Dish Prepared to Take TNT, TBS Off Lineup, Leave CNN Dark for Good: Ergen

Satcaster's chairman says it has hit technical snags for OTT service but still plans launch by end of 2014

charlie ergen dish network

Dish Network — engaged in a contract dispute with Turner Broadcasting that has left CNN, Cartoon Network and six other networks dark on the satcaster since Oct. 21 — may also lose the programmer’s TNT and TBS later this month, chairman Charlie Ergen told investors Tuesday.

“When we take something down, we’re prepared as a company to leave it down forever,” he said on the company’s third-quarter earnings call.

For now, Dish is still carrying TBS and TNT but “we have to be prepared that those channels will come down as well,” Ergen said, noting that programming deals typically are bundled together. That may result in a loss of subscribers, but “we have a responsibility to our shareholders not to do stupid deals.”

Ergen added, “If we’re not going to be in a relationship with Turner, we won’t have to raise our prices next year… we’d save a big, big, big check from a cash-flow perspective.”

The comments from the notoriously combative Dish exec may be aimed at trying to get leverage in cutting a better deal with Turner — a take-it-or-leave-it tactic Ergen has used before. Dish has dropped several regional sports networks over the last several years, including Comcast SportsNet New England this August, but has not yet made the decision to cut out a major national cable network.

Turner declined to comment. [UPDATE, 11/5, 11 a.m. PT: Turner released a statement Wednesday that said in part, “We are disappointed in the aggressive nature of the comments from Dish Network, particularly given the fact that Dish agreed to our rates and carriage proposals weeks ago. We were supportive of the Dish OTT effort and had found common ground on the major issues there. While there were clearly deal points to get done, they were not the type you would usually go dark over. So it is still unclear to us exactly what this dispute is about. We’ve been told our networks were taken down because we would not move an expiration date later in the year.”]

Dish lost a net 12,000 video customers during the third quarter of 2014, to stand at 14.041 million pay-TV subscribers at the end of September, essentially flat compared with 14.049 million a year earlier.

Dish CEO Joe Clayton claimed the absence of CNN, Cartoon Network, HLN, TCM and other Turner networks so far hasn’t resulted in major cancellations. But, he added, the loss of TNT and TBS “would force that to change.”

Regarding CNN, Ergen said the channel is “not quite the product they used to be,” saying viewership has dropped in half while Turner is seeking a double-digit rate increase. “Having CNN down on election night would be a disaster 15 to 20 years ago, but now there’s a lot of other places to get news,” he said.

Dropping TNT and TBS “will be more painful” for Dish, Ergen said. But he also said that “it would be a little different if their original programming were more of a success like AMC.”

Asked previously whether Dish would refund customers for lost programming, a rep for the satcaster said, “We charge by the package and we do not adjust the package price based on channels that are either added or removed within those packages.”

Meanwhile, Dish’s carriage agreement with CBS is set to expire in late November. Ergen said he was hopeful the company would reach a renewal with the Eye, but he also noted that the agreement covers CBS’s 14 owned stations and not the entire country. He also called out CBS All Access, the recently launched over-the-top video service that provides access to those local stations and other content. “On the one hand, that’s an interesting business plan,” Ergen said. “On the other hand it makes that product less interesting for (pay-TV providers) because customers have a choice to get it somewhere else.”

“The industry is changing,” Ergen said. “it’s not going to be a marketplace where (every pay-TV provider) has exactly the same thing and it’s just about a price.” He pointed to a decision by midsize cable operator Suddenlink Communications to drop Viacom’s channels last month, with the MSO saying it doesn’t expect to bring them back for the foreseeable future. “You’re just starting to see those rumblings,” he said.

With Dish’s pay-TV business plateauing, the company is seeking growth in satellite broadband and its forthcoming over-the-top video service that will deliver TV over the Internet. Dish also owns a large amount of wireless spectrum that it may use to launch a commercial broadband service.

On the OTT front, Dish still plans to launch the service before the end of this year. So far, it’s announced deals with Disney/ESPN, A+E Networks and Scripps Networks Interactive. “We won’t sign up (every programming group)… it’s a skinnied-down package,” said Ergen, adding that the monthly price point would be somewhere around $30 and targeted at younger urban dwellers.

Dish is having some technical issues in dynamically inserting ads into the linear networks from its partners for the OTT service, Ergen said, but that it wouldn’t delay the launch. “That’s a fairly complex process,” he said. “We are running into a few snags there.”