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Inside Charlie's Brain - what's he planning?


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41 replies to this topic

#1 OFFLINE   phrelin

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Posted 29 April 2011 - 12:16 PM

Richard Greenfield of the investment firm BTIG on Tuesday posted a report titled Inside Charlie’s Brain: Accepting the Eventual Death of Linear TV and Laying the Groundwork to Reinvent DISH.

It's one very-well-informed person's "big picture" view of what Dish is doing which begins with Charlies response to a question in DISH’s Q3 2010 conference call. It's a long post but worth reading as it offers a comprehensive explanation for the various pieces of the puzzle we've been discussing in various threads (spectrum acquisition, Blockbuster acquisition, dropping sports channels, giving away premium movie channels, staying away from sub growth just to grow subs).

Thursday's The Morning Bridge from MediaBiz offered up this summary:

What, oh what, is Charlie Ergen thinking? BTIG's Richard Greenfield (who came up with today's too-good-not-to-steal headline) says the DISH-EchoStar-Blockbuster etc. etc. honcho is "clearly worried about his core distribution business and has begun to take aggressive measures in 2011 to build a next-generation DISH Network."

Notes Greenfield, Ergen has been dropping sports programming (bye bye Fox RSNs, MSG, SNY); buying wireless spectrum, giving away free year deals to various premium nets, and apparently challenging Netflix via the purchase of Blockbuster, which, by the way, closed Tuesday. So what's he gonna do with all that? Who knows? says Greenfield. But a hybrid model is one good bet ... as is a challenge to Netflix. To get the full post, go here (and don't forget to register.)

Near the end of the analysis, Greenfield comments:

Ergen’s Goal Not Clear Yet: Hybrid Model in the Works? We’re not sure and to be honest, we’re not even sure Ergen has an exact plan at the moment, albeit, we increasingly believe he knows he needs to reorient DISH’s business model, especially while cash flow from his core business is robust enabling him to redeploy capital to build/re-engineer DISH. Ergen is reducing expensive sports programming and staying away from sub growth just to grow subs (focusing on profitable sub additions), while at the same time redeploying capital into new strategies such as online/mobile programming and helping to enable high speed wireless broadband.

...We wonder whether Ergen’s goal is to focus on a small group of linear networks that are must have destinations for consumers and supplement it with a robust on-demand offering that allows anytime/anywhere access to a wide array of programming (albeit without sports).

He doesn't discuss the Sling acquisition which was on the Echostar side, but it also fits into a broader picture.

With regard to sports, IMHO Charlie isn't dropping sports but rather only contracting for sports programming that is purchased separately.

I'm going to be curious what he will do with the Disney folks at contract renewal time when Disney will be pressing for a 100% price increase for the ESPN stuff charged to every customer which is already too expensive for the cash-strapped portion of the population.

Of course, Disney will try to leverage the Disney Channel if they notice that Charlie isn't big on making all his customers pay exorbitant fees for ESPN. It's hard to imagine a model without the Disney channel, but then again my 8-year-old granddaughter quit watching TV - she watches streaming video on a computer and other devices. Apparently this is not unusual, according to the Nielsen folks who report that not only do they watch on computer but tell us younger consumers ages 12-17 are the heaviest mobile video viewers.

Certainly Comcast (you remember them, the folks that bought a 51% interest in NBCU) is focusing their efforts on streaming and on-demand and "Comcast on the Go" (yeah, I know I should be using "Xfinity", but to me they're Comcast). Comcast, of course, is "the cable company" much like there used to be "the phone company." So to a degree, they can charge families more without too much subscriber loss.

Anyway, it's interesting to see an analysis of what's going on inside Charlie's brain with regard to the future of Dish.

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#2 OFFLINE   jacmyoung

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Posted 29 April 2011 - 12:30 PM

The analyst missed one thing but you picked it up yourself without knowing it, Charlie also mentioned how his kids now get to watch those shows and other media.

#3 OFFLINE   Wilf

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Posted 30 April 2011 - 06:29 AM

The analyst missed one thing but you picked it up yourself without knowing it, Charlie also mentioned how his kids now get to watch those shows and other media.

When we "baby sit" our grandkids, they now choose Netflix on our TV over any cable channel. The have no trouble navigating the GoogleTV remote. Yes, it is a brand new world for TV. A much better one.

#4 OFFLINE   SayWhat?

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Posted 30 April 2011 - 06:35 AM

Well, since this thread has mentioned both Comcast and Netflix................


Netflix, the DVD-by-mail and streaming movie giant, now has as many subscribers as Comcast, and in the evenings accounts for more than 40 percent of US bandwidth usage by some measurements.


http://arstechnica.c...you-believe.ars
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#5 OFFLINE   phrelin

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Posted 30 April 2011 - 12:11 PM

Well, since this thread has mentioned both Comcast and Netflix................

Netflix, the DVD-by-mail and streaming movie giant, now has as many subscribers as Comcast, and in the evenings accounts for more than 40 percent of US bandwidth usage by some measurements.

http://arstechnica.c...you-believe.ars

That story would seem to support what Greenfield thinks Charlie's focusing in on. Plus, we had Kaufman Bros' Todd Mitchell speculative comment:

Juxtaposed against the recent spate of M&A activity by DISH and SATS, we think DISH's CEO Charlie Ergen comments on yesterday's conference call reveal he is putting together the assets to build a two-way hybrid satellite/wireless infrastructure capable of delivering a ubiquitous, point-to-point, on-demand video and data offering that can be scaled in a very capital efficient manner and would ultimately provide DISH with a structurally lower cost of delivery for this type of service than the MSOs, DirecTV and emerging OTT competition.


We know Charlie's not into "wired" infrastructure. (He let's me deal with my ISP, Comcast, on that.) There's really three things affecting cable/telcom wired infrastructure: telephone, "cable" TV, and internet. What we know about Echostar and Dish within that framework plus wireless is:
  • Charlie doesn't sell telephone service, at least yet.
  • He now sells satellite internet services via the Hughes acquisition by Echostar.
  • He's acquired or acquiring all that wireless spectrum and some infrastructure.
  • Related to the internet, Echostar owns Sling which via Dish allows you access through the internet to whatever you get via your 722/722k/922; has a specific arrangement with Google TV as an internet portal from your 722/722k/922; offers DISH Online and HBO/MAX GO.
  • PPV/VOD is handled on the ViP DVRs via satellite.
  • He bought Blockbuster.
It's pretty clear Charlie intends to get a meaningful piece of the action shown in the chart in the ars technica story linked above by SayWhat?:

Posted Image


Edited by phrelin, 30 April 2011 - 12:30 PM.

"In a hundred years there'll be a whole new set of people."
"Always poke the bears. They sleep too much for their own good."

"If you're good enough, they'll talk about you." - Tom Harmon
A GEEZER who remembers watching TV in 1951 and was an Echostar customer from 1988 to 2008, now a Dish Network customer.
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My Blog: The Redwood Guardian


#6 OFFLINE   sigma1914

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Posted 30 April 2011 - 12:58 PM

25% Other = Porn :lol: (It should be higher.)
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#7 OFFLINE   SayWhat?

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Posted 30 April 2011 - 01:07 PM

Well, it would be, but that's where a lot of the malware is embedded. (I won't make the Trojan pun)
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#8 OFFLINE   kc1ih

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Posted 30 April 2011 - 03:55 PM

The title of this thread made me think of Charlie Sheen, and my reaction was “what brain?”. :lol:

#9 OFFLINE   phrelin

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Posted 30 April 2011 - 04:21 PM

The title of this thread made me think of Charlie Sheen, and my reaction was “what brain?”. :lol:

Yeah, that was a dilemma for me when I titled the thread. But the article title was just too good not to use that part of it.

"In a hundred years there'll be a whole new set of people."
"Always poke the bears. They sleep too much for their own good."

"If you're good enough, they'll talk about you." - Tom Harmon
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#10 OFFLINE   phrelin

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Posted 02 May 2011 - 11:30 AM

I would have to say that today really is Charlie's 21st Century "first day of the rest of his life" after seeing these news releases:

ENGLEWOOD, Colo., May 2, 2011 /PRNewswire/ -- DISH Network Corporation (NASDAQ: DISH) today reported total revenue of $3.22 billion for the quarter ended March 31, 2011, a 5.5 percent increase compared with $3.06 billion for the corresponding period in 2010.

DISH Network gained approximately 58,000 net subscribers during the quarter ended March 31, 2011, ending the quarter with approximately 14.191 million subscribers

ENGLEWOOD, Colo., May 2, 2011 — DISH Network Corporation (NASDAQ: DISH) today announced that its subsidiary, DISH DBS Corporation, plans to offer approximately $1.0 billion aggregate principal amount of debt securities. The net proceeds of the offering are intended to be used for general corporate purposes.

ENGLEWOOD, Colo., May 2, 2011 – DISH Network Corporation (NASDAQ: DISH) announced today that Michael Kelly has been named president of its subsidiary, Blockbuster L.L.C. DISH Network completed the purchase of Blockbuster’s assets last week.

...Kelly served as executive vice president of DISH Network’s Commercial Services division as well as both the Direct Sales and Media Sales organizations. Kelly had previously served in various executive positions for DISH Network, including management of field service, customer care operations and strategic initiatives. His company, Kelly Broadcasting Systems, a leader in distributing international radio and television programming in the United States, was acquired by DISH Network in 2000.

ALVISO, Calif., and ENGLEWOOD, Colo. – May 2, 2011[/B] – TiVo Inc. (NASDAQ: TIVO), DISH Network Corporation (NASDAQ: DISH), and EchoStar Corporation (NASDAQ: SATS) announced today that they have settled all of their ongoing patent litigation.

I mean, what we have is:
  • Dish not only has a 5.5% increase in revenue but gained a net of 58 million oops, thousand subscribers in a recession proving its current marketing strategy.
  • Dish is borrowing some cash to implement its future strategy.
  • Charlie has appointed someone with solid marketing and management experience to manage the Blockbuster acquisition.
  • Charlie has settled with TiVo in what appears to be a fair licensing deal, allowing him to move on (and also sell TiVo boxes in Blockbuster outlets).
This is a rather momentous day for Charlie.

Edited by phrelin, 02 May 2011 - 04:20 PM.

"In a hundred years there'll be a whole new set of people."
"Always poke the bears. They sleep too much for their own good."

"If you're good enough, they'll talk about you." - Tom Harmon
A GEEZER who remembers watching TV in 1951 and was an Echostar customer from 1988 to 2008, now a Dish Network customer.
My AV Setup
My Slingbox Pro HD Experience
My Blog: The Redwood Guardian


#11 OFFLINE   phrelin

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Posted 02 May 2011 - 02:18 PM

From Bloomberg:

Ergen said there is a plan to tie together his recent acquisitions, although he wouldn’t give details, referring to the TV show "Seinfeld," in which the various story lines often merge in the “last couple minutes” of an episode.

“Everything we do has a purpose, and we feel like it ultimately fits together,” Ergen said. “You’ll have to just wait and see where it all comes together. It’s a little hard to explain it this early in the show, so to speak.”


"In a hundred years there'll be a whole new set of people."
"Always poke the bears. They sleep too much for their own good."

"If you're good enough, they'll talk about you." - Tom Harmon
A GEEZER who remembers watching TV in 1951 and was an Echostar customer from 1988 to 2008, now a Dish Network customer.
My AV Setup
My Slingbox Pro HD Experience
My Blog: The Redwood Guardian


#12 OFFLINE   dgordo

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Posted 02 May 2011 - 02:31 PM

Gained 58 million subscribers?

#13 OFFLINE   sigma1914

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Posted 02 May 2011 - 02:34 PM

I would have to say that today really is Charlie's 21st Century "first day of the rest of his life" after seeing these news releases:


I mean, what we have is:

  • Dish not only has a 5.5% increase in revenue but gained a net of 58 million subscribers in a recession proving its current marketing strategy.
  • Dish is borrowing some cash to implement its future strategy.
  • Charlie has appointed someone with solid marketing and management experience to manage the Blockbuster acquisition.
  • Charlie has settled with TiVo in what appears to be a fair licensing deal, allowing him to move on (and also sell TiVo boxes in Blockbuster outlets).
This is a rather momentous day for Charlie.


That's a lot...58,000 is realistic. ;)
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#14 OFFLINE   phrelin

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Posted 02 May 2011 - 04:21 PM

That's a lot...58,000 is realistic. ;)

Thanks, I've corrected it. I get so used to seeing trillions and billions, that millions seems like a low number.:o

"In a hundred years there'll be a whole new set of people."
"Always poke the bears. They sleep too much for their own good."

"If you're good enough, they'll talk about you." - Tom Harmon
A GEEZER who remembers watching TV in 1951 and was an Echostar customer from 1988 to 2008, now a Dish Network customer.
My AV Setup
My Slingbox Pro HD Experience
My Blog: The Redwood Guardian


#15 OFFLINE   James Long

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Posted 02 May 2011 - 04:34 PM

I'm surprised that it wasn't another negative 100k+ subscribers. Hopefully all the things Charlie is doing will combine to improve the satellite company.

#16 OFFLINE   phrelin

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Posted 02 May 2011 - 04:55 PM

I'm surprised that it wasn't another negative 100k+ subscribers. Hopefully all the things Charlie is doing will combine to improve the satellite company.

I was as surprised as you were.

Charlie seems pretty realistic. In the Bloomberg story regarding the Blockbuster deal, they report:

Dish will keep some Blockbuster stores as long as movie studios want them, Ergen said on a conference call. Keeping a per-movie DVD-rental business may give studios a way to make more money than streaming content on Netflix Inc. (NFLX), Ergen said.

“I don’t see Blockbuster being a competitor to Netflix, directly, in terms of streaming, because Netflix has a formidable lead, and probably insurmountable,” Ergen said.

That story also noted that Charlie also has acquired:
  • DBSD North America Inc., a provider of voice and data services over satellite;
  • Hughes Communications, giving Dish the ability to offer broadband services; and,
  • Move Networks Inc., which makes technology for streaming video online.
As the bits and pieces come in, such as Charlie mentioning the studios liking Blockbuster having some stores, it seems like a picture is forming. Now whether it works out, no one knows. But it looks solid to me.

"In a hundred years there'll be a whole new set of people."
"Always poke the bears. They sleep too much for their own good."

"If you're good enough, they'll talk about you." - Tom Harmon
A GEEZER who remembers watching TV in 1951 and was an Echostar customer from 1988 to 2008, now a Dish Network customer.
My AV Setup
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My Blog: The Redwood Guardian


#17 OFFLINE   BobaBird

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Posted 02 May 2011 - 07:50 PM

The picture of Blockbuster stores may turn into more of a doodle, as they mentioned only about 370 of the 1700(?) locations are profitable.
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#18 OFFLINE   Wilf

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Posted 03 May 2011 - 06:37 AM

http://www.nytimes.c...?ref=technology

A good read.

#19 OFFLINE   lparsons21

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Posted 03 May 2011 - 08:02 AM

I'm surprised that it wasn't another negative 100k+ subscribers. Hopefully all the things Charlie is doing will combine to improve the satellite company.


Why surprised? Dish is selling a solid product for a competitive price. Their HDDVRs are rock solid, they have a good channel lineup available and their customer service is easier to deal with more often than not.

From the average consumer viewpoint, the big difference is the sports or lack of.

On customer service, the reason I say they are easier to deal with is that in nearly all cases, I can contact tech/customer service/sales via online chat which helps ensure the a mis-communication occurs less often.

I have many friends that have one or the other service and when I bring up some of the issues discussed here, I find that virtually none of them care a whole lot about what we discuss here that seem so compelling to us. They care that the system works, has the channels they want and pay a reasonable bill. They don't get humped up over what is missing in HD, nor any of the 'apps'.

In general, they've stayed with whichever provider they are with for quite some time. In fact, the only time I've seen much in the way of switching was for locals via SAT changes and even then, not nearly as often as discussions here would indicate.

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#20 OFFLINE   koralis

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Posted 03 May 2011 - 12:29 PM

A couple of tricks not mentioned so far...


1) the Blockbuster deal allows Charlie access to a contract allowing him to stream movies at rates that are FAR better than he's gotten before (no doubt!)


2) The new tivo settlement had some interesting language in it that suggests that echostar can make DVRs to service Dish, but that Tivo would be making equipment for other markets that are dish-compatible. I forget the exact jargon they used, but I read it as "Dish can make DVRs for Sat/Streaming. Tivo will be making the standalone Streaming devices."


3) The Blockbuster deal helps Charlie get a foot in the door for A-la-cart. He'll already be serving movies as one-ups. If the service is big enough then it gives him extra negotiating power to do individual episodes, seasons of an episode like iTunes does or individual channels unbundled from packages. TV producers are greedy. If doing the deal nets them more revenue they'll talk.




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