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Dish Upping Focus on Streaming 'Blockbuster' Content

8 Nov, 2011 By: Erik Gruenwedel

No. 2 satellite TV operator Dish Network Corp. is focusing on a Web-based platform that could theoretically compete with its current multivideo program distribution (MVPD) business model.The move underscores the maverick approach of founder and chairman Charlie Ergen.

Specifically, Dish is looking to bow an Internet-based movie streaming service under the Blockbuster brand that would incorporate major studio/network content and add another layer of competition to Netflix, Hulu Plus and Amazon Plus, among others.

Ergen, who last year brought in Joe Clayton from Sirius Satellite Radio to run Dish’s day-to-day operations as CEO, has gained a reputation talking off the cuff and following it up with action.

In 2010, he spearheaded the acquisition of bankrupt packaged-media rental icon Blockbuster for less than its salvage cost — a move that helped drive 12% revenue growth for Dish in the most recent fiscal quarter.

In a Nov. 7 call with analysts, Ergen said the Blockbuster brand helps Dish separate itself from a competitive landscape that he believes offers ubiquitous content.

“Everybody sells the same thing, everybody’s [bundled subscription] packages are generally the same,” Ergen said.

The executive said that sameness, coupled with the ongoing economic troubles, is what has prompted some subscribers by the thousands to ditch MVPDs in favor of lower-cost subscription-based video-on-demand platforms, such as Netflix.

Ergen said cable and satellite TV operators continue to take hits on premium video subscribers due to emerging over-the-top video providers such as Netflix, Hulu Plus and Amazon Prime. He said 50% of every lost cable/satellite subscriber is “probably” a Netflix member. Ergen said 20% of Dish subscribers are also Netflix members.

“When someone can buy Netflix for $7.99 [a month], do they really want to pay $14.99 for HBO?” he said. “I think all of us in the video business are looking at streaming video.”

Ergen said ongoing changes in technologies delivering home entertainment add to the challenges and opportunities afforded the proposed merger between AT&T and T-Mobile — a union, if allowed, that would propel him to seek a merger with No. 1 satellite TV operator DirecTV.

“There’ll probably be a lot of mergers that could happen that people never thought could happen,” he said.

Indeed, Dish made a bid for Hulu.com that reportedly approached $2 billion but was rejected when Hulu’s owners decided not to sell the online repurposed content aggregator.

“From an acquisition point of view we look at a lot of different things,” Ergen said, adding that partnering with third parties is the most prudent course of action in today’s economy. “It’s a great time to change your business for when the economy does change a bit.” 

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