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In 1980, a few months before Charlie Ergen founded the company that is now known as Dish Network he co-founded with a gambling buddy, he went into a Casino at Lake Tahoe in Northern Nevada. He wanted to make a fortune there with the Count cards make. Ergen was 27 at the time and had Book "Playing Blackjack as a Business" and diligently learned the basics of Strategies in it. Unfortunately, a casino guard caught him counting cards and the two were thrown out of the casino and banned for life.
More than three decades later, Ergen, now 60, is again facing charges of defrauding the house - but this time the house is here, nestled in the confines of executive suites from Burbank to Beverly Boulevard. And now Ergen's Englewood, Co.-based Dish Network, the nation's third-largest satellite/cable TV provider, a publicly traded company that has grown from a $60,000 startup to an empire with 14 million subscribers and $14 billion in annual revenue, is the entertainment industry's No. 1 enemy.
Mit zunehmender Häufigkeit hat sich Ergen auf hässliche, hochriskante Spiele mit Hollywood eingelassen. In seinem brutalen Kampf mit AMC um überhöhte Übertragungsgebühren ließ er die Sender The Walking Dead und Mad Men monatelang aus dem Dish-System fallen. Er hat auch Jahre damit verbracht, mit Sendern über die Praxis der Fernübertragung von TV-Signalen ohne Lizenz zu streiten und wurde sogar dabei erwischt, wie er ein Versprechen brach, das er unter Eid gegeben hatte, um damit aufzuhören – und das alles, während Dish von einer Watchdog-Website als „Amerikas schlechteste Firma, für die man arbeiten kann“ bezeichnet wurde. Aber all das war nur die Präambel für den Hopper.
In January 2012, Dish introduced its proprietary DVR service, which allows consumers to "AutoHop," or watch all of the networks' primetime programming commercial-free without having to fast-forward through ads. Immediately after the service's launch, CBS, NBC, ABC and Fox filed a lawsuit arguing that Dish would put them out of business if they were allowed to continue offering the Hopper. The networks want a judge to issue a preliminary injunction, and Fox is appealing the denial of a shutdown while it makes another attempt to ban the Hopper - after Dish added mobile features amid the legal challenge.
Ergen, who is married with five children and whose personal fortune has swelled to an estimated $10.6 billion, putting him at No. 100 on the current Forbes list of richest people, is confident he will win the legal battle and says it's time for broadcasters to get on board. "Some people are averse to change, but the advertising model will change with or without the Hopper," he recently told analysts. "What we're saying to broadcasters is, 'There's a way for you not to bury your head in the sand.' "
The broadcasters reject this assessment. "Services [like Hopper] that undermine the economic fabric of our business are not only illegal, they potentially destroy our ability to give audiences what they want," CBS Chairman and CEO Leslie Moonves tells THR. Ted Harbert, chairman of NBC Broadcasting, adds, "I think this is an attack on our ecosystem."
Unsurprisingly, Hopper has become extremely popular. The year before Dish started offering the service for free, the company lost 166,000 subscribers. Since then, Dish has gained back 89,000.
"We're a bit like an Indiana Jones movie," said a sanguine Ergen about his company at the All Things Digital conference on February 11. "We're always in trouble. We always get out of it. We always go from alligators to guys with arrows to snakes. We want to win." (Ergen declined to comment for this article.)

At a time when the ratings of the Big Four networks have reached historic lows - Fox is down this season by 21 percent drop, and NBC was beaten in the 18-to-49 demo by Univision in February - it's hard enough to convince advertisers to take viewers to the ads - as the networks will do in May at the annual $10 billion presentations. It's even harder when a major satellite operator touts its ability to completely eliminate commercials from the viewing experience. Broadcasters hope they can keep advertisers tuning in when market research firms like Nielsen start focusing on viewers who watch the program a week after the initial live broadcast. But analyst Richard Greenfield asks, "C3 vs. C7? Who's kidding who when it comes to viewing commercials on DVR programs?"
Interestingly, TV providers such as Time Warner Cable and DirecTV, despite presumably possessing the same technological capabilities, have not offered products that have sparked such industry retaliation. Perhaps there is a reason for this.
Ergen has presented the Hopper as a consumer right, while also telling analysts that programmers have "devalued" content by making TV shows available on Netflix and suing ESPN for allowing streaming, among other things. CBS is trying to undo its licensing deal with Dish, claiming Ergen and his top lieutenants fraudulently concealed their plans for the hopper in contract talks in 2011. And in February, Dish alleged that CBS forced "The Big Bang Theory" actress Kaley Cuoco to delete a sponsored tweet in which she endorsed the Hopper, even though there was no evidence that the actress was under pressure to set became. At an event honoring Moonves in March, Cuoco announced, "I want to take this opportunity to say one thing: Leslie, f- the Dish Network."
As Hollywood reluctantly enters the digital age, new players like Barry Diller's TV service Aereo are challenging traditional revenue streams and taking broadcasters to court. (Diller's Aereo survived an initial legal challenge on April 1, when an appeals court allowed it to stay in business at least until a trial.) Even among these threats, however, Dish represents perhaps the most aggressive and best-funded disruptor. And he is controlled by a man who has the money and the inclination to take the fight to its legal and, for Hollywood, very scary end. Yes, he's known by some within his organization for being a tight-fisted loudmouth ("They treat their employees like slaves," says one online employee review). But it's one thing to yell at subordinates and install a scanning device to monitor tardiness (yes, he really did that); it's quite another to destroy evidence and mislead judges in a courtroom - Dish was punished for such behavior.
All of which is enough to ask:
If Charlie Ergen is the most hated man in Hollywood, what should the industry do about him?
Ergen is now gearing up for a battle that could answer this question. A license agreement between Dish and The Walt Disney Co. expires in September. The upcoming talks between the companies are the first major negotiation since the launch of the Hopper. Disney is unlikely to want to rubber-stamp a tech product like the Hopper by renewing its contract with Dish. But it's almost impossible for a media company to pass up the billions of dollars Ergen is paying for programming.
This friend/foe dilemma is the essential conundrum that Dish presents. Six months before its contract with Disney was set to expire, Dish was not at the negotiating table, but in the courtroom, suing Disney's ESPN unit for allegedly offering better rates to Dish's competition.
Natürlich wurde Ergen von Verbraucherschützern als Held gefeiert, die seine Bereitschaft schätzen, mit einem TV-Modell zu play, das den Hollywood-Konglomeraten heilig geworden ist. „Wenn es darum geht, neue Dinge auszuprobieren und die Kosten in einem wettbewerbsintensiven Markt niedrig zu halten, braucht man einen Vorreiter wie Dish“, sagt John Bergmayer von Public Knowledge, einer gemeinnützigen Rechteorganisation.
Vijay Jayant, an analyst who has followed Dish for years at ISI Group, notes, "Charlie's attitude is, 'At some point, they'll negotiate with me on my terms.' He keeps bluffing until he doesn't."
If Dish displays a particular form of aggression, observers attribute this to its billionaire founder and his company's precarious position in the competitive video distribution industry.
Charlie Ergen was born in Tennessee, the son of a physicist who is said to have coined the term "China Syndrome" to describe the inadequacies of containing a nuclear reactor accident. After playing small forward on the state university basketball team, he earned a degree in business administration from Wake Forest University in 1976 and then worked as a financial analyst at Frito-Lay. Two years later, at the age of 25, he surprised his family by "retiring" - or rather, taking advantage of discounts his future wife, Cantey McAdam, received from her work as a flight attendant to travel the world. He also toyed with the idea of opening a more professional become a poker and blackjack player.
Then, in 1980, his buddy Jim DeFranco told him about "a large satellite dish that receives signals from outer space", according to an opening speech by Wake Forest in 2012. Together with DeFranco and McAdam, the three of them put 60,000 dollars of their personal savings into a start-up company called EchoStar in a suburb of Denver.
An avid mountaineer who has climbed Mount Kilimanjaro and Mount Everest, Ergen has steadily grown his company - now officially called DISH - into one of the 200 largest companies in the world, with average annual profits of about $1 billion (Ergen controls 88 percent of the voting rights in the company). Dish thrived in large part by focusing on the hilly rural areas of the country where there were no cable TV lines - and, of course, by being willing to take on anyone who got in the way.
Dish employees, opponents and analysts say no one exploits the justice system like Ergen to gain a competitive advantage. A decade ago, a judge found that Ergen had violated a promise, made under penalty of perjury, to cease long-distance transmission of local television signals. An appeals court wrote in 2006 that there was "no indication that EchoStar was ever interested in complying with the [Satellite Home Viewer] Act," adding, "We appear to have recognized a 'pattern' and 'practice' of violating the Act in every conceivable way."
In the mid-2000s, when Ergen was battling TiVo over who owned the rights to DVR technology, TiVo was not only able to convince a court that Dish had infringed a patent, but the judge in the case found it "distasteful" that Ergen's company "ran an advertising campaign touting its DVRs as 'better than TiVo' while continuing to infringe TiVo's patent." In 2009, Dish was officially sanctioned by the court. (The parties later settled.)
Perhaps most notorious were the angry judges who followed Dish's recent dispute with Cablevision/AMC after Dish signed a 15-year deal to carry the Voom networks, a lineup of 21 little-watched HD channels like Kung Fu HD and Movie Fest HD, had resigned. In the early days of the trial, Dish was sanctioned for "bad faith" or "gross negligence" in destroying internal company emails. A visibly angry New York Supreme Court Justice Richard Lowe later threatened to launch an investigation if Dish's documents were not released. The lawsuit got so ugly that Dish manager Carolyn Crawford punched the opposing attorney's father on her way out of the courtroom. She later apologized in open court.
In a Maryland sexual harassment case in 2005, a judge wrote that "EchoStar is guilty of gross destruction of evidence." In a 2012 trademark dispute, a judge said of Dish's attorneys that in his 17 years on the bench, he had never seen "such discord or contentiousness."
"Most companies have an institutional bias against litigation and see it as a necessary evil," says a network insider. "But for Charlie, it's the way he runs his company. You'll never see him sue in his home state, though. Their name is dirt in Colorado. The judges are hot on their heels."
In fact, when Dish filed a lawsuit in May 2012 in an attempt to beat the broadcasters in court and get a judge to declare the hopper legal, it did so in New York.
Dish continues to be combative at every turn. The Federal Trade Commission and the Department of Justice are jointly pursuing a lawsuit against the company for allegedly violating the Rules of telemarketing by making unsolicited calls to millions of consumers. Dish also takes every opportunity to tout its Hopper as the tech product that's so great that broadcasters don't want anyone to hear about it (even when they tell judges that the Hopper isn't that different from other DVRs).
Ambush spin is common at Dish. On industry news websites, employees regularly leave comments aimed at surreptitiously promoting Dish services. One AllThingsD writer was so annoyed that he wrote a column in 2011 titled "Dear Dish Network: Your Spam Makes Me Sad. Please Stop." The press release Dish issued on the Kaley Cuoco affair is another example. There was no source for the alleged request from CBS to delete her tweet, and CBS flatly denied it. When asked for confirmation of such a claim, Dish spokesman John Hall says only, "We were contacted by someone close to the situation who told us that CBS asked them to delete the tweet."
Barbara Roehrig worked at EchoStar in the mid-1990s and was the company's first female manager. She remembers constant arguments with Ergen, who sometimes threatened to walk into a room and fire all the employees, whom he described as a "crazy bunch". "The modus operandi there is yelling, and that takes its toll," Roehrig says, adding that she still keeps in touch with many in Dish's middle management who refuse to move up to the company's executive ranks because of the emotional turmoil it brings. "We've all been in the firing line of Charlie's rants."
Dish was labeled "America's worst company to work for" by the website 24/7 Wall Street, based on scathing reviews on the job website Glassdoor.com. Employees have been subjected to "badge reports" in which they are red-flagged for being minutes late. When traveling, employees are asked to take red-eye flights, book hotel rooms share und der Firma das Trinkgeld zu erstatten, wenn sie mehr als 15 Prozent Trinkgeld geben. Ein Außendienstmitarbeiter erzählt THR: „In meinem Büro darf man nicht einmal morgens auf die Toilette gehen, bevor man auf seine Route geht, oder abends, bis man Feierabend hat.“ (Ein Dish-Vertreter sagt, dass das Unternehmen seine Ausweisberichte im Januar aufgegeben hat und bestreitet, dass die Mitarbeiter gezwungen sind, Rote-Augen-Flüge zu nehmen und keine Toilettenpausen machen dürfen.)
After Dish was confronted with bad press, the management tried to intervene. Dish CEO Joe Clayton sent an email to employees stating, among other things: "If you are happy here at DISH and believe the company is moving in the right direction, log on to Glassdoor.com and give your feedback."
At Dish's Colorado headquarters, company executives dismissed the question of whether Dish is really the meanest of mean companies.
"I think it's a challenging place to work," admits Dave Shull, a Dish senior vice president in charge of content acquisition. He says it's common for meetings to be "animated," but he embraces the company's aggressive ethos. "You can always be a follower, a slave to the competition and hope for the best," Shull says. "Or you can take the lead, try to increase market share and innovate. What happens in skiing or riding when you sit back is that you lose control. We sit back."
After several years of growth, Dish, like the rest of the cable and satellite industry, is facing new challenges. According to analysts' estimates, pay-TV providers only gained a few tens of thousands of subscribers in 2012. And the overall trend is not good. In response, Dish has worked aggressively to keep customer bills lower than its competitors. Dish's subscriber-related expenses rose to $7.25 billion in 2012, up 6 percent from the previous year, which the company attributes to rising program costs. By comparison, DirecTV spent more than $13 billion on programming in 2012 (and another $2 billion on service), a 12 percent increase. "I would venture a guess that Dish's program increases are among the lowest in the industry," Jayant says.
Still, that might not be enough. Dish now competes with Internet-based TV services like Netflix and Hulu (a subscription to both costs only about a third of Dish's $49.99 basic package), as well as web and TV combinations offered by companies like Time Warner Cable and Comcast.
Unlike its competitors, Dish has struggled to expand into business areas other than satellite TV service. In 2011, the company completed its acquisition of Blockbuster, but was unable to grow the brand into a viable Netflix competitor. Dish has been trying to make more of its wireless spectrum, which it paid around $3 billion to acquire, but has been thwarted by the FCC. The company has been trying to get a wireless network service off the ground lately, holding talks with Google and making an aggressive bid to acquire part of 4G network pioneer Clearwire Corp.
At the moment, however, Dish remains a "one-trick pony", as analyst Jayant puts it. Unlike Comcast, the company doesn't make its own programming, and unlike Time Warner Cable or Verizon, it's not in a position to offer a TV/Internet/phone triple play. What it does have is the Hopper, leading one lawyer defending the networks to conclude:
"Ergen would rather ask for forgiveness than permission."
Some legal observers believe Dish will succeed in court. In November, a federal judge declined to issue an injunction to stop the hopper, saying Fox has a steep road ahead in arguing that Dish committed copyright infringement and breached its contracts with the network. However, the judge was not entirely convinced of the legality of Dish's scheme, and some lawyers believe the networks will ultimately prevail. "I think a court will side with the broadcasters because of the economics, although a new [legal] Test has to be developed, as this does not meet the usual standards," says Bryan Sullivan of Early Sullivan.
How the lawsuit plays out could determine Dish's ability to stay in the game depending on the outcome of the upcoming promotion negotiations. Ergen is taking a multibillion-dollar bet that Disney can't afford to give up Dish's 14 million subscribers, but if the company signs a new deal, it will send a signal that broadcasters have gone a little overboard when it comes to the threat they accuse the Hopper of posing.
If the offer isn't right, Dish could take a new approach. It could stream Disney's ABC anyway, without a contract but in partnership with a company like Diller's Aereo, whose proprietary technology to capture TV signals over the airwaves and transmit them privately online is likely to be fought out in a messy process. (Dish and Aereo have reportedly been in talks recently). Or Dish could abandon the rapidly growing cost of licensing ESPN's live sports to further position the satellite distributor as the cheap alternative in the market. But that's undoubtedly risky.
Analysts are already getting a little nervous. In a recent conference call, Dish's management was asked what would happen next.
"We're a big customer of Disney's," Clayton replied. "I wouldn't expect them to take it off with the AutoHop as the reason." Ergen added, "Our checks are pretty big." Dish pays Disney about a billion dollars a year for ESPN alone. But that's not enough to appease the analyst community. "I have no idea what's going to happen," Jayant admits.
As the recent legal battle between Dish and ESPN has shown, subscriber rates across the TV industry are intertwined thanks to the most-favored-nation clause (which guarantees that no competitor will get a better deal). If Disney accepts less than Dish's market value, it will likely have to give discounts to other providers as well. And getting rid of Dish doesn't necessarily mean losing all 14 million pay-TV customers if some of them defect to rival services. A recent Lazard Capital survey found that 41 to 48 percent of pay-TV subscribers would cancel or switch services if they lost a top channel, and 35 percent would quit if they lost ESPN. "If anything, the impact of content on distributors is getting stronger," concludes analyst Barton Crockett.
The last time Disney and Dish struck a deal, in 2005, negotiations lasted a year. Now it's just a few months until the license expires in September, and the very negotiators who will meet have just spent three weeks sitting uncomfortably next to each other in a courtroom.
Disney declined to comment on whether it would look past the hopper, the legality of which is unlikely to be resolved before the two sides have to make a deal. A Disney spokesman says any renewal with Dish "would be consistent with established market terms." Dish's Shull won't say whether Ergen or his executives have met with Disney, but says he hopes the two companies will be able to work out their differences.
Is Ergen about to get his comeuppance for his bad behavior? Or will broadcasters bow to what many believe is the inevitable evolution of the advertising business? By the end of the year, the outcome of the Disney-Dish negotiations could signal where the industry is heading.
"For some people, it gets personal," says Shull. "For me, it's about business. There are always a few differences of opinion, but when there are billions of dollars at stake, greed usually wins out."
"We are a big customer of Disney's," answered Clayton. "I would not expect them to take it down with the AutoHop as the reason." Added Ergen, "Our checks are pretty big." Dish pays Disney roughly $1 billion a year for ESPN alone. But that's not quite enough to settle the analyst community. "I have no idea what is going to happen," admits Jayant.
As the recent Dish-ESPN lawsuit highlighted, thanks to "most favored nation" provisions (which guarantee that no rival will get a better deal), subscriber rates are intertwined throughout the TV industry. If Disney accepts less than market value from Dish, it likely will have to give discounts to other distributors, too. And walking away from Dish might not necessarily mean losing all 14 million pay TV consumers if some of them defect to rival services. A recent survey by Lazard Capital found that 41 percent to 48 percent of pay TV subscribers would cancel or switch their service if they lost a top broadcast network, and 35 percent would cancel if they lost ESPN. "If anything, content's leverage over distributors is strengthening," concludes analyst Barton Crockett.
STORY: CES: Dish Network Ups Ante With New Hopper Features
The last time Disney and Dish made a deal, in 2005, the negotiations took a year. Now, there's just a few months until the license expires in September, and the very dealmakers who will be meeting with one another just sat uncomfortably side by side for three weeks in a courtroom.
Disney declines comment about whether it would look past the Hopper, whose legality likely will not be settled before the two sides need to make a deal. A Disney spokesperson says any renewal with Dish would "be consistent with established marketplace terms." Dish's Shull won't say whether Ergen or his execs have met with Disney, but says he hopes that the two companies will be able to work out their differences.
Is Ergen about to get comeuppance for his nasty behavior? Or will broadcasters bow to what many believe is the inevitable evolution of the ad business? By year's end, the outcome of the Disney-Dish negotiations could signal where the industry is headed.
"For some folks, it becomes personal," says Shull. "For me, it's business. There's always some difference of opinion, but with billions of dollars at stake, greed usually wins out."
Source: www.hollywoodreporter.com/news/dish-networks-charlie-ergen-is-432288?page=3