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A startling admission from Charlie Ergen, CEO of Dish Network (NSDQ: DISH), on his company’s Q3-earnings call capped a week of high anxiety and low expectations in the media business.
Asked to assess the pressures on Dish’s core video business, he began lamenting the fact that programmers were essentially giving away online the very same product for which he pays them. “My kids think I’m crazy for being in the pay-TV business because they don’t pay for TV, and watch a lot of TV and movies,” he confessed.
Ergen didn’t go so far as to label his progeny cord-cutters, but the implication was clear: The fundamentals of channel-distribution businesses like Dish are under attack. So much so that Ergen offered up another admission that put additional perspective: If he were launching Dish today, the billions he spent on launching satellites would have gone to servers and programming contracts the way Netflix (NSDQ: NFLX) has.
While Ergen & Co. figure out how to best utilize those giant hunks of metal they have floating in space, the rest of us try to figure out what their reported loss of 29,000 subscribers this quarter means (were some of them his own kids!?). With so many big media companies reporting Q3 results this week including Time Warner (NYSE: TWX), the opportunity to tally up cumulative subscriber gains or losses in hopes could have made this a moment of reckoning in the seemingly endless debate over the reality of cord-cutting.
Instead, now we may know even less. That’s because the math gets real messy depending on how you slice and dice it. NewTeeVee declared “Big Cable is Bleeding,” with a snapshot of the over 500,000 subs Comcast (NSDQ: CMCSA), Time Warner Cable (NYSE: TWC), Charter (NSDQ: CHTR) and Cablevision (NYSE: CVC) lost in Q3. But the Associated Press came back the next day with figures that showed a 55,700 gain once they factored in a broader pool of MSOs. When Dish’s numbers were factored in this morning, the MVPDs held onto the slimmest of gains, but then Bernstein Research’s Craig Moffett projected a loss of over 100,000 subs based on estimates of private cable companies like Bright House Networks and Cox Communications (and public companies that have yet to report including Mediacom and Insight).
What’s more, Moffett noted that Q4 and Q1 almost always see a seasonal upswing, which could mask any further evidence of cord-cutting. Executive after executive on earnings calls this week pooh-poohed the notion that this is a real phenomenon, which is a bit like putting lipstick on the elephant in the room. An MSO can’t ignore the looming threat, but can’t give it much credence, either.
In the absence of conclusive evidence regarding cord-cutting, it would not be prudent for a public company to sound the alarms. Which makes it all the more striking when someone like Charlie Ergen comes along and shares genuine concern.