Clayton takes over, Ergen remains chairman
Charlie Ergen’s resignation on Monday as CEO of satcaster Dish Network came as a shock to Wall Street, but given recent vague explanations from the topper about the strategy for Dish’s other recent surprise, the purchase of vid retail chain Blockbuster, it may be that he simply wants to figure out where Dish is headed.
Ergen will remain chairman of Dish Network; satellite veteran Joseph Clayton, last the chairman of Sirius, will assume the CEO and prexy roles.
Ergen remains chairman of his other company, EchoStar, which he founded in 1980 and from which Dish was separated in 2008. A year later, Ergen relinquished his CEO title there, appointing Mike Dugan as the new chief.
Ergen is gladly handing over the day-to-day duties to Clayton. “Joe is a 38-year veteran of the consumer electronics, telecommunications and satellite communications industries,” Ergen said Monday. “Joe brings an enormous amount of executive-level experience in the satellite and consumer electronics industries, including positions at RCA, General Electric and Thomson, and we look forward to his leadership.”
While stunned, investors seemed to welcome the news that Ergen might be spending more time on broader strategy, boosting Dish shares 9¢ to $28.90 while the rest of the market finished down.
On an earnings call with analysts on May 2, Ergen gave no hint of his plans to relinquish two of his titles. During that call, he offered little in the way of detail about his plans for Blockbuster, for which Dish paid $320 million during a bankruptcy auction. He conceded that the strategy for Blockbuster may still seem murky, going so far as to compare it to a “Seinfeld” episode: “Wait and see, it will all come together in the last few minutes,” he said. “I know ‘Seinfeld’ was a show about nothing, and I am sure our skeptics will say our strategy is about nothing. But everything we do has a purpose.”
In other recent calls with analysts, Ergen, unlike other distributors, has candidly expressed some doubts about the future of the subscription TV business given the rise of streaming on the Internet.
During the first quarter, Dish’s results exceeded Wall Street’s expectations. With Dish losing 156,000 subscribers in the fourth quarter and raising prices $5 across the board, the Street had worried sub losses would continue. But Dish added 58,000 subs in the first quarter, bringing its total to 14.2 million. Revenues gains of 5.5% in the period to $3.22 billion beat Street estimates, while net profits more than doubled to $549 million.