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Dish Chairman: Programmers Devalue Content via SVOD

7 May, 2012 By: Erik Gruenwedel

Charlie Ergen

Pay-TV channels making available original programming on subscription video-on-demand services such as Netflix are undermining their business platforms, including mandating higher carriage fees going forward from cable and satellite TV operators, said Dish chairman Charlie Ergen.

Speaking May 7 to analysts to discuss Dish Network fiscal results, Ergen’s comments come after Dish said it is dropping AMC Networks — which has programming that includes “Mad Men,” “The Walking Dead” and “Breaking Bad,” among others — due to escalating renewal costs. AMC also includes IFC, WEtv and Sundance.

The outspoken chairman said Dish, like most pay-TV channel operators, wants reduce programming costs, not increase them. Ergen said internal data showed that Dish’s subscriber base is largely indifferent to AMC programming, with the exception of the aforementioned programs.

Indeed, all back seasons of “Mad Men” are available exclusively on Netflix, as are prior episodes of “Breaking Bad.” It has been widely speculated that streaming availability of the entire catalog of “Mad Men” episodes on Netflix for $7.99 monthly helped spike record viewer interest when the Lionsgate-produced series returned followed an extended hiatus.

“Those particular channels are also available to our customers through a variety of other sources like iTunes, Amazon and Netflix and so forth," Ergen said. "Programmers have ... devalued their programming content by making it available in many multiple outlets. It's been devalued because you can get it multiple ways and customers are asking for more flexibility or have more flexibility to get the programming, so it's not quite the same [as] if something was exclusive.”

AMC claims Dish dropped its programming due to an ongoing legal dispute over its subsidiary Voom HD. The latter had an agreement with prior Dish owner EchoStar, which mandated a minimum $100 million annual investment in programming and infrastructure. Dish in 2008 terminated the deal, whereby Voom sued the satellite operator.

“Within days of the denial of Dish’s final avenue of pre-trial appeal, Dish informed AMC Networks of its intention to drop its award-winning networks,” AMC said in a statement.

Ergen said it was a good opportunity to make a good business judgment call.

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