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Dish's Ergen: People Are Cutting the Cord

Head of third largest pay TV operator argues ad and pay TV models have to change 2/12/2013 07:28:01 PM Eastern

During an hour-long interview at All Things
D's "D: Dive into Media" conference, Dish chairman Charlie Ergen
argued that consumers are in fact cutting the cord, threatening the foundations
of the pay TV business, and that whole television industry needed to embrace
major changes in their business models.

'Advertising is great'

At
the start of Ergen's interview, the organizers played a new Dish Network ad for
its Hopper with Sling HD DVR that allows consumers to automatically skip prime
time broadcast network shows. The feature has prompted lawsuits by broadcasters
against Dish.

The new ad featured a mock memorial service
for advertising, which the spot noted had been killed off by Dish. But Ergen
responded by saying "I don't want to kill advertising. I think advertising is
great."

He
added, however, that "I don't want to put my head in the sand. The world is
changing" and that consumer don't want "ads that aren't relevant."

With
the Hopper, Ergen argued that they had the ability to insert targeted ads to
different demographic groups and that he would much prefer working with
broadcasters to offer targeted ads.

Ergen
also denied that they had simply instituted the feature to give them leverage
in retransmission consent agreements. "It is not about leverage," he noted.
"It's really about technological change," adding that they were competing with
online companies that could offer more relevant targeted ads.

Cord Cutting Is Happening

Ergen
also had strong words for the pay TV industry. "People are cutting the cord," he
noted, despite the fact that pay TV subscription levels continue to show slight
increases.

"If
that trend is happening, we have to get in front of that."
One key factor driving cord cutting he believes is the rising costs of
programming. "I don't think you can get $100 a month from everyone," he noted,
adding that only Dish and Cablevision have been proponents of a la carte
pricing.

Dish Is Serious About Wireless

The
need for new business models is one reason why Dish is so interested in wireless
and is serious about its bid for Clearwire. It isn't an "illusory" bid, he
noted.

That
spectrum would make it easier for Dish to offer video "inside and outside the
home," Ergen noted.

Isn't Technically Possible To Skip All Cable Net Ads

In
response to a question why Dish was skipping broadcast network ads but not
cable ads, Ergen said it was a technical issue.

Dish
has put all the broadcast content on one satellite transponder. It had the
capability of recording that whole stream onto the Hopper but could not do all
the other channels. "It is a technical limitation," he said.

 

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