Dish Seeking Disney Ad Deal for Hopper, Ergen Says

Exec reiterates that he's prepared to walk away from Mouse House if they can't reach a satisfactory deal

Dish Network chairman Charlie Ergen said he’s still “cautiously optimistic” about reaching a long-term deal with Disney for ABC stations and ESPN and other cable channels, saying the satcaster is looking for a way to deliver ads to Hopper DVR customers that would make more money for the programmer.

At the same time, Ergen reiterated that if the two companies can’t reach a satisfactory deal, he’s willing to walk away.

“We’re prepared to go either way,” he said on Dish’s third-quarter earnings call. While it would be a “short-term problem” to lose ESPN and other Disney channels, “long term it could make a lot of sense.”

The companies have been in talks for months on an agreement that would cover carriage of cable networks including ESPN, Disney Channel and ABC Family, as well as ABC-owned stations in eight markets. The previous agreement, reached in 2005, expired Sept. 30.

SEE ALSO: Dish Subs Less Disgruntled in Q3, Helping Satcaster Beat Street

“There’s not a particular timeline on it. It has to be done right, and it has to be done right long-term,” Ergen said.

Last week, Disney CEO Robert Iger said on the media conglom’s earnings call that “as long as we’re making progress (in talks with Dish) we are perfectly patient to see this thing through and avoid a blackout of our channels, which we’d like to do.” He added that technology “is creating a lot of complexity in terms of what we’re selling to them, in effect what they are buying and ultimately what they can do with the product that we’re making available.”

In the talks between Dish and Disney, in addition to haggling over the usual economic terms, both sides are “trying to look at where the technology is going” over the next several years, according to Ergen. Dish doesn’t want to go back to Disney “to ask for permission… if there are different forms of distribution” that emerge, he said.

ABC and other broadcast networks have sued Dish over the Hopper DVR’s AutoHop feature, which lets users automatically skip commercials, arguing that it violate copyrights and distribution agreements. Dish has won several legal victories so far, as courts have denied broadcasters’ requests to shut down AutoHop.

Ergen claimed that what Dish is looking for from ABC and others is a way to deliver targeted ads to TV viewers — an approach, he said, that could make the broadcasters more money.

“Hopper can target commercials to customers in a better way,” he said. “Can we get a relationship where we can experiment with the Hopper, improve the experience for the consumer in a way that makes Disney more money — that’s really what we are trying to achieve.”

But, while Ergen said Dish wants to “make Disney our best relationship,” he also said that the satcaster will move on if it can’t work out a pact. “You don’t marry everybody you date,” he said, adding, “Disney is a very pretty girl.”

“Disney, historically, has not been one of our best relationships,” Ergen said, “and that’s my fault.”

Meanwhile, Dish last week said it would shut down the 300 remaining Blockbuster video stores in the U.S. by January, and shut down the DVD-by-mail business. The wind-down will eliminate 2,800 jobs. The company took $21 million charge in the third quarter related to the closures and estimated future losses of $15 million to $30 million associated with shutdown of the Blockbuster domestic business.

“Blockbuster was a poor strategy on our part,” Ergen said on the call, noting that Blockbuster didn’t obtain streaming-video options the way competitors like Netflix or Redbox did.

Asked on the call what Dish plans to do with its considerable wireless spectrum holdings, Ergen didn’t tip his hand, saying the satcaster could pursue any number of options. He said a Dish buildout of the spectrum or a sale of the spectrum were not “high probability,” saying the more likely path will be some kind of partnership.

Ergen didn’t rule out a potential acquisition of T-Mobile: “I think acquiring a company, selling our company, merging, partnering — those are all part of the ‘optionality’ we have.”

On the topic of over-the-top TV, Ergen has previously said Dish is in a position to roll out such a service — if it becomes a market reality. He said Dish has not had any discussions with Intel Media, which had intended to debut an Internet TV service this year but now is looking to sell the business or team up with another company to launch it.

“We’ve talked to virtually every programmer about OTT,” he said. “I would say it’s going to happen at some point in time… but most programmers have been hesitant to make such a dramatic change.”