Ergen Says He'd Dump CBS

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Charlie Ergen and Sumner Redstone are eyeball to eyeball, but it is unclear who might blink first.

Ergen, the chairman and CEO of Dish Network parent EchoStar Communications Corp., last week said he's prepared to drop CBS stations from his direct-broadcast satellite service if the two can't reach amicable carriage terms by midnight on March 8.

EchoStar and CBS parent Viacom Inc. have been negotiating the carriage of 15 CBS stations and about 20 cable networks, but Ergen said the two have been far apart.

EchoStar filed an antitrust lawsuit against Viacom in federal court in Oakland, Calif., which succeeded in ensuring EchoStar did not lose access to the Feb. 1 Super Bowl telecast on CBS.

Ergen's opposite number is Viacom chairman and CEO Sumner Redstone, who is just as crafty as Ergen and equally willing to use antitrust litigation as a negotiating tool.

In remarks to a Progress and Freedom Foundation audience that included at least one Viacom lobbyist, Ergen accused Viacom of demanding 40% price hikes and refusing to release CBS unless EchoStar carried at least six Viacom cable networks that EchoStar doesn't want.

"I am not feeling really good about them right now," Ergen said. "In the last three years, we have given Viacom more customers than the entire cable industry and DirecTV combined. Why are our customers paying 15% to 20% premiums? I don't understand it."

A Viacom spokeswoman did not return a reporter's phone call Friday.

Federal law allows Viacom to seek compensation from pay-TV distributors for carriage of its CBS stations, but broadcasters are required to bargain in good faith under rules enforced by the FCC.

Since 1992, when TV stations first won the right to withhold retransmission consent, broadcasters have usually traded access to off-air signals not for cash but for paid carriage of their cable networks, creating a broadcast-cable programming bundle offered on an all-or-nothing basis.

Without retransmission consent, EchoStar might not carry Viacom's CBS stations because doing so would violate copyright law.

In the past, similar disputes have usually played out in the media with the cable or satellite company ending up on the losing side of the public relations battle.

"The only way they are coming down is if they don't extend our retransmission," Ergen said. "If they don't extend our retransmission, we have no choice, no choice legally, but to take it down."

Many cable company operators, particularly small MSOs, have complained for years that the Big Four networks have used retransmission consent to force carriage of untested and unwanted cable networks, leading to higher cable rates and less programming diversity.

Ergen said he was not interested in Viacom's Noggin or GAS Nickelodeon Games and Sports] channels.

"I have five kids and my kids aren't watching Noggin. My kids aren't watching a channel called GAS. It sounds like something you have in a Mexican restaurant. I don't even know what it is," Ergen said.

EchoStar's suit alleges that the tactic of granting access to CBS stations only upon carriage of numerous Viacom cable networks violates antitrust prohibitions on the illegal tying of products.

"We think the retransmission law that was passed in [Satellite Home Viewer Improvement Act of 1999] is being abused," Ergen said. "With regard to Viacom, they have been the biggest abusers of that privilege."

In other comments:

Ergen said EchoStar wanted a new law that would allow EchoStar to provide out-of-market HDTV feeds of ABC, CBS, NBC and Fox to consumers that can't get the same programming from their local affiliates.

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