Dish Network Chairman Charlie Ergen was in rare form today in his quarterly earnings conference call with analysts and media — especially when asked about his battle with Time Warner’s Turner Broadcasting. All of its channels except for TBS and TNT went dark on the No. 2 satellite company on October 21 as a result of a contract dispute. And Ergen says he’s prepared to dig in his heels, including doing without CNN which he says is “not a top 10 network anymore. Unless they find the Malaysian plane.” His comments were so interesting that I’ve decided to include big blocks of them, instead of summarizing. Here you go:
He’s prepared to do without Turner:
When we take something down we’re prepared to leave it down forever. Things like CNN are not quite the product that they used to be. You can imagine: CNN down on election night would have been a disaster 15 or 20 years ago. Now there are plenty of other places for people to get news. In fact a lot of people get news not from TV but from their devices. So it’s not had a major impact on our business yet. I do expect that we would ultimately lose some subscribers without Turner programming. We would prefer to get a deal done. But we have a timeframe that we look at and there comes a point in time, certainly during this month, if we don’t have a deal [then] we just make a long-term decision to go a different direction.
How the Turner dispute reflects broader trends:
The industry is changing…There are about 10 big programming groups – I don’t anticipate that the cable companies, satellite companies and phone companies are going to carry the same 10 groups. It’s not going to be a marketplace where everybody has the exact same thing and it’s just about price. Some [will lean] more towards family and kids, some more toward sports, some more towards entertainment.
Possible advantages of losing Turner:
If we’re not going to be in a relationship with Turner then we would not have to raise our prices next year. And that would be slightly cash positive for us from a cash flow perspective. Yes, we listen to customers. But we would save a big, big, big check from a cash flow perspective. And for those folks who don’t care about news and cartoons, we have other news and cartoon shows. [Would subscribers] rather save the money? There’s a pretty good chance that they would. With regional sports, at some point someone is not going to carry regional sports because not everybody watches regional sports. I just think that there’s going to be more diversity, particularly when you can get cartoons from Netflix, or you can get news from the Internet, or you can get a TV show a week later, or you can binge view all the shows in a way that you can’t do easily on TV as you do it today. The world is changing. Some people are going to change with it. Some people are going to be fast followers. And some people are going to figure it out after somebody tells them what they should be doing.
Contrasting Turner and Disney:
Disney has been the leader. You’ve seen an announcement today where [the company] is doing something smart which is — if you buy a movie from Disney it will work on Android and on Apple so you can watch on all your devices. That makes sense for consumers. That’s real technology. That’s really smart stuff. I would expect that other content people will do smart stuff. We’re going to work with those people who want to do new things and try new things. We hope that Turner is going to be one of them.
On whether Dish might lose TBS and TNT, too:
I would guess that if you’re Turner and if we’re not going to carry CNN or Cartoon Network then I’m not really excited when your contract’s up to carry TNT and TBS. So we have to be prepared that those channels will come down as well. Those will be more painful.… It’s almost been a non-event at this point.
Why Ergen wants to resolve the Turner dispute:
Turner was the first company that signed with us in DBS. It’s one of the easy ones to take down, but it’s one of the last ones I want to take down because they were the ones who helped us to get into business. I would bend over backward for Turner. But we have a responsibility to our shareholders not to do stupid deals and it’s hard… We know how many minutes people watch CNN and how many minutes they watched five years ago and it’s hard to pay a double-digit price increase for something that people are watching half as much as they used to watch. It’s Turner’s job to make their product better. Not ours… When they make the product better, they make more money from it.