Dish Network has “approached several media companies about the possibility of licensing their TV channels for use on a new pay-TV service to be delivered over the Internet, rather than over Dish's satellite system,” according to sources cited by Schechner & Jarzemsky of the WALL STREET JOURNAL. Dish Chair & CEO Charlie Ergen has “raised the idea with multiple media companies as part of a broader effort to control rising programming costs.” Sources said that the programming “wouldn’t include sports channels” in the “most-basic tier of service.” Sports channels “are among the most expensive for cable and satellite operators to carry.” On a conference call to discuss Q3 earnings yesterday, Ergen said, “Sports programming may be 20% of the viewing on a day-to-day basis, but it may be 50% of the cost that the consumer pays. I think that there's a limit to where sports costs can go." Schechner & Jarzemsky note offering channels over the Internet “could give Dish more flexibility to exclude channels whose existing contracts with Dish mandate that they appear on the satellite company's most-widely distributed tiers of service.” Sources said that the conversations around Dish's service “are exploratory, and it is unclear whether Dish will actively seek to launch the service.” A Dish spokesperson “declined to comment on whether the company is pursuing any such service.” Sources said that the company’s new discussions about a broader Internet-based service “are motivated in large by Mr. Ergen's desire to curb ever-growing bills it pays each month for the right to carry channels -- especially sports channels” (WALL STREET JOURNAL, 11/8). Meanwhile, Ergen said that approval of AT&T’s acquisition of T-Mobile “could lead to more mergers and open the door for a deal" between Dish and DirecTV. He added that if the deal is "blocked, a DirecTV-Dish marriage would be ‘problematic’” (DENVER POST, 11/8).
PROFITS UP, SUBS DOWN: DAILY VARIETY’s Jill Goldsmith noted Dish “saw profit and revenue rise last quarter but lost 111,000 subscribers, citing intense competition -- including heavy discounting by rivals -- a weak housing market and lower discretionary spending by consumers.” Dish reported profit “rose 30% to $319 million on lower costs from adding fewer subscribers.” Revenue “was up 12% to $13.6 million.” The quarter “was the first one to fully incorporate Blockbuster, which Dish acquired out of bankruptcy for about $240 million” (VARIETY.com, 11/7).
