Ergen: Only Slight Impact from Viacom Spat


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.).