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tv   Titans at the Table  Bloomberg  August 16, 2015 6:00am-6:31am EDT

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betty: he is the country boy millionaire of dish network, charlie ergen. charlie: i think we have a lot to talk about. onty: for the first time bloomberg television, he talks about the seismic shift in television. he is looking to merge with his plans for becoming the next big wireless company, and why he might be looking to merge with that guy -- the t-mobile ceo john ledger. but the famously tough boss charlie: they certainly have done a fantastic job. betty: but the famously tough boss faces questions about his management style. charlie: we have high expectations, and if you are somebody who is not used to high
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expectations, you're just not going to be as comfortable here. betty: join me and charlie ergen as he dishes it out here at "titans at the table." hello. i am betty liu. welcome to "titans at the table." dish network founder charlie ergen has been known as something of a fearless renegade , being thrown out of casinos for counting cards and other things. he created echostar in the 1980's and then started dish in the next decade. in the process, he has become one of the richest men in america, worth more than $20 billion. he stepped out of the spotlight in 2011, handing the ceo reins to joe clayton. just four years later, the founder is back in the hot seat. as television undergoes another revolution, video moving on to your second screen. like the satellite tv business, ergen wants to be at the
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forefront of this change by creating a new over the top product called sling tv. and buying up billions to dollars of wireless assets, assets he says can be used to build a legitimate competitor to at&t and verizon. when we first sat down for an interview at his inglewood, colorado headquarters, i asked him to describe this new frontier. charlie: now we are in another transformation. the transformation has gone about in two places. one, tv itself is transforming. people are looking for more of what they want to watch and not paying for what they do not want to watch. they want to watch tv everywhere. part of that is technology of over-the-top allows customers to do that. and the second transformation is wireless. the wireless industry where the world will be connected all the time and there are only two ways , to do it. one is through the wire and the other way is through wireless, and we started on a mission about five years ago saying we
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want to be a part of that revolution. the best place to do this in the marketplaces in the wireless side because we are a wireless company. betty: unless you have accumulated $50 million or $60 million in wireless assets? charlie: 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. that is what we are looking forward to doing. betty: charlie, does this remind you at all about the transformation of television and the on boarding of so many millions of people wirelessly -- does this remind you of the early days of satellite television? charlie: it does. in the early days of satellite television, the incumbent said, why would anybody pay for a satellite dish? the answer was simple.
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it was better digital quality, all-digital, interactive, less expensive, and the bundles were a little bit smaller and you have more choices as a consumer. the signal quality was more reliable, it was a better picture, hd tv was more prevalent satellite, and so now people are asking the question, why would you pay for ott and the similarities? ott eliminates some of the pay points. we have millions of homes that do not pay for tv as we know it. they pay for netflix and we take away some of those pain 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 your service for two months without any cost. it is immediate. betty: you can do it right away. charlie: you can watch the nba finals tonight and you don't have to wait for an installer. betty: you don't have to wait and take a day off work and wait for the cable guy.
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charlie: 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 today or maybe who paid for tv one time and then just drop off the pay tv universe. wanting to pay for more we certainly are encouraged by the start of sling tv, but we have a long way to go. we are not perfect yet. we are on lots of different devices and live tv is really hard, and we are doing things and inventing things like dynamic ad insertion that we have not done before. it reminds me a lot of when we started dish and satellite television. we had all kinds of technical problems and every night, we just not them down -- knocked them down one by one. we occasionally have a technical problem today. betty: but you pretty much resolved it then.
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charlie: we have resolved most of them, but we had a choice to make, it was either get out there and find out what we do not know or wait and try to be perfect. we probably got a little ahead of our skis, but i think it will pay off for us now. for those who are watching and did not have a good experience, try it again. 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: i think we have told people what we are going to do, and that is virtually the same thing for the last five years. i don't think it was really anything new. our dream would be to use our spectrum to really enhance the way that people connect and provide competition in the wireless business. not just in the wireless business, but in the broadband business as well. i do think that if properly deployed that we can go to a a
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lot of homes with totally wireless connections and they would not have a need for cable at all. it provides meaningful competition where there is not that much in broadband today. it is not that we have not played our cards, we do not know. 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 you want to do it. you want to make sure that it is economic to your shareholders to move in that direction. we are not that big a company. it is not that 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 would take our call, but certainly the wireless industry is controlled by two companies today. they are 20 times bigger than we are. they are going to make their moves and do their things and people are going to react to
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that. sometimes you just 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 is going to be put to use, it will create value for our shareholders, and we want to make sure it is provided in an economical way and we want to make sure it 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. ♪
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betty: welcome back to "titans at the table" and my conversation with charlie ergen. for years, ergen has been buying up gold -- the wireless kind. he has bid in several auctions for wireless spectrum, 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. this 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 a lot of positives to that. if there are willing participants, but they have done a fantastic job being the upstart company. john's team has captured the imagination of the public in terms of attacking the paying
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points we have in the wireless industry. their network is similar to our spectrum position. so it fits in that sense and obviously with their growth rate they will need more spectrum. , those things make sense. there are things that don't make as much sense. they are obviously controlled by a german company that has strategic initiatives 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 out there. certainly, t-mobile is an option. betty: speaking of the german owner, there are reports one of the reasons why a deal might not happen with t-mobile is they do not value dish shares as highly as you value them. there is a disconnect. where do you think dish should really be trading it?
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charlie: i never can predict the stock market. i would say that in the long run, 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: i don't know. i can only speak as a shareholder. i have sold some shares recently. [laughter] charlie: i still have the shares i had when we originally started the company. i believe in the long-term life of the company. this is our 53rd year in business and i think our best days are ahead of us. i think it is how you can take advantage of the things that may happen in the marketplace to grow your business and you cannot be afraid of change and 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. our short-term focus is a merger with at&t, directv, a merger, if approved, we want to see what the conditions -- we publicly have not opposed the merger but
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we have said 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. now set at 30 megahertz. i think us and other companies will want to see that be higher. it is what stands in the way of real competition with at&t and verizon is the fact they control the vast majority of the low band spectrum so they have better coverage. betty: off the top of your mind, what is the number one condition you want to see for you to say "ok, this merger is ok?" charlie: i think the main condition is obviously at&t controls a lot of the broadband pipes. what people do now is they bundle the video and broadband together where you really cannot pick the best video choice for you as a customer if you want the broadband. in some cases, they are the only broadband provider. our only meaningful broadband
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provider and what we want to make sure is that broadband is sold as a standalone item and at a fair price to consumers. the other part is that you want interconnect to the broadband pipe. the ramp to broadband -- you don't want that to be closed. net neutrality addresses some of that, but you would like to make sure the conditions of this merger would survive court cases. betty: some people estimate the value of your wireless assets to be $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 video and wireless spectrum? charlie: i think we have talked about this on one of our conference calls. we have looked at different corporate structures. we continue to look at different corporate structures so that you
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may end up with assets in different formations and the reason you would do that is to have flexibility for how they could get put to use and 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 certainly something worthy of looking at. betty: is there anyone out there you would never partner with? charlie: i don't think we would ever say never. i don't think so. the people i know in this industry -- i have a tremendous amount of respect for what they have all done. they have all been very successful companies. they all have their strengths and weaknesses. have things that are very meaningful. i think the most important thing for us is ultimately what will the value be to our shareholders and who will make the best use of our spectrum? so we can change the way people live by this connectivity and how that does change lives. we have done some of that on a small scale with satellite tv.
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we were the first guys to really do local to local. we were the first guys to have a dvr for the american public. we obviously have fought many battles to make sure that consumers have the right to choose when it comes to watching tv. we have done a lot of good things. 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 of the american economy -- rich, poor, inner-city, rural -- they all know how to use phones and tablets, even little kids know how to use tablets 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 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
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boss and how he can revamp that image and his company. charlie: you do not get a medal for participation. betty: more when "titans at the table" returns. ♪
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betty: welcome back to "titans at the table." i am betty liu. it was fun to sit down with charlie ergen, but according to some reports, it is not so fun to work for him. in 2012 and 2013, employee
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surveys gave dish network some of the lowest ratings in the country for its work environment. ergen told me he 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. i think dish is a culture for those people who want to achieve something. and there is some uncertainty, as you know, with what you can do with the wireless. our shareholders don't know exactly, so it takes a little bit of bravery as a shareholder. you have to have long-term thinking. i think even for employees, they would like to know what is going to 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, a bit of an adventurous spirit to work here. you do not always know exactly where you are going to go.
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and 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. people who started in call centers who are executives now. we have 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, 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 and 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. not to say a culture would not evolve and change over time, but the culture is what carries on, not the people. once you establish a culture, you have to hire and train into that culture.
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maybe where we have made some mistakes in the past where we got complacent and did not do a good enough job upfront to make sure people understood what our culture is all about. but i think what generally people would say they 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, analyzing. a lot of meetings, a lot of decisions. we are moving quick. the negative part of it is that we do have high expectations. so if you are not used to that, you are not as comfortable here. i remember when my kids would be in the relay and in the track meet at school and the person who came in first and last 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 , for this ceo, winning is what ultimately counts. so our conversation turns to competition. as the paid tv market morphs,
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will there be a shakeout and who will succeed? charlie: i think there will be new technology and new businesses. i think there will be some some carcasses that don't make it just along the side of the road. we just hope we're not one of them. you know, we don't mind other people being successful. we try to do it ourselves and think how we are going to be successful and we will be. if we have good technology and a good product and good choice. betty: will it be primarily fought on price? charlie: i think also user interface and how the user -- 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 have a lot 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
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there, but it will be fought on a number of issues. it will be fought on distribution, real estate, prices. a lot of issues but price will be one of the issues. betty: given that, is apple tv -- the fact they have not revamped 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 to the game at all. i do not think the second inning is told next year. i think there is room for multiple entrants. we will probably see multiple entrants, including the cable industry, at future points in time. betty: where do you see video in five years? charlie: in general, almost any video that you and i would want to watch is probably in the cloud. we are connected to the cloud. we 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
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probably that goes on between the networks and the shows. it just becomes shows. netflix has proven that, right? you get 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 device and say this is what i want to watch and it will pull it up. and you are going to start watching it. you're not going to have to worry about pushing a button or recording something, or doing anything. you have access on demand. whether it is a 1930's movie or whether it be 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. we are trying to get better, but we have no expertise on content. the only thing we ever created in content was a charlie chat.
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would sithow where i 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. the phone is not ringing off the hook to bring back the show. betty: that wraps up this special "titans at the table" conversation with charlie ergen. you can find more episodes of our show on, along with in-depth coverage of today's news and conversation with the world's business leaders. i am betty liu. thank you for watching "titans at the table." ♪
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♪ martha: i was told when i started that i could not be a director because i was a woman. and i have been directing now for many years, but certainly not as frequently as i would have had i been a man. maria: i was going into meetings on projects with people as a featured director that would work with academy award nominated actors. so i should have been taken seriously in these meetings. but i wasn't. it was always a sense of, can you really do this? that a man could do it better.


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