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Dish Network Chairman Suggests COVID-19 Pandemic Has Exposed Flaws in Pay-TV Model

Stephanie Sengwe

Because the coronavirus has forced people to stay home, the streaming industry has seen an uptick in viewership. Various reports have shown that streamers such as Netflix and Disney+ have benefited immensely because people have had the time to stay at home and binge-watch their shows. Earlier this week, AMC Networks’ streaming services hit the benchmark on targeted subscribership “a full two years ahead of the company’s original target of year-end 2022,” as they have seen “‘strong growth over the past six to eight weeks.”

With so much upward mobility in the streaming world, Dish Network chairman Charlie Ergen believes the wide popularity of streamers is partially due to the flawed model of pay-TV service. In their Q1 earnings report today, the company revealed they lost a record 413,000 pay-TV customers. During their earnings call this afternoon, Ergen pointed out the several ways pay-TV can be burdensome on the consumer.

“Everybody on this call has probably watched more television in the last eight weeks, and everybody that I see is going to Disney+ or Netflix or Amazon, because there are no commercials. It’s easy to watch on [any] device because TV’s become an app without commercials,” he said. “In linear TV, you might have 16-17 minutes of commercial time during an hour-long show. It might be a really good show, but it’s painful once you’ve seen something without commercials. So ad-load needs to change.”

He then pointed out how the user experience on cable is also drastically different than on streaming services: “If you want to binge something you have to sit there and push a bunch of buttons instead of just waiting eight seconds — so the user experience has to better.”

Finally, he pointed out how licensing content has also played a part in cord-cutting. “The final thing is the branding of particular channels has gone away and people are used to watching [different] shows but not necessarily the channel. So if they’re used to getting that show somewhere else, they don’t want to have to pay for it twice. So all those dynamics are out there,” he concluded.

Dish Network has been part of the rumor mill as reports surfaced saying the company will merge with DirecTV. Though AT&T denied those claims stating, “DirecTV is an important part of what we’re going to be doing going forward.” Ergen said the deal feels “inevitable” during Dish Network’s Q4 2019 earnings call in February.

Back in October, Fox Business reported that private equity firm Apollo Global Management, along with another banker, were looking into a deal with AT&T that would allow the company “to offload some of the risk” of DirecTV and maintain its satellite business. The deal also would merge DirecTV and Dish into one company managed by AT&T. The investment firm would provide financing for the transaction and hold a minority equity stake along with Dish, but AT&T would still maintain control of DirecTV and its more than 20 million customers

Though the deal would get AT&T about half of the $49 billion it paid for DirecTV in 2015, the benefits of having it in place outweigh the losses, Fox Business reported. It is structured in a way that relieves AT&T of its $20 billion DirecTV debt.

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