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Dish Chief Ergen Is Still a Gambler

Dish Network celebrated turning 10 years old a little early, holding a party on March 10 in a Littleton, Colo., hotel for about 175 invited guests — an assortment of vendors, retailers and, importantly, advertisers.

EchoStar Communications Corp., parent company of the 12-million subscriber satellite-television service, billed it as an interactive-TV summit. Scott Higgins, EchoStar’s ITV director, passionately asserted that Dish was the U.S. leader in that category by a long stretch, according to two individuals who were there (but would not be identified because of business ties to Dish).

Higgins said Dish’s interactive-TV portal, Channel 100, rates higher than all basic-cable channels except one, according to the two listeners. If that channel was Nielsen-measured, it would ring up a 2.3 rating, he claimed.

Dish Network also claims it has a 67% share of 18 million U.S. interactive-TV households, followed by Cablevision Systems Corp., which has 16% (or about 2.9 million). Satellite rival DirecTV was assigned single-digit share, according to one note-taker.

Being No. 1 in interactive TV isn’t a huge advantage in this country in terms of subscriber acquisition or retention. Channel 100’s most popular feature is said to be a mosaic that lets viewers open up six different channels on a single screen — not a pass-the-remote trivia game or a recently added personalized-news service from Cable News Network.

Interactivity, though, is one more thing that helps build a distinctive identity for Dish, like the “low-cost digital TV provider” moniker it embraces.

Actively advertising a 40-channel, $19.95 monthly “family” programming package is another. When cable companies came out with their family tiers, devoid of sports networks and news channels that aren’t necessarily rated “TVG,” critics said they wouldn’t be popular with the masses and implied that cable didn’t really want them to be.

“An invitation to an unmarketable package” is how Sen. Frank Lautenberg, a New Jersey Democrat, put it during a Senate Commerce Committee hearing in January, where Ergen also testified.

Last Wednesday, talking to analysts about EchoStar’s fourth-quarter earnings, Ergen pointedly said Dish’s family package includes news, sports and movie networks. “It’s not an attempt not to sell it, it’s an attempt to sell it,” he said.

As contributor Monica Hogan reported after a televised “Charlie Chat” last week, Dish beamed its first TV signals to an authorized set-top box on March 16, 1996. Since then, Ergen has built his company on a series of gambles.

Ergen gambled by sending his first satellites into space on Chinese rockets that, at the time, had a nasty habit of crashing after liftoff. He survived after getting jilted by merger partner Rupert Murdoch in 1998 and saw his company walk away with a lucrative breach settlement. So far, he’s survived his inability to outbid Murdoch in 2001 for DirecTV. That $32 billion idea failed because the federal government rejected the merger. DirecTV got sold to Murdoch instead, in 2003.

During the analyst call last week, Ergen called his the only U.S. telecom merger to be rejected in the last 10 years. “I’m 0 for 100 in Washington,” he lamented. He said he’s surprised he even gets asked by Congress to testify.

Ergen’s current bets seem safe by comparison. Analysts on the call homed in on EchoStar’s commitment to $1.6 billion in new satellites, mostly for capacity to add lots of high-definition channels and to provide in-orbit backups for existing birds.

EchoStar is loading up on national and local high-definition channels. If HD doesn’t break out, then maybe that’s a gamble that won’t pay off, he conceded.

Staying independent in a sea of conglomerates can be risky in itself. Citigroup analyst Jason Bazinet in a report took note of EchoStar’s surprisingly positive fourth-quarter results, including 330,000 net new customers – while maintaining “sell” and “high-risk” ratings on EchoStar stock.

Dish doesn’t have a broadband play — at least not yet — and cable companies, having added voice service to their video and broadband packages, seem to be gaining ground with new bundles. Telephone companies are adding video to their wares.

EchoStar does have a partnership with AT&T Inc., the conglomerate that wants to expand by absorbing independent BellSouth Corp.

Having a telco partner isn’t quite as good as owning the broadband line, though.

“I think their downfall will be the bundle, if cable really figures this out and they offer heavy discounting with services that EchoStar doesn’t inherently offer,” an attendee of the Littleton conference opined.

That remains to be seen. Ergen the gambler remains at the table, and still has chips to play, interactive and otherwise.