Ergen Explains Dish Network HD Expansion and Limited Price ‘Freeze’

EchoStar Chief Says Dish Will Launch One Satellite Per Quarter, Expanding National HDTV Channel Count to 100

By Linda Moss -- Multichannel News, 1/7/2008 3:18:00 PM

LAS VEGAS -- Dish Network CEO Charlie Ergen Monday explained his company’s HDTV ramp-up and clarified what turns about to be a very limited price “freeze” by the satellite TV provider.

In fact, one Wall Street analyst claimed that Dish Network is actually raising prices for most of its offerings, by an average of 8%.

During a press conference at the Consumer Electronics Show, Ergen said that Dish Network plans to launch a satellite each quarter this year, with three of those for domestic use to help facilitate an expansion to 100 national HDTV channels from 76 now.

“It’s really one per quarter,” Ergen said. “That allows us to go to those 100 channels of HD in those hundred cities, assuming there’s 100 channels to broadcast, which we think there will be by the end of the year.”

Three of the birds that will debut this year will be for U.S. use, while the fourth will service China, Ergen said.

Earlier in the day, Dish Network had also announced that it was freezing the price for its “most popular programming packages, including the DishDVR Advantage.” That package, at $39.99 or $49.99 depending on the programming selected, will stay the same price until February 2009.

As for the freeze, Ergen said, “We may be wrong on this, but it just makes a lot of sense to give a customer a great value every day and they know where they stand. Imagine if your electricity bill was the same every month, instead of going up and down.”

But Ergen himself said there were prices increases for other offerings, such as Dish’s America’s Top 100 and America’s Top 200 package, a point that Sanford C. Bernstein analyst Craig Moffett – who was at the press conference -- stressed in a note Monday.

The freeze “only applies to a small portion of their base that subscribes to a single specific package, DishDVR Advantage,” Moffett wrote.

“The company intends to raise prices in almost every other tier in 2008,” he said.

Dish Network is raising prices for its America’s Top 100 package by 15%, and for America’s Top 250 by about 3.7%, according to Moffett. Overall, the prices increases average out to about 8%, he wrote.

Moffett also pointed out that Dish Network had “sharply scaled back its promotional stance.”

During the press conference, Ergen said, “I personally don’t like the discounting side of the business … think we’re trying to simplify business … I think we got away from that a little bit with some of the crazy promotions we did.”

Promotions confuse and annoy customers, prompting calls to Dish Network, Ergen said.

When asked about Dish Network’s intent in planning to participate in the 700 MhZ spectrum auction, Ergen said, “We’ll see what people are doing in the auction and see whether it makes sense for us to participate or not or what level we would participate.”

EchoStar stock closed at $31.98 Monday, down $1.50 per share, or 4.48%.