Dish Can't Match Netflix
"Netflix has a formidable lead, and probably insurmountable lead, in that business," Ergen said on Dish's earnings call Monday morning. (See Dish Posts Q1.)
Some analysts are concerned that Blockbuster will be a drag on Dish, but Dish thinks the struggling brick-and-mortar retail business and Blockbuster's by-mail DVD service are more than salvageable. Dish will be discussing with studios in the coming weeks whether they still want that physical presence or they want to go with an all-electronic approach. Those conversations will likely help determine the fate of Blockbuster's retail side. (See Dish's Baffling Blockbuster and Dish's Latest Buy Is a Blockbuster .)
During its pursuit of Blockbuster, Dish assumed that 375 stores were profitable (out of 1,700).
Dish expects to evaluate what to do next over the next 90 days, according to new Blockbuster President Michael Kelly. (See Dish Appoints Blockbuster President.)
"The good news is, we control the asset now, so we can start making the right long-term decisions there," Ergen said.
The other two big topics on Dish's call were the settlement with TiVo Inc. (Nasdaq: TIVO) and the valuable wireless spectrum Dish is gaining via two acquisitions. (See Charlie Ergen's Spectrum Grab and Dish, EchoStar to Pay TiVo $500M to Settle Suit .)
Dish settled with TiVo because it didn't want to risk having to turn off all of its DVRs if the courts decided that its software workaround infringed the TiVo Time Warp patent. That "would've been a knockout blow," Ergen admitted; he's now hopeful that Dish and its EchoStar Corp. LLC (Nasdaq: SATS) technology and set-top unit can put the TiVo patent license to good use.
Ergen wouldn't say whether Dish might use TiVo's user interface down the road, but he said the companies are talking. "Tom [Rogers, TiVo's CEO and president] already owes me dinner. He owes me about a $600 million dinner. That's before the tip," Ergen joked.
Ergen also wouldn't specify what Dish intends to do with spectrum assets that are set to rival those of Sprint Corp. (NYSE: S). He downplayed the notion that Dish would build anything on its own. Instead, Ergen said he's much more open to partnerships, and even referred to LightSquared by name.
"I think it is unlikely that we would do something [in] wireless without somebody who's more of an expert in that business than we are," he said. "I think we're watching closely what LightSquared does ... [because] I think our spectrum fits in nicely with them in terms of how they are going about doing it."
— Jeff Baumgartner, Site Editor, Light Reading Cable