EchoStar’s Ergen Admits Hawking Set-Tops to Cable Ops Is Tough Sell

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Dish Network CEO Charles Ergen Monday told analysts that cable operators have proven wary about buying set-tops from his spin-off company, EchoStar.

Ergen, who is also EchoStar’s CEO, made his remarks during a third-quarter conference call for his set-top and fixed-satellite spin-off company. EchoStar became a separate publicly traded company in January, totally apart from the video satellite service Dish Network.

EchoStar sells set-tops to Dish Network and a Canadian cable company, but earlier this year also made a push to market the boxes to Dish Network’s rivals, cable companies.

But so far EchoStar hasn’t gotten any traction lining up U.S. cable customers.

“I think it’s gone along about as expected,” Ergen said. “I think that domestically, in the United States, the relationship with Dish in terms of my ownership of both (dish Network and EchoStar) makes it difficult for a competitor to say they want to buy a product.”

He maintained that EchoStar has the best DVR in the market, and that the company also benefits by having access to place-shifting technology from Sling Media, an acquisition that is now part of EchoStar.

“People will have to think non-emotionally at some point,” Ergen said, referring to potential buyers for EchoStar set-tops. “Maybe they will. Maybe they won’t…There also have realize that there’s got to be some element of trust, that they know they’re going to be treated fairly because obviously, EchoStar is a separate company (from Dish Network). Internationally, I think we have a much better chance to be successful, because those issues don’t come into play.”

During Dish Network’s third-quarter conference call, also on Monday, Ergen said that although SlingBox’s place-shifting technology has been sold as a product, “We think it’s a feature,” a feature that should be incorporated into a set-top. But it’s not easy to integrate the SlingBox technology into a set-top, according to Ergen.

EchoStar has been selling the SlingModem, a modem that does have the place-shifting feature. By connecting the SlingModem to a coaxial cable input or set-top, cable customers can place-shift TV programming to Internet-connected devices—like personal computers or mobile devices—and watch it. 

In the third quarter, EchoStar posted a net loss of $308 million in the third quarter, compared with net loss of $7 million a year ago, officials said Monday.

“The $301 million increase in net loss primarily related to unrealized losses and impairments on marketable and non-marketable securities,” EchoStar said in a press release. “Basic loss per share was $3.43 for the quarter ended Sept. 30, 2008, compared with a basic loss per share of seven cents during the corresponding period in 2007.

EchoStar posted total revenue of $616 million in the third quarter, a 52.4% increase compared with $404 million for the year-ago period.

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