Ergen: Only Slight Impact from Viacom Spat

3/26/2004 5:25 AM Eastern

EchoStar Communications Corp. chairman Charlie Ergen said there would likely be a churn impact resulting from its recent battle with Viacom Inc., but he added that it wouldn’t be any worse than if he increased rates.

EchoStar, the No. 2 direct-broadcast satellite service provider in the country, dropped Viacom’s CBS broadcast network and several cable channels for two days earlier this month over a retransmission-consent dispute.

The two parties settled their disagreement March 11, with EchoStar agreeing to long-term deals for several Viacom cable networks.

On a conference call with analysts discussing fourth-quarter results, Ergen said the Viacom dispute will likely result in lost customers, but the impact shouldn’t be great. EchoStar also agreed to rebate customers between $1-$2 each for the lost services, which could have a minimal impact on average revenue per subscriber.

"Anytime you take CBS off the air, you will have some negative impact short-term," Ergen said on the call. "We gave $1 credit to everybody for their basic and $1 for CBS, so you have a reduction in ARPU [average revenue per unit]. You also have customer confusion and dissatisfaction because they can’t watch Survivor. That will have a short-term negative impact. I would say it’s along the same lines as when you raise prices."

Average monthly churn for the year was 1.57%, down slightly from 1.59% in 2002.

For the quarter, revenue increased 4% to $1.5 billion and net income was $3 million compared with a $716 million loss in the same period last year.

The fourth-quarter-2002 loss was mainly due to one-time charges for the breakup fee related to EchoStar’s failed merger with DirecTV Inc. parent Hughes Electronics Corp. (now DirecTV Group Inc.).

Want to read more stories like this?
Get our Free Newsletter Here!