Dish Sees 'Connectivity Company' Future With IoT, Connected Cars

While Stream TV -- Dish Network's foray into over-the-top video service -- was first in the pay-TV universe to look at market segmentation as a business model, Dish's interests longer term lie in being "a connectivity company ... through satellite or wireless," CEO Charlie Ergen said Wednesday during the company's Q1 earnings call. Executives were largely mum about the company's spectrum strategy, citing the quiet period of the upcoming incentive auction, including whether it plans to take part in the auction. But, Ergen said, "We think we're positioned to participate in all kinds of connectivity -- cars are just one of them." He said the company sees connectivity revenue opportunities in IoT.

Dish executives said Sling TV still hopes to add Disney and ESPN to its multistream service, from a deal unveiled earlier this month (see 1604130042); both are available on its single-stream service. Ergen said one holdup with Disney has been that the single-stream service allows variation by programmer on issues like pausing capabilities or dynamic ad insertion, but for multistream, Dish has one consistent standard. Sling TV CEO Roger Lynch he expects more live broadcasts to become available to OTT providers in general; Sling's multistream service includes Fox local affiliates and sports, and Disney has said it's launching an ABC affiliate service for distribution of content on TV Everywhere platforms and OTT providers (see 1604180040). Broadcasters "are trying to work through the [rights] issues" with affiliates, and that will take time, Lynch said.

Ergen said if there is no last-minute carriage agreement with Viacom, Dish is "prepared to move on as Suddenlink and others have done without the content." The companies' current carriage extension was to expire at midnight Wednesday. Ergen said he became more optimistic of signing a deal with Viacom over the weekend and earlier this week: "The tone on both sides has been more productive." He didn't discuss sticking points on the negotiations but said Dish's priorities have been avoiding "needless price increases" and not paying for content available elsewhere, such as via subscription video on demand services. Similar carriage talks with NBCUniversal are, meanwhile, "not really an issue," since the Comcast consent decree included rules that if there's no carriage agreement, talks go to arbitration and the content stays up during it, Ergen said.

“Consumers have spoken loudly and clearly," Viacom said in a statement. "Over the past 24 hours, hundreds of thousands of concerned subscribers have reached out to implore Dish to negotiate reasonable terms with Viacom for continued carriage of our networks. Based on year-to-date Nielsen data, our networks represent nearly one fifth of cable viewership on Dish, which gives Dish enormous incentive to renew our agreement. As a long-standing partner, we are hopeful that we can work together to reach a deal.”

Dish said it ended Q1 with just shy of 13.9 million pay-TV subscribers, down from 14 million one year earlier, with those numbers counting Sling TV. Ergen said the decline largely results from the company's ditching its $19.99 per month product to focus on more profitable customers with less churn. Throughout pay TV, he said, "There's a lot of people moving away from $19.99. It's misleading to a consumer -- there's not really a good $19.99 package." He also said Dish was a year into what would be a two-year process of shedding those unprofitable customers: "We still have some cleanup to do."

Dish -- a major critic of Charter Communications' proposed buys of Bright House Networks and Time Warner Cable (see 1603160019, 1602240030 and 1603110048) -- sees the same anticompetitive dangers likely posed by any cable company combination, said Dish General Counsel Stanton Dodge: "Every merger is unique ... but it's hard to envision scenarios where you don't have similar concerns."

For the quarter, Dish net pay-TV subscribers dropped by 23,000, vs. a 35,000 gain in Q1 2015, it said in a news release. It also said it added roughly 5,000 net broadband subscribers, bringing its broadband subscriber base close to 628,000. Dish is widely seen as "a 'do-nothing' stock until the auction concludes late fall," Macquarie Capital Analyst Amy Yong said in a note to investors. Dish shares closed Wednesday at $47.42, up 0.21 percent.