Ergen: AT&T-Time Warner Approval Could Create Deal Flood or Famine

Dish Network chairman Charlie Ergen said government approval of the $108.7 billion AT&T-Time Warner merger could plant the seeds for further consolidation in the industry, while a rejection could put a damper on any further deals. But either way, he said Dish won’t likely be a participant in the rush to acquire content.

“Were not likely to get into content creation,” Ergen said on a conference call with reporters shortly after a similar call with analysts to discuss quarterly results. “That’s a skill set we don’t have; it takes a different skill set, it takes a lot of capital; it’s a little hit or miss and we’re just not that company. And we’ve always felt from a distribution point of view, we shouldn’t be in competition with our distribution partners.”

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Other distributors are waiting for the AT&T-Time Warner deal to get approved before pulling the trigger on other deals. AT&T-Time Warner just wrapped up their arguments in the federal court case to stop the U.S. Dept. of Justice from blocking the deal While the judge’s decision on the matter is expected on June 12, the general consensus is that the deal will be approved, but with some conditions.

Comcast, which already has lobbed an offer to buy U.K.-based satellite giant Sky, also is reportedly waiting in the wings for approval of the AT&T-Time Warner deal before launching a separate bid for 21 Century Fox content assets currently pledged to The Walt Disney Co.

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On the call with reporters, Ergen said he had no particular insight into the possible Comcast bid, but said it speaks to the broader issue of the current regulatory environment.

“I think you’re starting to see the seeds of potentially some major consolidation efforts out there; or depending on the ruling of AT&T-Time Warner, you may see a bit more of a cold shower,” Ergen said.

Earlier, on the analyst call, Ergen expressed some surprise at the current state of the content industry, especially in how it allowed services like Netflix to run roughshod over their businesses.

“OTT opens up a number of potential minefields for content owners that I’m not sure they’ve totally thought through,” Ergen said, pointing out the increased potential for piracy and the beginnings of true a la carte programming.

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Ergen said that several things could happen, including the abatement of heavy price discounting to the creation of new revenue streams like addressable advertising – which he said distributors have the technical ability to launch but content providers have been slow to adapt.

“And in some cases, some programmers will get dropped from certain operators because the customer is not asking necessarily for more content from current providers, they’re more balanced with not seeing their rates increase, or not increase as much,” Ergen said.

He added he has been surprised with the rise of SVOD services like Netflix and Amazon, but said there are still things linear content producers can do to reinvigorate the business.

“There’s a reason why people like Netflix and there is a lot of things we could do in the current linear style business that would more reflective of what customers want. It’s just hard to corral everybody,” Ergen said. “Every contract we have is different, so sometimes you can take some content with you and offload I and take it on an airplane, and sometimes you can’t. With Netflix you can do that.”

Later, on the reporter call, Ergen said that he hopes the industry would focus more on piracy and account sharing, reducing ad loads and unbundling networks.

“I’m hopeful that there is going to be some content owners out there who will take some chances to try to do some things,” Ergen said.