Dish Network's Charlie Ergen Is the Most Hated Man in Hollywood
This story first appeared in the April 12 issue of The Hollywood Reporter magazine.
In 1980, a few months before Charlie Ergen co-founded the company that would become Dish Network, he and a gambling buddy strode into a Lake Tahoe casino with the intention of winning a fortune by counting cards. Ergen, then 27, had bought a book called Playing Blackjack as a Business and studied the cheat sheets. Unfortunately for him, a security guard caught his pal lip-syncing numbers as the cards were dealt. The two were kicked out and subsequently banned from the casino.
More than three decades later, Ergen, now 60, again stands accused of cheating the house -- but this time the house is here, nestled in the confines of executive suites from Burbank to Beverly Boulevard. And now, Ergen's Englewood, Co.-based Dish Network, the nation's third-largest satellite/cable TV provider, a public company that's grown from a $60,000 startup to an empire with 14 million subscribers and $14 billion in annual revenue, is the entertainment industry's Enemy No. 1. With increasing frequency, Ergen has engaged in ugly, high-stakes games of chicken with Hollywood. In his brutal battle over ballooning carriage fees with AMC, he dropped The Walking Dead and Mad Men network from the Dish system for months. He also has spent years fighting with broadcasters over the practice of distantly retransmitting TV signals without a license and even was caught violating a promise to stop that he made under oath -- all while Dish was named "America's worst company to work for" by a watchdog website. But all that was just preamble to the Hopper.
In January 2012, Dish introduced the proprietary DVR service that allows consumers to "AutoHop," or watch the entire primetime lineup of the broadcast networks commercial-free without even having to fast-forward through ads. Immediately after its introduction, CBS, NBC, ABC and Fox filed lawsuits arguing that Dish, if allowed to continue offering the Hopper, will put them out of business. The networks want a judge to grant an injunction, and Fox is appealing the denial of a shutdown while making a renewed attempt to enjoin the Hopper -- after Dish added mobile capabilities amid the legal challenge.
Ergen, who is married with five kids and has seen his personal net worth swell to an estimated $10.6 billion, making him 100th on the most recent Forbes list of richest people, expresses confidence that he will win the legal fight and says it is time that the broadcasters get on board. "Some people are averse to change, but the advertising model is going to change with or without the Hopper," he recently told analysts. "What we're saying to the broadcasters is, 'There's a way for you not to put your head in the sand.' "
The broadcasters reject the assessment. "Services [like Hopper] that undermine the economic fabric of our business aren't just illegal, they potentially destroy our ability to give the public what it wants," CBS chairman and CEO Leslie Moonves tells THR. Adds NBC Broadcasting chairman Ted Harbert, "I think this is an attack on our ecosystem."
Not surprisingly, Hopper has become extremely popular. The year before Dish began offering the service for free to customers, the company lost 166,000 subscribers. Since then, Dish added back 89,000.
"We're a little bit like an Indiana Jones movie," a sanguine Ergen said about his company at the All Things Digital conference Feb. 11. "We're always in trouble. We always get out of it. We're always going from alligators to guys with arrows to snakes. We want to win." (Ergen declined comment for this piece.)
At a time when Big Four broadcast network ratings have hit historic lows, with Fox down 21 percent this season and NBC being beaten in the 18-to-49 demo by Univision during the February sweep, it's hard enough to pitch advertisers on delivering eyeballs to ads -- as the nets will do in May at the annual $10 billion upfront presentations. It's even harder when a major satellite carrier is touting its ability to completely eliminate commercials from the viewer experience. Networks hope that if research agencies like Nielsen start placing emphasis on those who watch programming a week after an initial live telecast, it will help keep advertisers in line. But analyst Richard Greenfield asks: "C3 vs. C7? Who is kidding whom about watching commercials during DVR'd programming?"
Interestingly, such TV carriers as Time Warner Cable and DirecTV, though presumably in possession of the same technological capability, have not provided products that have triggered such industry venom. Maybe there's a reason for that.
Ergen has presented Hopper as a consumer right while simultaneously telling analysts that programmers have "devalued" content by making TV shows available on Netflix and suing ESPN for, among other things, allowing streaming. CBS is trying to rescind its licensing contract with Dish by claiming that Ergen and his top lieutenants fraudulently hid their plans for the Hopper in contract meetings in 2011. And in February, Dish claimed CBS forced The Big Bang Theory actress Kaley Cuoco to delete a sponsored tweet endorsing Hopper, even though there was no evidence the actress was pressured. At a March event honoring Moonves, Cuoco announced, "I would like to take this opportunity to say one thing: Leslie, f--- the Dish Network."
As Hollywood reluctantly enters the digital age, new players like Barry Diller's Aereo TV service are challenging traditional revenue streams and squaring off against the networks in court. (Diller's Aereo survived an initial legal challenge April 1 when an appeals court allowed it to stay in business at least until a trial.) Even among these threats, though, Dish represents perhaps the most aggressive and well-funded disrupter. And it's controlled by a man who has the money and inclination to take the fight to its legal and, for Hollywood, very scary conclusion. Yes, he's known by some within his organization to be a penny-pinching loudmouth ("They treat their employees like slaves," says one online employee review). But it's one thing to scream at underlings and install a scanning device to police tardiness (yes, he really did that); it's quite another to destroy evidence and mislead judges in a courtroom -- Dish has been sanctioned for such behavior.
It's all enough to ask: If Charlie Ergen is the most hated man in Hollywood, what should the industry do about him?
Ergen now is gearing up for a fight that could answer that question. In September, a licensing agreement expires between Dish and The Walt Disney Co. The coming talks between the companies represent the first major negotiation since the introduction of the Hopper. Disney hardly wishes to bless a tech product like the Hopper by renewing its deal with Dish. But it's nearly impossible for a media company to walk away from the billions of dollars Ergen is paying for programming.