Ergen Downplays DirecTV’s 100 HD Channels

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EchoStar Communications CEO Charlie Ergen Friday touted quality over quantity when it comes to HDTV content.

During a second-quarter conference call, analysts asked Ergen about DirecTV’s coming HDTV expansion, which will translate to 70 channels by the end of the third quarter and 100 HD channels by the end of the year.

Ergen said he didn’t think it’s so important to have 70 or even 100 HD channels, although he noted that Dish Network has 50, so much as having something that people want to watch.

“There’s not 100 channels of HD that I would watch,” he said, while at one point also conceding that 100 HD offerings “is a good round number to get people excited.”  

In essence, Ergen was being asked to reply to remarks that DirecTV CEO Chase Carey made Thursday to analysts about his company’s expanded HDTV offering.

“More is more … I think there’s a magic to having a unique volume,” Carey said. “I think there is a critical mass that is important.”

EchoStar also disclosed Friday that it had won a second victory this week in terms of a pending patent-infringement case, this one involving a suit filed by software provider Forgent Networks. On Thursday a Texas judge denied a motion by Forgent for a new trial and awarded EchoStar $90,000 in court costs, reaffirming a jury verdict handed down in May. That verdict deemed invalid a patent Forgent accused EchoStar of violating.

DirecTV and several cable companies settled with Forgent for $28 million before trial, according to EchoStar.

In a 10-Q filed this week, EchoStar also reported favorable news related to a patent-infringement claims lodged against it by TiVo.

Back in April 2006 a Texas jury found that some of EchoStar’s digital video recorders had infringed on a patent held by TiVo. EchoStar, parent of Dish Network, has set aside $94 million to cover that judgment and interest. An appeals court stayed that verdict in October, permitting EchoStar to continue to provide DVR service while it appeals the jury verdict.

Now, EchoStar said that on July 30 the Patent and Trademark Office issued a “final office action” that “rejected as invalid all of the hardware claims that TiVo asserted against us at trial and which the jury found we had infringed.”

According to the securities filing, the patent office didn’t reject the infringement claims, related to hardware, against EchoStar that TiVo had made at trial. TiVo can appeal the “final action” by the patent office, according to EchoStar.

News of the patent-infringement cases emerged as EchoStar was reporting its second-quarter earnings. The satellite provider gained 170,000 subscribers in the second quarter, down from 195,000 subscribers in the year-ago quarter. EchoStar now has 13.9 million subscribers, moving ahead of Time Warner Cable to become the third largest pay-TV provider, behind Comcast and DirecTV.

In a conference call with analysts, Ergen cited the more competitive environment -- with cable’s successful triple play, the telco’s video plays, and the housing slowdown – as helping to put a crunch on subscriber gains.

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