Ad-Free Streaming Is Big COVID-19 Winner, Dish Chairman Charlie Ergen Says, While Linear TV Watching Is “Painful”

Dish Network chairman Charlie Ergen, a vocal critic of the programmers he routinely jousts with in contract talks, amped up his critique of the traditional TV business during a conference call with analysts Thursday.

“The product itself, from a consumer point of view, isn’t good enough,” Ergen declared. While viewing during the past two months has surged across the board due to COVID-19 shutdowns, he expects that most of the increase has gone toward ad-free streaming services. “It’s human nature. They’re going to Disney+ or Netflix or Amazon because there’s not commercials and because you can binge-watch something or you can watch whenever you want to.”

Even on ad-supported streaming services, Ergen went on, “it’s a lighter load” compared with linear. On traditional telecasts, including on Dish, “You might have 16, 17 minutes of commercial time during a show. It might be a really good show, but it’s painful once you’ve seen something without commercials.”

In addition to the ad load, “you’ve got to push a bunch of buttons to watch the next show, as opposed to just waiting for eight seconds” on services like Netflix. “The user experience has to be better.” Content being sold to various digital platforms is even more salt on the wound, Ergen said. “Branding has kind of gone away” in the streaming era. If users see a network brand proffered for free in one part of the ecosystem, “they don’t want to pay for it twice” by remaining a pay-TV customer.

Ergen said he long anticipated media companies digging themselves a long-term hole by selling their programming to streaming services. Licensing content had been the only option for years until major companies decided to reverse course in the past couple of years and mount direct-to-consumer streaming efforts. “

While Ergen has always been a free-spoken maverick in the pay-TV conversation, is even less constrained by the conventions of the TV business given that Dish is pivoting toward wireless. The company acquired spectrum, including significant assets divested during the T-Mobile-Sprint merger. Most of the hour-long call with analysts was devoted to telecom.

Despite the criticism of the overall TV experience, Ergen and Dish CEO Eric Carlson declined to offer guidance on carriage talks. The regional sports networks formerly controlled by Fox, and now in the hands of a consortium led by Sinclair Broadcast Group, have been dark for months on Dish, along with HBO. A major renewal is looming this summer with ViacomCBS. Sinclair CEO Chris Ripley on Wednesday told investors there was “no update” on talks with Dish.

The Dish execs also didn’t offer any insights about sports programming, a hot-button issue for programmers and distributors alike during the shutdown of sports during COVID-19. Backlash has been growing against the hefty monthly fees charged to consumers due to sports rights despite no games airing. Distributors have said they are stuck in the middle and would need rebates from leagues in order to pass savings to customers.

Dish opted to disconnect and waive fees for 250,000 commercial pay-TV customers, mainly bars and restaurants, during the quarter due to closures related to COVID-19. That contributed to an overall plunge of 413,000 pay-TV customers in the first quarter, up from a loss of 259,000 in the year-ago quarter.

Prior to the call, Dish reported profits that undershot analysts’ estimates, with net income dropping 78% to $73.1 million, or 13 cents per share, from the same quarter a year ago. Revenue edged estimates, coming in at $3.22 billion, roughly flat from the year-ago period.