Dishnetwork Might Get Sold Soon, or Merged

[hdtvtechno]

Special Report: 2005 Predictions

EchoStar Will Seek a Partner
The gutsy satcaster needs help to keep pace with top
dog DIRECTV.
By Phillip Swann

Editor's Note: Phillip Swann, president of TVPredictions.com, is
making 40 predictions for new TV technology in 2005. A new
prediction will be published every weekday at TV Predictions
for the rest of 2004, except for Thanksgiving and Christmas. Click
Predictions to see a list of his 2005 forecasts to date.

Washington, D.C. (December 1) -- I predict that EchoStar, the nation's
second largest satellite TV service, will either sell the company or enter into
a major partnership in 2005. In fact, you can put this one in the bank.

EchoStar, which is run by maverick Charlie Ergen, has been an inspiring
success story over the last several years. Despite being outspent by
DIRECTV, EchoStar's Dish Network has piled up more than 10 million
subscribers. And, in its third quarter report, released last month, the
company said that profits had tripled.

So, why would EchoStar have to sell the company or partner with another
organization with deeper pockets?

Two words: Rupert Murdoch.

Murdoch, whose News Corp. now owns DIRECTV, the nation's top satcaster,
appears willing to spend an unlimited amount of money to acquire new
subscribers. DIRECTV recently announced that it will launch four new
satellites over the next three years, enabling it to offer up to 150 national
High-Definition TV channels by 2007.

Despite Ergen's pluck, EchoStar can no longer compete against a company
with Murdoch's money, not to mention his vast holdings, which include the
Fox Network and Fox Studios. EchoStar will soon be at risk of losing
subscribers to DIRECTV, rather than gaining new ones.

Consequently, I believe that Ergen will look for the best possible deal. He
may not sell the company outright, but he will at least find a well-financed
partner who shares his vision and/or would like to keep Murdoch and News
Corp. from getting even bigger. Candidates would include such companies
as Disney, Sony and Viacom -- the usual suspects when media mergers are
contemplated. Cablevision, which owns the Voom satellite service (and its
coveted orbital slots), is another interesting possibility.

The merger (partnership) will be complicated for many reasons, particularly
Ergen's reputation for being difficult in negotiations. (EchoStar's proposed
merger with News Corp. was reportedly scrapped several years ago after a
shouting match between Ergen and a top News executive.) However, I predict
that Ergen will keep his eye on the prize and make the deal.

Phillip Swann is President & Publisher of TVPredictions.com. If you
would like to contact Mr. Swann, he can be reached at 703-505-3064
or at Swann@TVPredictions.com. And come back every weekday
for a new prediction for 2005!

Click News to see more of today's developments in new TV technology.

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http://www.tvpredictions.com/echostar120104.html

 

[bcshields]

The company is too big for it's britches to remain independant, in my opinion. It needs an established corporation to come in and straighten things out. Although I think Voom/Dish merger would be great, I would be more excited with another major broadcaster coming in and merging. That would create a more organized (eventually) corporation which would have more bargaining clout against a media giant like Murdoch/Fox/Direct TV.

I don't think acquiring a failing startup satellite company (Voom) would do much in the clout department. It's more like a stop-gap measure. Band-aid instead of a cure. Yeah, sure, orbital slots, hdtv, and happy subs, sure. All it'll do in the long run is catch Dish up to Direct TV, and even then... Direct has the corporate negotiating advantage.

 

[SimpleSimon]

I don't think the two things are mutually exclusive.

Partner up with a media giant - giving you deep pockets, AND merge E* & V*.

 

[Pepper]

I hate to imagine Echostar as a subsidiary of one of the megabureaucracies. You think customer support is bad now, just wait till it's on a par with BellSouth, HP or IBM (apologies in advance if any of you work in the customer support deptartments for those companies).

At least with Charlie in charge and on the chat every month or so, we have the "illusion" of a company that's easy for the customer to deal with.

 

[SimpleSimon]

Good point.

I used to work for a major international software company as a Level 3 support rep. The international support center in Denver won the DataPro award 3 years running. Then the germans bought us and told us Ve Ver Doingk It All Vrong. This from an outfit where you couldn't even call in with a system down problem - you had to snail mail it (public email didn't yet exist). Needless to say, the company went downhill fast.

 

[Stryf3]

Your point is well taken with one exception, IBM's customer service(call center) is widely held as the best in any industry.

 

[Cyclone]

As someone who called IBM's AIX and RS/6000 hardware support, I can confirm that their techs are pretty good. But if there is a clerical error about your configuration/billing in their system, watch out! That can be a nightmare to resolve.

IBM: We fixed the error in our records, you are now clear to call in trouble tickets.
Next call: I'm having problems with my IBM system.
IBM: We show that you do not have support with us?
But I called just yesterday and you all said that this was resovled. 5 hrs later
IBM: Ok, my bad, you are now clear to call in trouble tickets.
Next call: We show that you do not have support with us?
......

 

[TuxCoder]

Cyclone, that's why now you're the king of the VAX? You prefer DEC, I mean Compaq, er.. uh, HP's support of those systems these days? Care to give me the number of a call center willing to support my PDP-11/34a and PDP-11/73 at home?

 

[Poke]

Most likely E* will buy out someone.

 

[carload]

Sorry, but I just don't get it. Why would Charlie (the majority shareholder) sell?

After years of losses, he's making money AND renegotiating his debt to lower rates.

He's building market share, launching new satellites, and planning to switch everything to MPEG4.

With the final signing (one of these days) of the satellite bill, he's got legislative certainty for years on terms that aren't as awful as he wants us to believe.

IMHO, he'll sell when he's tired of it all, no sooner, no later. Lately, I haven't seen any signs of that.

 

[SatinKzo]

Your point is well taken with one exception, IBM's customer service(call center) is widely held as the best in any industry.

Well, the IBM call center is ok, as long as you get some from the US/Canada. It is such a PITA when we get the overseas center and they don't know what an AS400 is or have any clue on our 6400 series printers. They constantly call the AS400 and iSeries system and end up sending the wrong tech or parts.

 

[roadrhino]

I may be way off base here, but because DirecTV appears to be aiming to market their own DVR in Spring 2005 instead of TiVo. I have trouble believing that their own version will be as appealing as the TiVo. Maybe if they don't charge anything for it, it will be okay, but I suspect that any consumer who isn't given the option of TiVo who formerly would have been given that option will be frustrated and more likely to choose E*.

Roadrhino

 

[StevenD]

Sorry, but I just don't get it. Why would Charlie (the majority shareholder) sell?

Sorry, but Charlie is nowhere near being the majority shareholder anymore:

http://finance.yahoo.com/q/mh?s=DISH

 

[Cyclone]

Cyclone, that's why now you're the king of the VAX? You prefer DEC, I mean Compaq, er.. uh, HP's support of those systems these days?

actually, the King of the Vax was a joke around here. We had a guy who did Vax Admin training. Well one day he was giving his class and for some reason, he had to telnet over the Vax that was used by the lab. Well, he forgot where he was later on in his class and just before he rebooted the system (he thought he was in his Training Vax and not the Lab's Vax), he typed a "display to all logged in users" text message that said "I am King of the Vax!". He then rebooted the Lab's vax system.

Well about 20 Lab personell were working away on their daily grind, when all of a sudden they get this message accrosss their screens "I am King of the Vax" and their system appruptly reboots.

hehehe.

We miss that guy around here.

 

[Cyclone]

Sorry, but Charlie is nowhere near being the majority shareholder anymore:

http://finance.yahoo.com/q/mh?s=DISH

They should call it the James DeFranco Chat.

At $154,110,708.66 worth of E* stock he'd the man!

 

[RBBrittain]

The last I checked E*'s FCC figures, Charlie and his wife indirectly control just shy of half of E*, and well over half in voting control thanks to classes of shares. I think the SEC counts "indirect" ownership differently than the FCC does.

My opinion: The only possible buyer is SBC, in order to secure a programming source for their FTTC/FTTH system. It doesn't sound as far-fetched as it did when SBC tried to buy D* and got shot down by Wall Street analysts; SBC's need for video expertise (which Charlie can provide) is now very clear. It also makes it far easier to transition SBC Dish customers to FTTC/FTTH.

 

[rad]

The last I checked E*'s FCC figures, Charlie and his wife indirectly control just shy of half of E*, and well over half in voting control thanks to classes of shares. I think the SEC counts "indirect" ownership differently than the FCC does.

My opinion: The only possible buyer is SBC, in order to secure a programming source for their FTTC/FTTH system. It doesn't sound as far-fetched as it did when SBC tried to buy D* and got shot down by Wall Street analysts; SBC's need for video expertise (which Charlie can provide) is now very clear. It also makes it far easier to transition SBC Dish customers to FTTC/FTTH.

I don't see why SBC would purchase E* 'to secure a programming source'. E* doesn't produce any programming, they contract with others. If that's all SBC wanted they could go to the different companies and get their own contracts. As for their video expertise (that's a laugh) SBC's already contracted with Microsoft to work on delivery systems.

 

[RBBrittain]

I don't see why SBC would purchase E* 'to secure a programming source'. E* doesn't produce any programming, they contract with others. If that's all SBC wanted they could go to the different companies and get their own contracts. As for their video expertise (that's a laugh) SBC's already contracted with Microsoft to work on delivery systems.

E* doesn't produce programming (unless Charlie Chats count???), but they DO have experience in negotiating with programmers that SBC doesn't. Using an existing provider may give SBC leverage in negotiating with programmers; it's established under Federal law that most cable networks cannot deny their programming to satellite carriers, but it's unclear yet if that applies to ILEC FTTC/FTTH offerings. Otherwise, SBC would be a "newbie" and could very well end up buying the proverbial Brooklyn Bridge from some cable networks--if they'll even deal with SBC at all. (The Federal law I mentioned went on the books back in 1992 because some cable networks refused to even talk to C-band or early DBS distributors, largely because of their ties with cable systems.)

As far as SBC/Microsoft, that's mainly a hardware and software deal. Any "programming" involved in that is more computer programming than TV programming. About the only thing Microsoft could offer the Viacoms and Time Warners of the world that SBC can't is a deal on Windows and Office licenses. (TW might not even want to talk with Microsoft because of its role in MSNBC.) Otherwise, Microsoft is just as green in that field as SBC is.

 

[rad]

E* doesn't produce programming, but they DO have experience in negotiating with programmers that SBC doesn't. Using an existing provider may give SBC leverage in negotiating with programmers; it's established under Federal law that most cable networks cannot deny their programming to satellite carriers, but it's unclear yet if that applies to ILEC FTTC/FTTH offerings. Otherwise, SBC would be a "newbie" and could very well end up buying the proverbial Brooklyn Bridge from some cable networks--if they'll even deal with SBC at all. (The Federal law I mentioned went on the books back in 1992 because some cable networks refused to even talk to C-band or DBS distributors, largely because of their ties with cable providers.)

As far as SBC/Microsoft, that's mainly a hardware and software deal. Any "programming" involved in that is more computer programming than TV programming. About the only thing Microsoft could offer the Viacoms and Time Warners of the world that SBC can't is a deal on Windows and Office licenses. Otherwise, Microsoft is just as green in that field as SBC is.

I would think it would be a lot cheaper to hire a lawyer to negotiate then to buy a company

And if you reread my post I said that SBC had microsoft for their delivery system, didn't say anything about programming.

 

[RBBrittain]

I would think it would be a lot cheaper to hire a lawyer to negotiate then to buy a company

And if you reread my post I said that SBC had microsoft for their delivery system, didn't say anything about programming.

But who do you think tells the lawyers what to negotiate for? Ed Whitacre (SBC's CEO) might not know unless he had someone like Charlie on board to tell him what to ask for, and not to ask for (see the Viacom debacle).

Besides, it's still not certain the cable networks would talk with any SBC lawyer unless Federal law says they have to, as is the case with E*. The Baby Bells are cable's biggest competitor in broadband; why would cable execs want to help out the competition? That's just the kind of conflict of interest that inspired the 1992 Cable Act's protections for satellite.

And I did NOT misread your post. My point was, a Microsoft delivery system would NOT help SBC in obtaining programming rights; owning E* would.