Linda Moss

Charlie Is No. 3, But He Tries Harder
August 10, 2007

It looks official: The two DBS upstarts are now the nation’s second and third largest pay-TV providers. DirecTV for some time now has been No. 2, behind mighty Comcast. But on Friday, EchoStar noted in its second-quarter earnings release that it had become the “third largest pay-TV provider.”

My reporter’s “b------t detector,” as B&C’s John Higgins used to call it, was tripped immediately. I checked with Mike Farrell, our senior finance editor extraordinaire, to find it if EchoStar had really pulled ahead of Time Warner Cable in terms of distribution. The verdict was yes. EchoStar now has 13.585 million subscribers, a nose ahead of Time Warner, with its 13.39 million. DirecTV ended the second quarter with 16.316 million homes. Comcast is the top dog, with 24.1million customers.

There’s been plenty of smug talk from cable operators about the success of their triple-play bundle, and about DBS being hamstrung by not having a broadband play. And the scuttlebutt was that Rupert Murdoch was dumping his DirecTV stake, putting it in Liberty Media’s lap, because he lost faith in satellite.

But it looks like the bird business has made remarkable progress in the past few years, to now have won those No. 2 and No. 3 slots, in terms of carriage.

Whether DBS will take a nosedive in the next few years, as the competitive landscape gets even more difficult, remains to be seen. EchoStar’s Dish Network gained 170,000 subscribers in the second quarter, which was down from 195,000 a year ago. DirecTV netted 128,000 subscribers, up just a hair from 125,000 last second quarter.

Charlie Ergen, EchoStar’s chairman and CEO, was congratulated by analysts on Friday’s second-quarter conference call. Listening to the inscrutable Ergen is always enlightening, if not amusing. He doesn’t sound like the devil that some make him out to be. But then I’ve never sat across from him at a negotiating table.

Earlier this week, ad-rep firm Turner Media Group, also known as The Media Group, essentially painted EchoStar and Ergen as conspirators. TMG alleged that EchoStar forced it to file for Chapter 11 protection, a charge that the satellite provider denied.

Ergen, and ergo EchoStar, move in mysterious ways. Earlier this year, the New York Post reported that EchoStar has made a $2.13 billion offer for ION Media Networks, a collection of TV stations and a broadcast network. Then EchoStar and Liberty Media made a failed bid for Intelsat, the world’s largest fixed-satellite provider. And most recently, The Wall Street Journal reported that EchoStar has been approached by MySpace co-founder Brad Greenspan about being part of a bid for Dow Jones & Co., to compete with Murdoch’s offer, which eventually won.  

Ergen was asked about those three odd moves during Friday’s call.

“Honestly, we don’t have any plans to be in the newspaper business, but I imagine we’re going to get thrown around as a bidder for anything that News Corp. bids for,” Ergen said. “We have a hard enough time knowing the business we’re in today, versus a business we don’t know much about.”

As for bids for Intelsat and EchoStar, Ergen said, “Intelsat is a business we know about. It’s a distribution business, it’s a satellite business. ION was a distribution business that we know something about. So anything that fits the category of recurring subscription from a customer, or technology, or distribution, or satellite, or wireless, those are things that make could make some sense for us.”

Anyway, even though you don’t like the press, mazel tov on being No. 3, Charlie. 

Posted by Linda Moss on August 10, 2007 | Comments (0)