Feb 21 2014, 2:51pm CST | by Forbes
Optimism is supposedly one of the qualities people look for in politicians and business leaders. Apparently no one told Charlie Ergen, who seemed less concerned with soothing investors than with managing their expectations on Dish Network’s fourth-quarter earnings call.
It was a great quarter for the satellite broadcaster thanks mostly to an uptick in subscribers. Revenue was up 5% to $13.9 billion and profits jumped 38%.
But Ergen sounded far from triumphal after a rocky few months that saw the defeat of a $20 billion bid for Sprint, the withdrawal of another (legally complicated) bid for LightSquared’s spectrum and, most recently, the proposed merger of Comcast and Time Warner Cable.
The last development is troubling for Dish, and for every other company in its orbit, said Ergen.
“There’s nothing I can see that is positive about it for anyone in the video content, distribution or broadband business,” he said. “If you’re in the video content or distribution or broadband business and your name isn’t Comcast or Time Warner, the news is not positive.”
But, asked one analyst, what about the claim by the merging companies that the deal won’t have much effect on the landscape, as the two don’t compete in many markets (and plan to divest assets in the areas where they do)?
Ergen dismissed that, noting that all distribution companies are negotiating with the same content owners. Anything that gives one player more leverage to wrangle lower carriage fees will result in higher prices for those who lack such leverage, he predicted.
“If you put United Airlines together with Southwest, it’s going to put pressure on American, or the bus, or the trains,” he said. “We will be facing, realistically, a much more challenging environment if that merger is approved.”
The only silver lining, perhaps, is it might make it easier to win federal approval for a merger of Dish and DirecTV, a scenario Ergen has said he thinks is potential strategic option. “Obviously if you can put the No. 1 and 4 providers together, it would be hard to see why you couldn’t put the No. 2 and 3 providers together,” he said.
Ergen has long made it clear that Dish needs to do something big to avoid becoming a victim of the long-term shift in video consumption from cable and satellite to broadband.
“At some point in time the video business as we know it will change dramatically enough that the current business will go from a mature business to a declining business,” he said. “What chairman do you know goes on a conference call and says ‘We’re in a mature business’? They talk about the future and say we’re gonna do this and that, but they don’t normally say ‘We’re in a declining business.’ And we’ve been saying that for five years.
I would’ve thought we would be in a decline mode already,” he added. “Obviously it hasn’t declined yet, but its’ going to happen.”
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