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UPDATE: Dish Network Hints At Wireless Video Streaming Plan, But Shares Lag On Soft 2Q Earnings

UPDATE, 11:00 AM: No Charlie Ergen on today’s earnings call. But Dish Network’s new CEO Joe Clayton did an admirable job of playing cat-and-mouse with analysts who want to know whether the company will use Blockbuster and the wireless spectrum it’s acquiring to create a mega-video streaming service that wouldn’t have to go through cable’s broadband pipes. “We will be somewhat nebulous,” Clayton said. “We will not tip our hand.” Still he offered clues that suggest something big is afoot. With its recent deals Dish is “systematically developing the building blocks” for its new initiative. “Video is our primary objective,” he says adding that it’s “extremely important to us” for consumers to have a broadband-connected set top box. He says the company’s considering additional acquisitions, partnerships and asset sales. Dish also is talking with Hollywood studios about different licensing arrangements for Blockbuster that could include subscription VOD. “We’ll look at it on a case-by-case basis for each studio,” says Tom Cullen, who’s in charge of business development. In any event, Dish doesn’t plan to unveil anything soon: It will wait until federal officials approve some of its spectrum acquisitions.

As for Dish’s satellite TV business, Clayton says “it has underperformed.” The company may have tried too hard to cut back on subscribers with so-so credit who might stop paying their bills. “I’m looking for a better class of customer,” Clayton says. A big part of his strategy … Read More »

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Dish Network’s Charlie Ergen Exits As CEO

This is a surprise. Dish Network CEO Charlie Ergen announced today that he’s calling it quits. He’ll turn the reins of the No. 2 satellite company over to longtime consumer electronics executive Joseph Clayton next month. Ergen still controls Dish stock and will remain its chairman. Clayton had been chairman of Sirius Satellite Radio, and earlier helped to revive RCA as a consumer brand.

Ergen’s recent decision to buy Blockbuster out of bankruptcy seemed to provide just the kind of challenge that would intrigue an executive who became a multi-billionaire by outsmarting and outlasting more powerful rivals including Rupert Murdoch. But while Ergen had become one of the most durable fixtures of the media business in his 31 years at the helm of the company he founded, he also provided plenty of signals that he was ready to pull back from the daily grind. Several years ago he drastically cut back on public appearances. He’s almost invisible aside from presentations he pretty much has to make to reassure Wall Street analysts and his own sales teams.

In 2009, Ergen gave up the CEO title at EchoStar, the unit he separated from Dish to develop electronics devices for consumers and the satellite company. Lately he has questioned whether the cable and satellite business model — selling packages of networks to consumers — can survive as Internet services such as Netflix make it easy for people to watch individual shows on demand. Ergen … Read More »

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UPDATE: What Will TiVo Do Next? Dish Network’s $500M Payment Is ‘Far Less’ Than Expected

UPDATE-WRITETHRU: How long will it take before Wall Street’s cheers for TiVo CEO Tom Rogers turn into catcalls? The Street applauded the former lawyer and NBC cable big shot today following TiVo’s agreement to settle a seven-year patent dispute with Dish Network. TiVo shares were up 3%, to $9.86, after the satellite company’s cunning billionaire CEO Charlie Ergen agreed to pay TiVo $500 million. Dish made the payment so it could continue to provide its customers with DVRs that do things TiVo says it invented –  including record one show while users watch another. Rogers says that means TiVo can pretty much insist that every DVR provider fork over a license fee. TiVo has already charged Microsoft, Motorola, Verizon, and AT&T with patent infringement. “The precedent is set” in TiVo’s favor, Rogers says as he vows to “aggressively enforce our intellectual property” rights. But TiVo is a DVR provider, not a law firm. And its core business is growing weaker each year. It had about 2 million subscribers in January – down from its peak of 4.4 million in January 2007. It has also consistently lost money for the last two years. Rogers continued to charge hundreds of dollars for DVRs capable of integrating Web video with conventional TV shows at a time when most consumers were satisfied paying about $10 a month for the simple, if often badly designed, DVRs that their cable or satellite providers offer. Meanwhile, Rogers’ pals in the cable  industry let him down. Beginning in 2005 he cut deals with Comcast, Cox and others: They agreed to give TiVo about a buck a month for each subscriber willing to pay an additional fee to have TiVo’s user interface on their DVRs. But that strategy has been long on press releases and short on results as cable companies complained about how difficult it is to integrate TiVo software into their set-top boxes. As a result, all TiVo has are its lawsuits. It recently borrowed $150 million, mostly to ensure that it would have enough cash to keep the court battles going.

Although Ergen blinked first in his standoff with TiVo, he may have outsmarted Rogers by dragging the case out as long as he did. Bernstein Research analyst Craig Moffett says that Dish’s $500 million payment was “far less than we expected.” Dish, which has 14.2 million subscribers, no longer has to worry about a court order that would force it to turn off all of its DVRs. “That would have been a knock-out blow,” Ergen told analysts. And Dish now can count on TiVo’s help as the satellite company figures out what to do with Blockbuster, the bankrupt home video chain that Ergen just bought. TiVo is one of the few Web devices that offers its subscribers the movies that Blockbuster transmits through its video-on-demand service. “I hope we win the war, and that TiVo wins the war,” Ergen says. But investors seem more optimistic about Ergen’s prospects than they do about Rogers’. Dish shares were up nearly 19%, to $29.79 on Monday.

PREVIOUS, MONDAY AM: Dish Network CEO Charlie Ergen blinked first: The satellite company said Monday morning that it has agreed to pay TiVo $500 million to settle their long-running dispute over who controls key patents to the DVR. The agreement appears to strengthen TiVo’s hand in lawsuits against Microsoft, Motorola, Verizon and AT&T over whether DVRs that they’ve built also violate TiVo patents. TiVo says it controls the technology that enables DVRs to do things like record one show while the user watches another. But if Dish had lost its case in court, then it would have been at TiVo’s mercy: The DVR company could have demanded that Dish either pay a huge license fee, or turn off service to its customers’ DVRs.

TiVo and Dish now say that they plan to work together at Blockbuster, the bankrupt home video retailer that Dish just bought for $320 million. Although Ergen’s light on details, he says that the TiVo will “help develop our Blockbuster service.” Ergen is thought to be interested in using Blockbuster’s brand name to develop a service that would challenge Netflix in streaming movies and TV shows vis the Internet.

TiVo CEO Tom Rogers says that the agreement “demonstrates the significant return affording to our shareholders by diligent enforcement of TiVo’s  property rights. Those efforts will aggressively continue with other parties.”

There’ll be more to come: TiVo will discuss the settlement in a conference call at 9 AM ET. Dish has a scheduled call to discuss 1Q earnings at noon. Read More »

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Hollywood Could Decide Blockbuster’s Fate, Dish Network CEO Charlie Ergen Says

Dish Network CEO Charlie Ergen — once tossed out of a Las Vegas casino for card counting — was poker-faced again on Monday in discussing his plans for Blockbuster. In a conference call with analysts he wouldn’t say whether he’ll continue to rent DVDs at lots of bricks and mortar stores, or gut that business in favor of slapping the Blockbuster name on an Internet streaming service for movies and TV shows. Ergen says his plans will roll out like an episode of Seinfeld: “You’ll have to wait (for the last two minutes) to see how it all comes together,” Ergen says. “Seinfeld was a show about nothing. So this could be a strategy about nothing if you’re skeptical. But we feel we have a purpose.” Yet if Ergen has a strategy, then he contradicted himself by saying that he’ll have conversations with Hollywood studios over the next few weeks to see what they want.  “If studios want a physical (retail) presence, there’s a lot of reason to keep stores open,” he says. Blockbuster has about 1,700 stores and Dish hasn’t decided how many to shutter. The company says that only about 370 of the stores are profitable. So is Ergen leaning toward a digital strategy? Maybe, or maybe not: He says that Netflix “has a formidable and perhaps insurmountable lead” in attracting subscribers who want to stream programming to smartphones, tablet computers, and TV sets. Ergen says he likes the option of having a … Read More »

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EXCLUSIVE DEADLINE LIST: Media Moguls With Pay Compensation NOT Out-Of-Whack

EXCLUSIVE: Media Moguls With Out-Of-Whack Pay Compensation

My previous post showed that a lot of media company bigwigs have pay that’s out of whack with the other 4 top executives whom the SEC requires these corps to list. Now I want to show the flip side — CEOs that don’t set off alarm bells with corporate governance experts. Top dogs like News Corp’s Chase Carey, Comcast/NBCUniversal’s Steve Burke, Cinemark’s Alan Stock, World Wrestling Entertainment’s Kevin Dunn, Dreamworks Animation’s Jeffrey Katzenberg, Dish Network’s Charlie Ergen, Netflix’ Reed Hastings, AMC Entertainment’s Gerardo Lopez, Regal Entertainment Group’s, and National Cinemedia’s Kurt Hall make no more than 3 times as much as the average for the 4 other top executives whose compensation is listed in the annual proxy statement to shareholders.  Let’s be clear: We aren’t saying that the executives below are fairly or unfairly paid. But they work at companies where the boards of directors at least seem to recognize that multiple people deserve the credit for the company’s performance:

1. Microsoft: B. Kevin Turner. Here’s an indication of how technology companies differ from most media ones: Executives in tech don’t depend so much on annual compensation. They typically own a lot of stock and profit when it appreciates. So CEO Steve Ballmer, who owns nearly 4.8% of Microsoft’s shares, is the lowest paid top executive listed in Microsoft’s proxy, with $1.4 million in compensation for the fiscal year that ended in June.  Turner, the COO, … Read More »

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