EchoStar’s Revolving Door Spins Again
COO Neuman Resigns After Eight Months
By Linda Moss -- Multichannel News, 2/19/2006 7:00:00 PM
During an analysts’ call in November, Michael Neuman corrected his mercurial boss, EchoStar Communications Corp. chairman Charles Ergen, about when the company’s fourth-quarter results would be delivered.
Neuman, EchoStar’s president and chief operating officer, said it would be in “early March,” not “late February,’’ as Ergen had said. Either way, it turns out Neuman isn’t going to be around for the event.
Neuman, after just eight months on board, abruptly left the direct-broadcast satellite company last week. While his exit surprised some analysts, Ergen may have begun paving the way for Neuman’s departure — by bringing back a trusted lieutenant — less than a month after the November third-quarter call.
| EchoStar Presidents | |
|---|---|
| Who was in and out: | |
| source: Multichannel News research |
|
| 1994 to 1997 | Carl Vogel serves as EchoStar’s president and chief operating officer |
| January 1998 | John Reardon, a former MTV president, is named EchoStar’s president. |
| September 1998 | Reardon leaves |
| April 2000 | Michael Dugan, formerly president of EchoStar’s technology unit, is named EchoStar president and COO. |
| April 2004 | Dugan retires as EchoStar president and COO “for personal reasons,” but joins the company’s board. |
| May 2005 | Vogel is named to EchoStar’s board of directors. |
| June 2005 | Michael Neuman is hired as EchoStar president and COO and Vogel is appointed vice chairman. |
| November 2005 | Dugan is named EchoStar’s chief technology officer. |
| February 2006 | Neuman resigns as president and COO, with his duties assumed by Vogel and Dugan, the two former presidents and COOs. |
By most measures, it’s been a game of musical chairs in terms of who holds the No. 2 slot at EchoStar. Four presidents have moved in and out of the post in the past decade.
“There is a pretty high attrition rate there,” said Barbara Sullivan Roehrig, a Denver-based consultant and former EchoStar marketing executive. “An anonymous gentleman who was a prior president said it was the worst job of his career.”
The company wouldn’t comment on Neuman’s exit, and he couldn’t be reached for comment.
But the fact that EchoStar is a tough place to work — and that Ergen is a difficult taskmaster — is the industry’s worst-kept secret.
“Charlie is very, very smart, he’s incredibly high energy, but he’s a micro-manager,” Sullivan Roehrig said. “With anything from a bill stuffer to programming contracts, he’s just microscopically involved to a level that’s hard to fathom.”
EchoStar vice chairman Carl Vogel and chief technical officer Michael Dugan have assumed Neuman’s responsibilities. Both men had previously served as EchoStar president.
Vogel was president from 1994 to 1997. Dugan was president from 2000 to 2004, when he left the company, only to return last November.
Jimmy Schaeffler, senior analyst for The Carmel Group, said he met with Neuman Feb. 10, just three days before his resignation, and got no sense that the executive was about to leave.
“My jaw fell when I heard … that he was gone,” Schaeffler said.
Earlier this year, Neuman, who was hired in June, did a lengthy interview with The Denver Post. He gave no hint of any problems with his status at the company. He enthusiastically talked about the launch of PocketDish, a portable video recorder, which was one of his responsibilities, as well as his family’s adjustment to Denver.
The writing may have been on the wall for Neuman, though, when Ergen brought back Dugan in late November.
Dugan was hired as chief technology officer, less than a month after the analysts’ call. Dugan’s style is said to be very similar to Ergen’s: hard-nosed and low profile, in keeping with EchoStar’s penchant for being secretive and tight-lipped.
When he returned to EchoStar, Dugan began essentially usurping some of Neuman’s authority, according to one executive familiar with the events at the company.
“He [Dugan] effectively segued into presidential responsibilities and people inside saw him as president,” the executive said. “It was a clash of cultures, Canadian versus American, and clash of personality styles, Neuman versus Dugan.”
Before joining EchoStar, Neuman was president of Bell Mobility, the wireless subsidiary of Bell Canada Enterprises, and had previously been president of Bell ExpressVu Satellite Television, the Canadian DBS operator.
Neuman was somewhat of a laid-back Canadian who was well-liked and respected by EchoStar employees, according to executives and managers familiar with his tenure at the company. He was not prone to angry outbursts or micro-managing.
While not shedding light on Neuman’s relationship with Ergen, charges about EchoStar’s workplace environment were made in a sex discrimination suit filed last year by one of its former top executives, Soraya Hesabi-Cartwright. The lawsuit alleged that Ergen would subject Hesabi-Cartwright to “violent yelling fits” and at times he “exploded in rage.”
At the time, one industry executive said a common joke was that the suit wouldn’t succeed because Ergen didn’t discriminate against any employee — he was difficult with everyone, regardless of sex, race or creed.
EchoStar denied the allegations in Hesabi-Cartwright’s suit, saying she had been given promotions, as well as sizable salary increases and stock options. She had garnered $13.5 million compensation in 2003. The lawsuit was settled out of court last summer.
Ergen is not known for delegating responsibilities to other executives or giving them any real decision-making power, several people familiar with how the company operates said.
“It’s fairly crippling for a senior executive,” Sullivan Roehrig said.
Craig Moffett, a Sanford C. Bernstein & Co. analyst, said that Neuman’s exit “throws cold water” on the idea he was brought in provide management continuity in the event EchoStar was sold. After SBC Communications Inc. acquired AT&T Corp., a smattering of press reports indicated the new AT&T Inc. that resulted from the merger might want to buy the satellite television service.
Ultimately, EchoStar has “got a history of hiring outsiders who have a tough time cracking the inner circle and [who] figure out, somewhere along the way, that there’s just no role for them,” Moffett said.
Kent Gibbons and Mike Farrell contributed to this story.
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