Gambler Ergen Bets Big

Charlie Ergen, one of the last great entrepreneurs still standing in the multichannel-TV business, has certainly seen more than enough to shrug off a week like last one with all its gyrations.

Satellite launched too low to be useful? OK, that’s bad and could either shorten the life of the bird or, worse, hamper his Dish Network’s attempts to be competitive with DirecTV on the high-definition programming front. That was Monday, and Dish’s stock hit its weekly low at around 1 p.m. at about $25.75.

Dish said the setback would not hamper its plans for high-definition expansion, but analysts weren’t so sanguine, at least at first. “Dish Network had made it clear that HD featured prominently in their own future plans, and that they did not plan to cede 'video superiority’ to anyone,” Citibank analyst Jason Bazinet said in a note to clients Monday. “Given the long lead times involved in contracting for, building, and launching a satellite, however, it could take years for Dish Network to fully recover.”

But Dish CEO Ergen’s the guy who, in 1995, essentially bet the farm on launching his first direct-broadcast satellite into orbit on a Chinese rocket — successfully but fortunately, as another Long March rocket several weeks later crashed and killed six people. EchoStar’s second satellite went up on Arianespace.

Then there’s TiVo’s thus far successful claim that Dish infringed on a TiVo patent for recording one show while watching another. A federal appeals court in January upheld TiVo’s initial victory and a $94 million damages claim against Dish. Dish last week said it would appeal that decision, claiming a TiVo witness gave contradictory testimony.

In court, you win some and lose some. Ergen, an ace card player by reputation, has had big decisions go his way. In 1997 he sued Rupert Murdoch’s News Corp. for backing out of a merger deal the companies had struck. Murdoch settled and Ergen walked away with key satellite assets, including an orbital slot, yielding some EchoStar stock.

He’s lost other bets: notably, that the government would approve a Dish buyout of DirecTV. It didn’t, costing Dish a $600 million deal-breakup fee.

Would you expect Ergen to meekly roll over when John Madden and Charles Barkley threaten to sue over Frank Caliendo’s impersonation of them in Dish Network ads (the brainchild of Dish marketer Jessica Insalaco) that tout Dish DVR as “better than TiVo?”

Heck no, and you’d be right. Dish has gone to court, asking a judge to declare the ads legitimate First Amendment-protected parodies.

Four years ago this month, Ergen took on mighty Viacom over deal demands that tied payments to retransmit CBS broadcast signals with carriage of such MTV Networks channels as Nick Toons. (At the time CBS and MTVN were all part of Viacom.) After two days without CBS, MTV, Nickelodeon and other Viacom channels on Dish, Ergen settled and Nick Toons joined the lineup. Ergen had little leverage, really, but was able to say he’d locked in CBS long-term, including HD rights.

By Thursday — the same day a USA Today headline proclaimed “Dish Network has a lot of problems on its plate” — it emerged that Dish was a winner in the federal auction of wireless spectrum in the 700-Megahertz range. EchoStar won 168 licenses in the E block, spectrum covering most of the country, for $711 million.

Dish could possibly use it for wireless data, which would help compete with three-service-providing cable operators. Bazinet thinks that because Dish isn’t buying two-way spectrum, mobile-TV applications are more likely.

Bazinet also says the spectrum spend makes it less likely Dish would, as has been rumored for months, sell out to AT&T.

That might be a big gamble by Ergen, if he truly has lessened the chance of selling out in the face of strong competition from DirecTV at a time when the economic slowdown is hitting Dish harder than its bigger satellite rival.

Still, it was an upbeat way for him to end the week. Dish was trading at $28.62 at Thursday’s close, more than $3 ahead of the Monday trough.

As we wrote in 2001, citing a Wall Street analyst, “Betting against [Ergen] has historically not been a profitable exercise.”

We’ll see if the cards played last week change that dynamic any.