Friday, June 8, 2012

Charlie Ergan Speaks

It's worth checking out the article on Charlie Ergan in today's Wall Street Journal.  There has been quite a bit of press recently on his company, Dish Network.  From his latest DVR that completely hops over ads to his fight with AMC Networks and their former parent company Cablevision over Voom, Charlie doesn't seem to mind a battle. 

Although the article speaks only about his Auto Hop service, he clearly has opinions on the future of TV and advertising.  "With the new service, Mr. Ergen aims to force the networks to develop 'more meaningful' ads, using, for example, demographic targeting of viewers."  But how can networks show more "meaningful ads" if ads are immediately skipped over.  What does Charlie really want?

Perhaps his real point is that the networks are offering the same content with less ads on other platforms, like Hulu.  Viewers, like his children, are bypassing cable subscriptions for the web.  "Mr. Ergen, 59 years old, says four of his five children have stopped paying for a TV subscription, and the fifth is living home."  Viewing habits are changing whether Dish is skipping ads or not.  His ploy may be to find ways to get networks to lower their costs to him so he can lower his costs to subscribers and win them back.  At the end of the day, he certainly has gotten the attention of the network executives.

So what is Ergan's next move?  He is also holding on to wireless spectrum with an opportunity to build out a competing service.  The costs to build are enormous and Ergan may want to consider a partnership with an existing mobile carrier.  AT&T couldn't do a deal with T-Mobile.  Perhaps Charlie can.  The future is two way wireless of voice, video, and data and Charlie Ergan seems intent to compete with a cost effective model. 

As to the networks, the Auto Hop feature is already out of the box.  You can't turn back technology.  Tivo and the DVR was the first step; consumers want to skip commercials.  As Ergan intimated in the interview, a new creative approach is needed.  Less breaks and more innovative and targeted ads could help.  Viewers are changing habits and it is time to take notice.