Dish Open to Selling, Leasing or Merging Spectrum, Says Ergen
Dish Network’s prospects for spectrum are part of an effort toward “optionality,” said Chairman Charlie Ergen. Dish is awaiting an FCC decision on its request for flexible use of its AWS-4 spectrum (CD Sept 16 p1) and is the stalking-horse bidder for LightSquared spectrum. Using the AWS-4 spectrum for all downlink “will free up some impaired spectrum for us and downlink is more valuable than uplink spectrum,” Ergen said Tuesday during Dish’s Q3 earnings call. The company’s main wireless focus is for video, which involves mainly downlink, he said. “Next year, we'll see where we come out with the H-block option” and LightSquared, he said. Dish still plans to bid about $1.6 billion in the H-block auction next year if its FCC request is granted by Dec. 22, Ergen said.
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The company is open to many possibilities, Ergen said. “We can build out spectrum all by ourselves.” Another possibility is “we can sell,” he said. “Neither one is high probability, although possible.” Whether Dish leases or sells spectrum, the move must enhance Dish’s current business, he said. “It doesn’t make sense to enter a new business and not do that in a way that would enhance what we've been doing for the last 33 years."
Ergen said Globalstar’s effort to use some of its mobile satellite service spectrum for a terrestrial service is “good public policy” to use spectrum in its best and most efficient manner. Globalstar has part of a band “that hasn’t been particularly economic just for satellite,” he said. “My opinion is that it makes a lot of sense because that puts more spectrum out there.” Ergen was referring to the FCC NPRM on Globalstar’s request (CD Nov 5 p5).
Dish’s business with Young Broadcasting could result in a resolution of a stalled retransmission consent agreement between Dish and Media General, Ergen said. The commission approved Media General’s transaction with Young last week (CD Nov 12 p15). Programming from Media General is no longer on the lineup for Dish subscribers as a result of the ongoing dispute (CD Oct 21 p7). “The merger may end up with some opportunity on our side to get that settled,” said Ergen. If not, “we won’t carry their product,” he said. “We do hundreds of deals and we know where the market price is ... We're not going to pay more but we'll pay a fair rate."
Dish prefers to work with broadcasters to deliver content over the top rather than create a service like Aereo, Ergen said. Aereo is a good product, he said, but Dish will continue to work with current content providers: “That leads to the most efficient way to deliver broadcast programming over-the-top in the way that Aereo does today.”
Dish has been in active retrans negotiations with Disney for many months, said Joe Clayton, Dish CEO. Because Disney contracts tend to be long-term, “both sides are trying to look at where the technology is going” and craft an agreement around how the market might look in the future, he said. “It’s a great negotiation because it’s forcing us to think about what the future looks like."
Dish Q3 revenue rose 2.2 percent to $3.6 billion from Q3 2012, it said in a news release (http://bit.ly/18purkR). Pay-TV customers increased by 35,000 in the quarter, closing the quarter with 14.05 million subscriptions, compared with 14.04 million in the same period last year, it said.
EchoStar said Q3 sales rose 11 percent to $849 million. Plans to launch EchoStar 19 in the first half of 2016 are on schedule, CEO Michael Dugan said during another conference call. The Ka-band satellite will cover the U.S., and part of Mexico and Canada, he said. EchoStar also is moving ahead with its plan to finalize its partnership with GVT for a pay-TV service in Brazil, he said. It relocated EchoStar 15 to an orbital slot for the desired DTH service, he said.
Hughes reached $322 million in revenue, said David Rayner, chief financial officer. This was due in part to “strong consumer service and equipment revenue and North America enterprise service growth,” he said. Hughes added 72,000 net subscribers, up from 43,000, EchoStar said. Under the Hughes business, profits and revenue this quarter were lower than last year, said Pradman Kaul, Hughes president. “The MSS segment is opportunistic.” The contracts “tend to be lumpy” right now, he said. “New ones haven’t come in at the rate we'd like.”
EchoStar will continue to focus on the satellite space, said Rayner. “If the right opportunity came for an M&A deal versus organic growth, we'd certainly have an interest in that,” he said of mergers and acquisitions.