Don’t get too comfortable with your low, low price on that DISH Network package you have. During a call with reporters earlier this week, DISH Network CEO Charlie Ergen said that cable companies are really hitting the No.2 satellite TV provider with large license fee increases. Ergen was frank and revealed that DISH may be passing on the expenses to subscribers.
“I think we have room to do it later in the year. It depends on getting ourselves in a position to do that,” says Ergen regarding fee increases. “I think we’re under-indexed [on rates for programming packages] compared to the rest of the industry.” In laymen’s speak: DISH customers have had it good for too long.
Why have DISH’s TV packages been so low? Ergen blames the war with DirecTV, who has stumbled in fourth quarter earnings. The two satellite giants have engaged in discounting battles that have entranced consumers but left both companies feeling the pinch.
“I’ve been befuddled a little bit that DirecTV, who had a very nice brand position, actually started discounting that brand a couple of years ago with heavy discounting. It took us a while to figure out that they turned our business into more of a commodity by discounting a brand,” Ergen said.
Ergen also announced his company’s intention to lure in future customers with huge discounts, but raise prices once they are under contract.
“If this is going to be a commodity business, I like where we’re positioned,” said Ergen. “If it’s a branding business, we’re certainly not at that level with DirecTV today. But it looks like if it’s a ‘have a big discount to bring you in, raise your prices later’ [business] — we’re very comfortable in that kind of environment.”
Ergen relinquished his position as CEO of sister company EchoStar Corp. during the fourth quarter. Now he feels a bit saner:
“I had two CEO roles, and I wasn’t very good at either one of them. … Now I get to find out if I am a good CEO with DISH or whether somebody else would be better.
I will give myself a little more time to do it, but as people here can attest to, I was a bit schizophrenic last year, so I am obviously … much, much more focused now on DISH.”
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