You will be redirected back to your article in seconds

Dish’s Ergen Says Satcaster Has Critical Mass of OTT Deals, Eyes Launch by End of 2014

Exec says over-the-top offering is an 'experiment,' and says he doesn't know if Dish can make money on it

Dish Network chairman Charlie Ergen said the company has landed over-the-top rights deals with several programmers — in addition to Disney — for a viable Internet TV service, but said the satcaster is looking for more partners and expects to launch near the end of the year.

Dish sees an opportunity to market a slimmed-down TV package to “cord nevers” or cord-cutters who are loath to pay $100 per month for a standard pay-TV service, Ergen said on the company’s first-quarter 2014 earnings call. The satcaster is aiming at a price point for the bundle of $20-$30 per month, with a package that appeals to urban adults 18-35.

“OTT is an experiment,” Ergen said. “It’s a skinnied-down version of pay TV targeted at a different class of people that we don’t believe we or Disney are getting today.”

While the goal of the initiative is to generate incremental revenue on top of Dish’s traditional satellite TV biz, Ergen said he isn’t sure whether Dish can make money on the offering. “OTT is not going to move the needle this year for anybody,” and probably won’t in 2015, Ergen said. “It’s a precursor to where we think the industry is going.”

SEE ALSO: Disney Deal Gives Dish the Rights for a Virtual-MSO Foray

Ergen didn’t identify which programmers Dish has signed deals with. “We wouldn’t launch with Disney channels alone… We would want to have enough critical mass between general entertainment and sports and children’s (programming) to launch (and) we believe we have enough to do that,” he said.

In March, Dish reached a broad, multiyear distribution pact with Disney, which included unprecedented rights to offer linear and video-on-demand content from ABC-owned broadcast stations, ABC Family, Disney Channel, ESPN and ESPN2 as part of an Internet-delivered TV service.

The Dish OTT service will be accessible on a range of devices, including smart TV, Google Chromecast, Roku boxes, videogame consoles and Kindle Fire tablets, according to Ergen.

The Internet TV service can make more money for programming partners — and Dish — by being able to narrowly target interactive ads to users, said Ergen. It also reinforces Dish’s wireless strategy, as the company has spent six years amassing spectrum for mobile Internet services, he said. As for whether the Dish service might incorporate other OTT services, like Netflix, Ergen said the company hasn’t made the decision yet.

Other companies developing virtual pay-TV services delivered over the Internet include Sony, which announced plans at 2014 Consumer Electronics Show to launch a trial of a service combining live TV and streaming VOD services like Netflix in the U.S. later this year.

Ergen compared OTT to the state of dial-up at the dawn of the Internet. Dish wants to get ahead of the curve so it can adjust to the changing dynamics in the TV industry, as pay-TV subscriber growth levels off or declines. “It’s a bit like the lobster that gets boiled… which is, you don’t really know you’re dead and boiled until too late,” he said.

While the Dish OTT service will include VOD content, fast-forwarding will be disabled so that users can’t skip ads. It also will be limited to a single video stream per subscriber, under the terms of Dish’s agreement with Disney.

Also on the call, Ergen reiterated his concern about Comcast’s $45 billion bid to acquire Time Warner Cable, which he said would be an “unprecedented consolidation of broadband” that would create a “virtual monopoly” in the market. Asked if Dish will oppose Comcast-TW Cable deal, he said: “We’re not opposed to being opposed to something if it’s not the right thing to do.”

Meanwhile, Ergen addressed the reported talks between DirecTV and AT&T, which is exploring a $40 billion or more acquisition of the No. 1 satcaster. DirecTV has hired Goldman Sachs to advise it on the AT&T offer, the Wall Street Journal reported.

The Dish chairman said “We have no shot” in outbidding AT&T or Verizon for DirecTV. “We don’t want to pay a value for something that’s purely financial, not strategic,” he said.

For Q1, Dish added a net 40,000 TV subscribers, versus analyst estimates of 31,000. The company posted quarterly revenue of $3.59 billion, up 6.5%, largely driven by pricing increases, in line with Wall Street expectations of $3.57 billion. Q1 2014 net income was $175.9 million, down 18% from the year-earlier period.

More Digital

  • hearst logo

    Hearst Magazines Unionizes With Writers Guild of America East

    The Writers Guild of America East has scored a major victory by unionizing Hearst Magazines’ editorial, video, design, photo and social staff across 24 digital and print brands. The New York-based WGA East, which has about 6,000 members in film, television, news and digital media, announced on Monday that a strong majority of the 500-member [...]

  • Apple AR Headset Coming in 2022:

    Apple Said to Prep AR Headset for 2022

    Apple’s augmented reality (AR) headset won’t be arriving on store shelves until at least 2022, according to a new The Information report. The iPhone maker reportedly updated a large number of employees about the project last month, filling the spacious Steve Jobs Theater on its Cupertino, Calif. campus with employees working on AR hardware. Apple [...]

  • Variety Launches New Video Series, 'Daily

    Variety Launches New Video Series, 'Daily Variety'

    Variety has launched a daily video series covering the business of entertainment. Hosted by Audrey Cleo Yap and executive produced by Eva Wong, “Daily Variety” will feature breaking news coverage and analysis from Variety’s award-winning staff as well as in-depth features and interviews with top industry professionals. Each bite-sized segment and featured clip will be [...]

  • Pluto: Vevo Stations Launching on Ad-Supported

    Channeling MTV, Vevo Launches Linear Programming on Pluto

    Music television is back: Major label-owned music video platform Vevo is launching a series of linear channels for leanback viewing on Pluto TV, the ad-supported video service that got acquired by Viacom earlier this year. A first channel, dubbed Vevo Pop, will launch on November 12; additional channels, including a holiday-themed station, are expected to [...]

  • Instagram tests hiding likes

    Instagram Will Begin Hiding Likes in the U.S.: Smart Move or Misguided Fail?

    Instagram is about to launch a test of removing like counts from posts in the U.S. — and, predictably, the idea has been met with a range of reactions ranging from praise and support to concern and mockery. The hope is that the change can reduce anxiety among Instagram users, to make social media less [...]

  • Scott Stuber, Ron Howard are seen

    Netflix's Scott Stuber: Film Biz Needs to 'Be Calm and Talk Through' Exhibition Disputes

    Netflix film chief Scott Stuber urged film producers and exhibitors to come together to reach a consensus on exhibition window disputes as Netflix and other streaming giants move forcefully into feature production. Stuber, Netflix’s VP of film, spoke Saturday morning at the Producers Guild of America’s Produced By NY conference in a wide-ranging Q&A with [...]

  • Instagram Logo

    Instagram to Start Hiding Like Counts in the U.S.

    Instagram likes are about to disappear from public view for many more users: The Facebook-owned photo sharing service is getting ready to hide like counts from U.S. users as early as next week, CEO Adam Mosseri announced at a Wired event in San Francisco Friday. In an attempt to strengthen conversations over popularity contests, Instagram [...]

More From Our Brands

Access exclusive content