Dish on Track to Launch Internet-TV Service by End of 2014, Ergen Says

Dish Network is still planning to launch an over-the-top pay-TV service by the end of the year, with Disney-owned networks forming the “core” of the offering, chairman Charlie Ergen said.

Ergen, speaking on the satcaster’s second-quarter 2014 earnings call, said the service — which will include networks from at least Disney and A+E Networks — would appeal to a younger demo.

“We think OTT is a good, smart move. But we’re not absolutely positive,” he said. Dish’s over-the-top service is aimed at “college kids in a dorm” and young people who “don’t live the same place all the time.”

Dish is looking to potentially pick up OTT subscribers as its core TV business is flatlining. In the second quarter, which is seasonally weak for the pay-TV industry, Dish lost 44,000 pay-TV subscribers in Q2 2014, an improvement over the year-ago quarter when the satcaster shed 78,000 subs. The company ended the second quarter with 14.053 million pay-TV subscribers, compared with 14.014 million at the end of Q2 2013.

Dish on Tuesday announced a multiyear contract renewal with A+E, under which the satcaster obtained over-the-top streaming rights to the cable programmer’s networks for its forthcoming Internet TV service. Dish this spring acquired OTT rights from Disney for ABC, ESPN, ESPN2, Disney Channel and ABC Family.

Under the A+E deal, Dish has multistream rights to the cabler’s networks, whereas Disney’s contract specifies only one stream per account. Ergen said he had “a concern” about the single-stream restriction in the Disney deal, citing as an example a hypothetical customer watching an Alabama college football game on ESPN and somebody else in the household wanting to watch Auburn on ESPN2.

“Those are things we have to work through,” he said, adding that Dish has not made all the final decisions about the pricing and packaging of the OTT service. Ergen said Dish is cognizant that the Internet-delivered pay-TV service “could be disruptive to the current ecosystem, so we’re going cautiously about it.”

The satcaster is targeting a monthly price of between $20-$30 for the package, to appeal to consumers who don’t want a full pay-TV bundle.

Asked about Dish’s interest in merging with or acquiring Sprint, now that the wireless carrier has dropped its bid for T-Mobile USA, Ergen said the company has yet to decide on its next course. “We remain interested in working to enhance our overall business, and that could include looking at a number of businesses out there,” he said.

He declined to say whether Dish has made a bid for T-Mobile, but said, “It’s a relatively small industry… Everyone talks to everyone.” Later in the call, asked if Dish would seek to acquire T-Mobile, Ergen left the door open: “T-Mobile is something we’d have an interest in.”

Selling its wireless-spectrum holdings would not be Dish’s preferred route, Ergen said, adding that the company believes investors are under-valuing those assets. Dish expects to see the value of its spectrum holdings increase with upcoming FCC spectrum auctions, he said.

As for the NFL Sunday Ticket package, which DirecTV is currently in talks about renewing with the league, Ergen said that Dish would “obviously be a bidder” for “the most valuable content in the world” if the opportunity presented itself. But, he said, with AT&T’s bid to acquire DirecTV hinging on securing the Sunday Ticket, those rights are not on the table at this point. “I think DirecTV, given the fact their merger (with AT&T) depends on it, (the NFL has) to be confident they’re in the driver’s seat,” he said.

Over all, Dish posted $3.7 billion in revenue for the quarter ended June 30, up 1.1% from the year-earlier period, and net income of $213 million (versus a loss of $11 million in the year-ago quarter).

During the second quarter, Dish added approximately 36,000 net satellite-broadband subscribers to bring its broadband subscriber base to approximately 525,000.

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