaimed but not viewed as much by our audience,” he added. “And our customers can go to iTunes and get ‘Mad Men’ the same time it’s on.”

Ergen also claimed that Dish could pay the entire bill for his subscribers’ purchases of AMC series on iTunes and still come out ahead of paying AMC’s increased licensing fee.

Of course, it’s still early August. Ergen’s position could change on or before Sept. 18, when the Voom HD trial begins; or on or around Sept. 23, if Mad Men and Breaking Bad clean up at the Emmys; or on Oct. 15, when Nielsen’s Fast National ratings appear for the third-season Walking Dead premiere the night earlier.

Then there’s Dish’s own Q3 earnings. In an SEC filing made several weeks ago, Dish revealed that it only lost 10,000 subscribers in the second quarter, beating analysts forecast. It will no doubt be interesting to see what the company’s subscriber churn is during the current quarter with AMC not around.

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Dish makes a mysterious investment. Could it be Clearwire?

Kevin Fitchard — Thu, 09 Aug 2012 17:31:10 +0000

An interesting tidbit popped up in Dish Network’s quarterly filing with the SEC (pdf) this week: the satellite TV provider has made a $396 million investment of debt in an unnamed “single issuer.” That statement stirred up financial analysts, who believe that the issuer can only be 4G carrier Clearwire, a potential partner for Dish’s planned rollout of a wholesale LTE network.

According to the filing, the issuer would “need substantial additional capital to meet its business and financial obligations beyond the next 12 months.” That sounds an awful lot like Clearwire, which recently raised new funds to get its LTE network off the ground and is strapped for operational capital.

UBS analyst John Hodulik said Dish management won’t confirm whether the investment is in Clearwire, but chairman Charlie Ergen did hint at the possibility at Dish’s second quarter analyst call. “Ergen reiterated that it would make sense for DISH to enter the wireless business with a partner that’s already in the space,” Hodulik said in a research note.

Why would Dish need the ailing Clearwire? Well, Dish claims it wants to become a mobile carrier, using recently acquired satellite spectrum to build an LTE network, access to which it would sell wholesale to other carriers and virtual operators. I have doubts that Dish truly intends to use that spectrum. It’s likely putting on a show for the FCC so it can get its satellite airwaves reclassified for terrestrial use, after which Dish would flip them for a quick and substantial profit.

But if Dish does plan to build a network, partnering with Clearwire would be logical step. Clearwire has the expertise and much of the infrastructure in place to host and run a future Dish network. It just doesn’t have the money.

Meanwhile, Ergen is trying to pressure on the FCC for permission to build a network. Currently the S-band frequencies Dish holds are allocated for “ancillary terrestrial” use, meaning it can only use LTE to offer supplemental capacity for a satellite broadband network – much like Sirius XM uses ground transmitters to boost its satellite signals in urban areas.

Dish wants the FCC to grant it a flat out waiver – much like it granted to LightSquared – to build a terrestrial only network, effectively turning its frequencies into a new cellular band. The FCC, however, wants to examine the satellite communications spectrum as a whole, deciding whether to permanently reallocate portions of it for mobile broadband. That means Dish will have to wait for the FCC to deliberate, and Ergen doesn’t want to wait.

At Dish’s earnings call, Ergen made the bold statement that Dish would launch a hybrid satellite-LTE service if it failed to get FCC permission for its 4G-only network, Light Reading reported. Ergen claimed that there is small market for satellite handsets that Dish could tap into, but that’s a bluff if I’ve heard one. Ancillary licenses like Dish’s have been around for years and no company has succeeded in making the hybrid model work. In fact, Dish bought its spectrum for two companies that went bankrupt trying to offer just such services.

Dish photo courtesy of (CC BY 2.0) Flickr user Dave Lindblom.

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Dish’s Ergen: Auto Hop protecting TV from online video barbarism

Daniel Frankel — Fri, 08 Jun 2012 22:27:41 +0000

Charlie Ergen: When he’s not running the nation’s No. 3 pay TV service, or cleaning up at the blackjack table, he’s thinking up new ways to protect the linear TV business from hordes of digital-video invaders.

Interviewed by the Wall Street Journal, the Dish Network founder and chairman attempted to paint a new, highly controversial commercial-skipping feature in his company’s Hopper digital video recorders as a necessary innovation.

Also read: Dish defends ad-skipping DVR, pay TV peers throw it under bus

“Ultimately, broadcasters and advertisers have to change the way they do business or they run the risk of linear TV becoming obsolete,” Ergen told the paper.

But in the same interview, even the 59-year-old former pro gambler seemed to belie his own spin, tying the introduction of the new commercial-skipping feature to a motive that many have suspected all along: Dish wants leverage to drive down spiraling broadcast network retransmission fees.

“If the ad is skipped, the consumer likes it, but it’s not necessarily good for me and it’s not necessarily good for the broadcaster because I’m in the same ecosystem as him,” Ergen told the Journal while consuming a $2.98 pancake breakfast at his favorite place near Dish’s Englewood, Colo. headquarters:

“So we have to figure out how the broadcaster benefits, we benefit and the consumer continues to feel like he gets a fair deal. So maybe [the consumer] pays a little bit less for ‘retrans,’ his bill doesn’t go up by double digits every year … That’s an interesting conversation to have.”

One skeptical TV executive interviewed by the paper, when apprised that Ergen had described the commercial skipping as an innovation, said, ”That’s like putting nice drapery on top of a casket. It’s 99 percent more likely that the conversation … is about retransmission fees.”

Dish ignited a fire storm last month when it introduced a new feature called Auto Hop that deletes commercials from recordings of broadcast-network shows. The matter quickly moved to federal court, with the major networks suing satellite carrier, but not before it was able to sue them first in a pre-emptive move.

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