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Discussion Starter · #1 ·
I just finished listening in on the Earnings call with Charlie Ergan.

Charlie for some reason sounded tired and confused for much of the call (that my opinion anyways)

Without getting into the figures (which are available from Echostars site) I will get into the interesting things Charlie said.

On Echostar 7 Charlie said that the testing of the satellite is now complete. And that "in the very near term" Echostar 7 will be transitioned online. (that has me wondering what kind of testing they did with it at 129!)

Because the core channels are at 119 there wont be much shuffling around of channels untill Echostar 8 goes online. He did mention he hopes to bring a few Pay Per View Channel back which were dropped due to the much carry space crunch.

He also said that Echostars Pay Per View channels were not doing well due the the fact that DVD's cost $12 to buy at Wal Mart and the PPV Channel have to wait from 45 to 60 days before they can show movies after they are available in the stores or Blockbuster. (My comment to Charlie is to GET A CLUE, if PPV is not doing well then why bring back PPV channels that were dropped due to Must carry?)

Charlie said (Get this) he wants customers to know that their satellite bill should be the "most important" bill they pay each month. He then gloated how he likes to shut off customers who are late on paying their bills.

I would think that heat, and electricity food and a roof above my head would be more important the my satellite bill. Charlie for some reason likes shutting people who are 30 days late paying their bill (when he bills in ADVANCE for service) without giving no leeway before shutting folks off.

Does he realize he does a lot of work to gain customers. Yet it only takes something stupid like shutting off a customer for paying his bill a few days late to loose the customer he worked so hard to gain. I don't get it.

Echostar has written off StarBand (*band) as of March 31st. He hopes to get back in satellite broadband if the satellite broadband providers can figure out a way to make the service better and figure a way to make money.

He also announced that Dish Network has indeed opened a call center in the Philippines. That should be fun calling there for Dishplayer support. :D

No mention of new receivers (suprise) but Charlie did say he was now "Technically Happy" with the Dish PVR products.

Anyone else listen have anything to add?

Hall Of Fame
5,345 Posts
Here's a summary:

Summary... Okay, I am listening to beautiful music on the Windows Media
Player plug in as I wait for the conference call feed. A wonderful
rendition of "The Rose" plays... While I'm waiting, I do want to say that
there are a ton of numbers and terms thrown out here that I do not
understand not care to. I'm doing this to get any info that affects us as
subscribers. There's some nuggets of info here.

At 12:05pm the operator came on the conference line and said "Hold your
damned horses! We'll get to you when we're ready!" :) Well...not really.
But they are running a little late. It's now 12:08 and still holding to
beautiful music. zzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz........

At 12: 11 Samantha comes on line to welcome everyone and explain the rules
of the conference call.

Mike McDonald CFO comes on line to introduce everyone... I had a drop-out.

Safe harbor statements being made...basically if it hasn't happened it's a
forward looking statements may not happen bla, bla...

Mike recaps the quarter take a look at the press release for the numbers
being read http://ir.ccbn.com/ir.zhtml?t=DISH&s=400

E* is 5.7 billion in debt right now.

Charlie begins to comment:

Charlie is disappointed in the EBITDA. He says that they decided to invest
in the future and the multi-TV marketing was necessary to get a longer term
customer and more profitable customer. In order to control churn, you need
either to get the customer to buy equipment or to get the equipment free
with a long term commitment. However you never want to give equipment away
with no commitment. That drives churn. Giving away programming is not
something you want to do, but it helps keeping customers for a long term.

Broadband is disappointing. Starband and Wild Blue...we don't se a path to
getting a return on our money. We are minority investors so we couldn't get
them to go the way we wanted them to. They are still good companies and
they may do well in business, but we didn't see a path to make a return on
our investment. (Network outage.....waiting..) We will jump back in with
both feet if we see a way to make a return on our investment.

We were able to balance our lack of success with sat broadband with two DSL
marketing plans. We don't have much of a revenue opportunity, but we do
have a great marketing strategy for overall growth.

The merger is still our key to compete. to reverse certain trends...to do
all 210 (LIL) markets..

We've moved out of the public arena (congress) and into the regulatory
arena. Analysis will go through the summer. FCC may rule in September.
Justice Dept maybe earlier. So it may be October before anything happens.
If we only do one thing right, that is what we're looking for.

Our relationship with RCA and Radio Shack will help us in the second half of
the year to attain critical mass.

Question time: (as per request I am not giving names)
Cable subscriber numbers are week. Are we getting customers from Cable or
are we growing the sub base?
They're coming mostly from Cable. Piracy hurts cable as much as satellite.
If they can get signal for free then they will not sub to Cable or

If the merger is denied would you look at expanded capacity?
Our future problems go beyond capacity. Rate from programmers and return on
investment on smaller market LIL. Capacity alone is not the answer.

SAC per customer?
$533 per customer (Subscriber acquisition cost...how much it costs to add
one subscriber). Recovering the box (lease programs) saved Dish $12 million
dollars in cash this quarter

Next caller: Lots of numbers I missed.... (and a network outage to
boot...love the dial-up connection)
Installation of lease plans is "expensed". Advertising, Installation, Box,
etc go into SAC.
Actually Charlie has been explaining how the SAC number is arrived at. And
he says that every company estimates it differently.

PPV is becoming weaker. They are discussing RPU (Revenue per Unit?). They
say that RPU is kind of weak because I like nine is still running. It is
making RPU 75 cents lower "easy". Sorry...I missed the RPU number.

RPU is not a major concern of mine other than PPV. DVD and lack of major
events on PPV are big contributors. The PPV window of 45-60 days after
Blockbuster has a negative impact.

Gross Subscriber Additions are down in the lease plan. Have you
deemphasized that?
No. We want to be at about 50% lease, 50% purchase. But we leave it to the
retailer. The current rate is $32% lease. And it still has legs.

Are you going to launch an new call center? And what about the costs
We opened up a call center in the Philippines. The government help us out.
An the per hour cost is much lower. (network outage...) No negative short
term impact. If Dish opens another US call center it will be in 3rd Q

Retention marketing was only 6 million dollars "an immaterial amount" that
is really not part of SAC. That number will remain consistent
(proportional) unless churn increases.

Churn went down 10 basis points from 4q to 1q?
Charlie says seasonally churn is lower in q1 than q4. But the numbers in
Churn are about the same from last q. We are pleased, but not as

Of the 7million subs, how many are on a 1 year commitment?
A) Don't know. It's a guess. It's less than 25%. Churn goes up the first 3
4 months then after a year is spikes again and then there is the seasonality
issue. Are they churning because of VOD, Broadband, Better offer...we have
to look at all this and be vigilant.

Question to Mike...Assuming the majority of subs are coming in with free
programming...is there (network outage)
They are talking about premarketing cashflow.

The gross adds were down 10% for the first time. Why?
The entire market is down and many cable markets are now competing head to
head. We didn't pick up the YES network so that is a flat market and may
see some churn there. but we need to compare cost to return.

A question about HDTV....
The merger will help us do HDTV nationally. The negative trend will be that
Cable will be doing a lot more HDTV and they will do local channels. We
can't do that. They're VOD system is something we can't do. But the PVR we
sell allow essentially VOD for all the channels. (Network outage again!!!!)
We get a better customer with PVR (NETWORK OUTAGE)

Do you think you're disadvantaged in HDTV Locals?
Our competitive answer is to put an HDTV tuner in the box so they can get it
over the air for free. As to nationally we are in a great position to

Satellite costs are going up...what are incremental costs? DSL particulars.
The DSL deals are reciprocal deals. The phone company provides DSL and we
provide the video. We market for the phone company and vice versa. Not a
great revenue opportunity. No money on SAC for DSL from us or Video SAC for
the phone company. This generates a better customer.

The biggest cost is the Depreciation--they do not have the exact numbers
available and will follow up off line. (NETWORK OUTAGE)

The IRS is questioning the timing of deductions. No question on the
eligibility of the deductions of SAC costs (expense).

They discuss some accounting issues dealing with EBITDA and Free Cash Flow
and Real Earnings. Charlie says that some of these "metrics" are going to
take a back seat to real earnings. If you do that Cable v E* we get a
better return on the dollar. We have lots of challenges.

They discuss E*'s positive free cashflow (NETWORK OUTAGE)

Charlie says we have a great balance sheet. That is how people ultimately
judge a company because these numbers cannot be manipulated.

They talk about the I Like nine churn rate versus the "regular" customer.
Charlie Suspects that the IL9 customer has a higher churn. No real numbers
to back it up yet.

They talk about SES, Northpoint and the Canadian/Mexican slots for
competition. All the facts still aren't in. But we have to be prepared for
new forms of competition. The only way to do that is to have LIL, broadband
and programming. The merger is because we don't stand still.

They begin to talk about the health of the satellite.
E*3 is generally fine. We only have a few years left in it. E*7 on orbit
check out is done. It passed it's health check. It frees up E*4 as back up
and E*5 (he meant 6) at 119 for back up. We needed E*7 or 8 be successful
to feel safe. We will be a little overinsured if E*8 is successful but we
feel good about that.

Has ABC litigation been dismissed with prejudice?

What was the impact of the price increases last March (churn? slowdown?)
We don't think it had a huge impact. It was only a dollar. (NETWORK
OUTAGE) We plan as a strategy to be the lowest cost guys out there (talks
about AT50).

They begin to talk about retail distribution. We don't know the impact of
Radio Shack.

How many PVR deployed and other impacts?
About 1/2 million deployed and we want it to get to a million. We are
pleased with our product. PVR customers churn less. Strategically
(marketing) we could do a better job.

Caller appreciates the clean accounting of E*. They go into a litany of
accounting numbers and terms in this Q&A AHA!! they've been talking about
CAPEX (Capital Expenditures)

(Network Outage)....missed the question
Answer made no sense.

Vast majority of new adds came from cable. Rural customers did not have a
negative growth like the possibly NRTC.
No material change in Receivables or bad debt. That situation is pretty
good. Dish has not changed procedures since the beginning. Customers do
not look at satellite bills as one of the first they pay. So we have not
changed the way we turn off no-pays. We will not give them the "extra"
month and that keeps our bad debt down. I would wager that it's the lowest
in the industry. "We don't like it when people don't pay us"

They begin to talk about RPU again and how the promotions (free service for
3 months) will affect the RPU number in the second, third and fourth
quarter. SAC is trending higher, but we are probably getting a better
customer for it.

Did you have to reduce the number of PPV channels due to must carry?
We really can't move things around and take full advantage until E*8 is up.
If E*8 fails we'll move E*7 to 110°.

Gemstar litigation?
No more insight that what has been stated earlier. (EPG fight...gemstar
says that the EPG is their intellectual property and everyone else including
the Government says "BAH!" )
Litigation process will go on for a long time.

Next conference call: 8/15/02 at noon eastern.

The summary above is strictly an interpretation of what I was able to hear
and understand. Any misstatements are absolutely accidental. This
information is only here as a courtesy to the readers of this
forum/newsgroup and should in NO WAY be construed as complete or totally
YOUR SHIRT! :) Have a nice day.

See ya

Hall Of Fame
2,027 Posts
Thanks for the great recap Scott and Tony.

RE: "He also said that Echostars Pay Per View channels were not doing well due the the fact that DVD's cost $12 to buy at Wal Mart and the PPV Channel have to wait from 45 to 60 days before they can show movies after they are available in the stores or Blockbuster. (My comment to Charlie is to GET A CLUE, if PPV is not doing well then why bring back PPV channels that were dropped due to Must carry?) "

Uh, how about get a clue and drop the PPV price or offer some two for one promotions and so forth.
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