tv Titans at the Table Bloomberg October 3, 2015 11:30am-12:01pm EDT
betty: he is the billionaire media mogul who calls himself a country boy from tennessee. dish network founder, charlie ergen. for the first time on bloomberg television, he weighs in on the seismic shift taking place in television. he plans to become the next big wireless company and why he may be looking to merge with that guy, the pink t-shirt wearing t-mobile ceo john ledger. but the famously tough boss faces questions about his management style. charlie: we have high expectations, and if you are not somebody who is used to high expectations, you're just not as comfortable here. betty: join me as charlie ergen dishes it all out here at "titans at the table."
i am betty liu. welcome to "titans at the table." dish network founder charlie ergen has always been known as something of a fearless renegade. from being thrown out of casinos for counting cards to selling satellites out of his car in colorado. he led a group that started echostar in the 1980's and then started dish in the 1990's. in the process, he has become one of the bridges man in america, worth more than $20 billion. ergen stepped out of the spotlight in 2011. just four years later, the founder is back in the hot seat as television goes under another revolution. like the satellite tv business, ergen wants to be at the forefront of this change by creating this new, over the top product called sling tv and buying millions of dollars worth of wireless assets.
assets he says can be used to build a legitimate competitor against at&t and verizon. when we first sat down with him at his headquarters in colorado, i asked ergen to describe his plan. charlie: the transformation is going on into their places. one is television. people are looking more for what they want to watch and not paying for what they don't want to watch. they want to watch their tv everywhere. part of that is the technology of ott, over the top, allows customers to do that. the second transformation is the wireless industry, where the world will be connected all the time. there is only two ways to do this, one is through the wire and the other way is wirelessly. we started on this mission five years to say that we want to be part of that connectivity revolution. we think the best place to rest in the marketplace is in
wireless technology. betty: so you have accumulated something like $60 billion in wireless assets? charlie: about 80 megahertz of spectrum. they vary in prices and valuations of what people think it is worth. but it is certainly worth a fair amount of money. but it is only really worth money when you put it to use and when you ultimately build a business around it and get discounted cash flows in the future. that is what we are looking forward to doing. betty: charlie, does this remind you at all -- what you just said -- the transformation of television. the on boarding of so many millions of people wirelessly. does this remind you of the early days of satellite television? charlie: it does. because in the early days of sunlight television, the incumbents said why would anybody pay for a satellite dish? the answer was simple. better picture quality. it was all digital. an interactive guide. less expensive. the bundles were smaller so you
had more choices as a consumer. the signal quality was more reliable. it was a better picture. hdtv is more prevelent with satellite. and so now people are asking the question, why would you pay for ott? there are similarities. ott eliminates some of the pain points. so many homes do not pay for ott as we know it. they pay for netflix or hulu. we take away some of those paying points with ott. you don't have to sign a contract, you don't have equipment to buy normally. you can go on vacation and not pay for a subscription or to put it on hold for a month. it is immediate. so you could sign up for sling tv and you can watch the nba finals tonight and you don't have to wait for an installer. betty: you don't have to wait out of work and wait for the cable guy. charlie: our basic package is about $20. we have several mini packs that
you can add onto if you want to, including showtime and hbo, so it attracts a lot of people, particularly younger people who are not paying for tv today. or where paying for tv and said it was too expensive and dropped off the tv universe. we are encouraged by the start of sling tv. but we have a long way to go. we are not perfect yet. we knew it would be difficult, but it is technically difficult because we are on a lot of different devices. live tv is really hard, and we are doing things and inventing things like dynamic ad insertion that we haven't used before. it reminds me a lot of when we started satellite. when we started satellite and dish, we had all kinds of technical problems. and night by night, we had to knock them down one by one by one. it took six months. we occasionally have a technical problem today. betty: but you pretty much resolved it. you believe you will resolve it now in the same timeframe.
charlie: there is no question we have resolved problems and we have resolved most of them, but we had a choice to make. it was either get out there and do what we don't know or wait and try to be perfect. i think we got a little ahead of our skis, but i think it will pay off for us. for the people who are watching, you will have a better experience today. betty: you have all of your cards close to your chest right now. you have your wireless assets, you have sling tv, you are looking at various options, so when are you going to make your play? charlie: well, i mean, i think, we have told people what we are going to do. we have said virtually the same thing for five years. our dream would be to use our spectrum to really enhance the way that people connect and provide competition in the wireless business. and not just the wireless business, but the broadband business as well. because i do think, if properly deployed, we can go to a lot of homes with totally wireless connections and they would not have a need for cable at all. that provides real meaningful
competition where there is not in broadband today. i think we can do those things. how we do those things -- it is not that we haven't played our cards. we don't know. so we do not know exactly the best way to play that. because you have to find companies that have a like-minded strategy. you like to have companies that want to move the same direction that you want to do it. you want to make sure that it is economic to your shareholders to move in that direction. and we are not that big a company. it is not like we can pick the phone up and make things happen. i think there are much bigger companies. betty: i think anybody would take a call from charlie ergen. charlie: i think people will take our call, but certainly the wireless industry is controlled by two companies today. there are 20 times bigger than we are. they are going to make their moves and do their things and people are probably going to react to that. so sometimes, you have to be ready to move when you see other things that happen in this
industry. one thing we know for sure is the spectrum we have is valuable, the spectrum will be put to use, and it will create value for shareholders. we want to make sure it is put to use in the most economical way and provides the best competition and the best product. betty: could charlie ergen's next play be a merger with t-mobile? i will ask him if all of those reports make sense when "titans at the table" returns. ♪
betty: welcome back to "titans at the table" and my conversation with media titan charlie ergen. for years, ergen has been buying up gold. the wireless kind. he has bid in several auctions for wireless spectrum, which are basically the airwaves that transmit your phone calls or video to your devices. analysts estimate ergen is sitting on almost $50 billion worth of this gold, which has led many to wonder if he is on the cusp of merging with a wireless carrier. maybe t-mobile? he would not confirm the rumors but i asked him if it would be logical for the two companies to team up. charlie: i think there are certainly a lot of positives to that. if there is willing participants. but they certainly have done a fantastic job. being the kind of upstart company. the uncarrier. john's team has captured the imagination of the public in terms of attacking the paying points that we have in the wireless industry.
their network is very similar to our spectrum position. so it fits in that sense and obviously, their growth rates will need more spectrum. so those things make some sense. things that do not make much sense, they are controlled by a german company that has strategic initiatives both in europe and the u.s. they may not be in a position where they want to do anything. we have other options that may be more attractive to our board and our shareholders. i think there is a number of options that are out there. certainly, t-mo is an option. betty: speaking of the german owner, deutsche telekom, there are reports that one of the
reasons why a deal might not happen with t-mobile that they do not value dish shares as highly as you value them. there is a disconnect there. where do you think dish should really be trading at? charlie: i never can predict the stock market. i would only say that, in the long run, we think our shares are undervalued, and i think the spectrum value we have -- we are probably undervalued with the spectrum position we have but we have to prove it to the marketplace. betty: undervalued by how much, charlie? charlie: i don't know. i can only speak as a shareholder. i have not sold any shares recently. [laughter] i still have the shares from when we originally started the company. i believe in the long-term life of the company. this is our 35th year. i think our best days are ahead of us. it is ultimately how you can take advantage of the things that may happen in the marketplace to grow your business. you cannot be afraid of change. you have to have a team that can adapt to change and be willing to change and i think we have that here at dish. short-term focus is probably with a merge with at&t, directv, a merger, if approved, we want to see what the conditions -- we publicly have not opposed the merger but we have said that there needs to be meaningful conditions, particularly protecting consumers for broadband rights.
the incentive option is coming up. and there is a set aside for new competitors. potentially. that is now set at 30 megahertz. i think us and other companies would like it to be higher. what really stands of the way of real competition with at&t and verizon is the fact they control the vast majority of the spectrum so they have better coverage. betty: top of mind, what is the number one condition you want to see for you to say "ok, this merger is ok for us?" charlie: i think the main condition is that obviously at&t controls a lot of the broadband pipes. what people do now is they bundle the video and broadband pipe together where you really cannot pick the best video choice for you as it customer if you want the broadband. in some cases, they are the only broadband provider in the territory. or the only meaningful broadband provider. so we want to make sure that broadband is sold as a standalone item and at a fair price to consumers.
and i think the other part is that you want to interconnect to the broadband pipe. the ramp to broadband -- you don't want that ramp to be closed. and net neutrality addresses some of that, but you would like to make sure some of the conditions of the merger would survive court cases. betty: some people estimate the value of your wireless assets to be $50, $60 billion or so. what will you do with those wireless assets? because there are reports that for you to really be able to leverage them up, you're going to have to partner with a wireless company. but if you don't, might you spin off those assets? might you separate dish into 2 -- video and wireless spectrum? charlie: i think we have talked about this at one of our conference calls. we have looked and continue to look at different corporate structures. so that you may end up with assets in different formations, and the reason you would do that is just to have flexibility for
how they could get put to use and maybe the timing of when they could be put to use. we have looked at that. we have not made any decisions on that yet. but it is something worthy of looking at. betty: is there anyone out there that you would never partner with? charlie: i don't think we would ever say never. i don't think so. i mean, the people i know in this industry -- i have a tremendous amount of respect for what they have all done. they are very successful companies. they all have their strengths and weaknesses. they all have things that are very meaningful. i think the most important thing for us is ultimately what will be the value to our shareholders and who would make the best use of our spectrum? so we can change the way people live by this connectivity and how that does change lives. and we have done some of that on a small scale with satellite tv. you know, we were the first to really do local to local and spot beam satellites.
we were the first guys to really have a dvr for the american public. we obviously have fought many battles to make sure that consumers have the right to choose to watch tv. i hope our best days are ahead of us. if you change -- if you get people connected all the time, it changes every facet of your life, from health care to education and to the way that you live. and it is a great digital divide conqueror, because at all levels in the american economy, rich, poor, inner-city, rural, they all know how to use phones and tablets. even little kids know how to use a tablet at two or three years old. betty: it is a great equalizer. charlie: it is a great equalizer. i think we can have a positive impact on america and society in terms of making sure that we bridge that digital divide and one of the ways we can do that is with connectivity. betty: when we come back, what is it like to work for ergen? i asked the dish founder about his reputation as a difficult boss and how he is trying to revamp that image.
country for its work environment. ergen told me he is aware of the criticism and is trying to change some things internally, but he also defended the culture he has built at dish. charlie: i think i am a really easy guy to work for and with if you are a high achiever and you want to achieve something. if you're just wanting a job, you are probably not going to like it too much here. right? i think dish is a culture for those people who want to achieve something. and there is some uncertainty, as you know, as we are talking about what you can do with the wireless. our shareholders don't know exactly, so there is some uncertainty, so it takes a little bit of bravery as a shareholder. you need long-term thinking. i think even for employees, they like to know what will happen tomorrow but we don't always know what is going to happen tomorrow. it is a special kind of -- it takes trust in your management, it takes a bit of an adventurous spirit to work here. because you do not always know exactly where you're going to go.
you are not in a training program, so you have to be more of a self-starter. for those people who like that, we have people who started in the warehouse that are executives. there are people who start in call centers who are executives now. people who are achieving their own internal potential and they are passionate about what they are doing. they're having a lot of fun. betty: if you were to write a management book, charlie, what would the title be? charlie: i couldn't write a book, number one, but i do think that the culture of a company is important. i think that companies don't have a good track record of surviving a founder. the ones that do have a culture that carries on. right? not to say a culture would not evolve or change over time but it is the culture that carries on, not the people. once you establish a culture, you have to hire and train into that. we have made some mistakes in the past where maybe we got complacent and did not do a good enough job of front in making
sure people really understood what our culture was about. but i think what generally people like about the culture is they can make a difference. they can make decisions and do things quickly. whereas a lot of companies, it is a lot of data, a lot of analyzing, a lot of meetings without a lot of decisions. here, we are moving pretty quick. but the negative part of it is we have high expectations. if you're not somebody used to high expectations, you are just not as comfortable here. i remember when my kids would be in the relay in the track meet at school and the person who came in first and last, they all got medals for participating. but we don't do that here. you don't get a medal for participation. betty: ergen went on to tell me that he thinks companies can be demanding while keeping their employees happy. but it is clear that for this ceo, winning is what ultimately counts. so our conversation turns to competition. as the paid tv market morphs,
will there be a shakeout, and who will succeed? charlie: like with any new technology and new business, there will be some carcasses that do not make it just along the side of the road. i just hope we're not one of them. we don't mind other people being successful. we really kind of try to do it ourselves and think how we are going to be successful. we will be successful if we have a good product and technology. betty: is it primarily on price? will it be fought on price? charlie: i think it will be fought on price, but i think also user interface and ease of use. can you just pick it up and use it without an instruction manual. certainly, apple has pioneered that kind of thing, but we have done a good job of that ourselves. we got lots of room for improvement on sling tv. it has a pretty good user interface for 20 channels and now we have 60 channels. over 200 international channels. we have to make improvements there, but it will be fought on a number of issues.
distribution, real estate. is your app on devices. so a lot of issues, but price will be one of the issues. betty: given that, is apple tv -- the fact they have not revamped this in several years, are they a little too late to the game? charlie: no, i think we are still in the first inning. i do not think they are late at all. i think the second game is still next year. i think there is room for multiple entrants. we will probably see multiple entrants, including the cable industry, at some point in time. betty: where do you see video in five years? charlie: in general, almost any video you or i would want to watch is probably in the cloud. we are probably connected to that cloud and have access to that video. and the next generation probably doesn't know video by channels, they probably don't know it by comedy central, they know it by this particular show, by the program. there is a loss of identity, i think probably, that goes on between the networks, and it
just becomes shows. netflix has proven that, right? you do not know -- you are getting program info from viacom or discovery but you don't know it is their programming. i was always a little baffled why the programmers did that. but that cow is out of the barn. you are just going to talk to your phone or to your device and say this is what i want to watch and it is just going to pull it up and you are going to start watching it. you're not going to have to worry about pushing a button to record something, or doing anything. you will have access on demand to every video. whether it is a 1930's movie or the latest sporting event. betty: you distribute content, but would you ever go into creating content? charlie: i doubt it. we barely have expertise to do what we are doing today. as a company. and we are trying to get better, but we have no expertise on content. creation. the only thing we ever created in content was a "charlie chat" show where i would sit and talk
to our customers like this when i was ceo, and it was a pretty bad show. that is the best we have ever done. betty: have you reinstituted that? charlie: i haven't yet. the phone is not ringing off the hook to bring back "charlie chat." betty: that wraps up this special "titans at the table" conversation with dish founder and ceo charlie ergen. you can find more episodes of our show on bloomberg.com, along with in-depth coverage of today's news and conversation with the world's business leaders. i am betty liu. thanks for watching "titans at the table." ♪