Here’s something you rarely see in Big Media: Dish Network — one of the industry’s most frugal companies when it comes to executive compensation — cut the outlays for most top execs, with CEO Joe Clayton down 90.8% to $907,000. Chairman Charlie Ergen‘s package was up 35.7%, to just $1.3M, the company says in its proxy filed at the SEC. For contrast, this morning Dish’s chief competitor, DirecTV, gave CEO Michael White a 200% raise to $18M. Dish’s packages are relatively simple. Ergen received $900,000 in salary and $400,186 in other compensation. Clayton also had a $900,000 salary, with just $7,000 in other compensation. Ergen’s compensation was 2.8 times the median for Dish’s four other highest paid execs, below the threshold that raises concerns among corporate governance activists. Dish shares appreciated 27.8% last year. The company says that its “overall executive compensation trails that of its competitors in the areas of base pay, severance packages, and short-term incentives.” Still, it provides execs with lots of stock that “may be competitive over time” and ensures that they have “appropriate incentives tied to the value realized by our shareholders” and that “mitigate(s) excessive risk-taking.” Ergen controls about 88% of Dish’s voting shares.
The No. 2 satellite company hasn’t raised consumer prices since February 2011 following CEO Joseph Clayton‘s commitment that year to freeze consumer prices to January 2013. So rates probably would be rising now no matter what. But the steep jump in programming costs no doubt factored in to the increases that will hit most of Dish‘s 14M customers beginning January 17. The top-of-the-line America’s Everything Pak (which includes HBO, Showtime, and Starz) will rise $15 to $119.99 a month. Subscribers with the lowest-priced service, Smart Pack, will pay $29.99, up $5. Those with other packages also will pay an additional $5 a month. Dish is holding the line on the $10 service fee for its Slingloaded VIP 922 as well as the Hopper DVR and the $7 charge for the remote boxes it serves. Service prices will increase by $1 to $7 a month for the other VIP DVRs.
Dish Network CEO Joe Clayton picked up the gauntlet that Leslie Moonves threw down yesterday when he threatened to pull CBS from the satellite system if it continues to market its ad-zapping Hopper DVR. “They would be well advised to tune into the consumer,” Clayton said at an event introducing an October 2 broadcast debate between former New York Gov. Eliot Spitzer and commentator Glenn Beck. “Give the customer choice and control. Give the customer a better experience and we all win.” The major broadcast networks are suing Dish, alleging that it violates their copyrights by marketing a DVR feature that automatically jumps past their ads in recorded shows. Dish says that its Auto-Hop feature simply automates what DVR users already do with their remote controls. “Will innovation like the Auto-Hop improve the consumer experience? Of course it will,” Clayton says. “I don’t know how the courts will rule on this. But I know that we’ve won in the court of public opinion.” He urged the networks to investigate technologies that can deliver different ads to different households. “Give them what they want. Not a bunch of trash.” Beck — whose online video programming now runs on Dish — agreed. “The days of commercials as we know them are limited,” he says. “It’s not the 1950s any more.”
We need to keep things in perspective. Compensation for all of Dish Network’s top five officers came to $14.2M — far less than Viacom CEO Philippe Dauman’s $43.1M package, or Disney chief Bob Iger’s $33.4M. Still, it’s a big deal when you consider that in 2010 Dish’s top five collectively ended up with $2.6M. The new CEO, Joe Clayton, accounted for most of the increase: He was the highest paid exec by a long shot, with $9.8M ($467,307 salary, $306,700 stock awards, and $9.1M in option awards). The company says it wanted to give a lot of equity to Clayton, who joined the company in June, to ensure that he has “appropriate incentives tied to the performance of Dish Network’s Class A Shares.” Chairman Charlie Ergen, who controls 90.4% of the company’s votes, provided other execs with stock awards that he deemed necessary to keep them. The satellite billionaire paid himself $958,441 ($750,000 salary, and $208,441 in other compensation — mostly personal use of the company jet). If the relatively modest amount doesn’t humble other moguls, perhaps this fact will: Ergen took a 20% raise in a year when Dish shares appreciated 47.5%.
Dish Network CEO Joe Clayton says that ABC, CBS, Fox, and NBC shouldn’t have a problem with his company’s just-announced PrimeTime Anytime DVR feature that automatically records the networks’ primetime shows, holds them for a week, and also streams them on-demand to computers, tablets and other mobile devices. But he doesn’t know. “I haven’t personally talked to every single one of them, but I’m sure they’re aware of it,” he says. He adds that Dish shouldn’t have to worry that it’s treading on their right to license TV Everywhere rights, or look-back VOD service to cable operators and online destinations such as Hulu. “This is no different than an opt-in for any DVR,” he says. I’m told that lawyers for the networks are reviewing the Dish service to see whether there’s a problem.
Clayton was in a buoyant mood, though, as he officially disclosed the news that had already leaked about his company’s powerful new DVR product — called Hopper — and Dish’s corporate makeover.
UPDATE, 10:55 AM: Dish Network CEO Joe Clayton was clearly talking about Warner Bros, although he didn’t single the studio out by name in his company’s conference call with analysts. Warners wants to make Blockbuster wait 28 days for new home videos, leading the rental operation that Dish bought in April to go to the open market to buy DVDs of WB’s Horrible Bosses and Green Lantern. The studio withheld them, largely to help its efforts to promote VOD and sales of new discs that include UltraViolet’s digital streams to PCs and mobile devices. That “creates some challenges,” Clayton says – adding that Blockbuster rentals improve promotion for films as they move to TV and other markets.
As for the main satellite video business, Clayton says: ”Progress was made in the third quarter. Was it enough? No.” He vowed to step up Dish’s marketing, which he says “needed the most work,” adding that he’s “cautiously optimistic” there’ll be progress in 4Q. Chairman Charlie Ergen said that DirecTV’s strong 3Q results last week shows that “there’s still a big business out there for satellite television on a stand-alone basis…. We’re just not getting our fair share.” Dish would consider offering less expensive video packages.
Another layer of a cryptic Dish Network plan for its future was peeled back today when the nation’s second-largest satellite TV provider formally asked the U.S. government permission to offer a mobile high-speed Internet service. The move brings into clearer focus Dish’s potential goal: building a mega video-streaming service for itself and its newly acquired Blockbuster on a network that would bypass the broadband pipes of its cable competitors. Dish and chairman Charlie Ergen have been on a buying binge of late, including acquiring spectrum from DBSD North America and TerreStar Networks; those are the assets that Dish is asking the government to clear, according to an FCC filing, which would allow the high-speed plan to move forward. During Dish’s 2Q earnings call this month, CEO Joe Clayton said the company would not “tip its hand” to plans, but that “video is our primary objective,” including having broadband-connected set-top boxes for its subscribers and adding licensing arrangements for Blockbuster that could include subscription VOD. Its own high-speed service would supply all of this and makes sense, but the question remains how much will such a network cost to build? Already, Credit Suisse Group AG analyst Jonathan Chaplin has weighed in on that one, saying it could be “costly.” As with everything Dish-related, stay tuned.