Dish Network's Charlie Ergen Is the Most Hated Man in Hollywood

 

This friend-and-foe dilemma is the essential conundrum Dish presents. Six months before its deal with Disney was set to expire, Dish wasn't at any negotiation table but rather in a courtroom, taking Disney's ESPN unit to trial for allegedly offering Dish competitors better prices.

Naturally, Ergen has been hailed as a hero by consumer advocates who appreciate his willingness to toy with a TV model that has become sacred to Hollywood conglomerates. "When it comes to trying out new things and keeping costs down in a competitive market, you need a first-mover like Dish," says John Bergmayer at Public Knowledge, a not-for-profit rights organization.

Notes Vijay Jayant, an analyst who has been following Dish for years at ISI Group: "Charlie's attitude is, 'At some point, they'll negotiate with me on my terms.' He's bluffing until he's not."

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If Dish exihibits a special form of aggression, observers credit this to its billionaire founder and his company's precarious position in the competitive video-distribution industry.

Charlie Ergen was born in Tennessee to a physicist father who is credited as coining the phrase "China syndrome" to describe the containment shortcomings of a nuclear reactor accident. After playing small forward on the state university's basketball team, Charlie earned a business degree from Wake Forest University in 1976, then worked as a financial analyst at Frito-Lay. Two years later, at 25, he stunned his family by "retiring" -- or rather, he took advantage of the discounts his future wife, Cantey McAdam, got working as a flight attendant to travel the world. He also fiddled with becoming a professional poker and blackjack player.

Then, in 1980, his buddy Jim DeFranco told him about "a big satellite dish getting signals from outer space," according to a Wake Forest commencement address Ergen gave in 2012. Together with DeFranco and McAdam, the three sank $60,000 of their personal savings into a suburban Denver startup called EchoStar.

An avid mountain climber who has scaled Mount Kilimanjaro and Mount Everest, Ergen steadily has grown his business -- now officially known as screaming-all-caps DISH -- into one of the 200 largest corporations in the world, averaging about $1 billion in annual profits (Ergen controls 88 percent of voting power at the company). Dish thrived in large part by focusing on the hilly rural areas of the country, where cable TV lines did not run -- and, of course, a willingness to brawl with anyone getting in the way.

Dish employees, adversaries and analysts say no one exploits the judicial system like Ergen does to gain a competitive advantage. A judge a decade ago noted that Ergen had violated a pledge made under penalty of perjury to stop distantly retransmitting local TV signals. An appeals court wrote in 2006 that there was "no indication that EchoStar was ever interested in complying with the [Satellite Home Viewer] Act," and added, "We seem to have discerned a 'pattern' and 'practice' of violating the Act in every way imaginable."

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During the mid-2000s, when Ergen was fighting TiVo over who owned rights to DVR technology, not only did TiVo convince a court that Dish had violated a patent, but the judge in the case found it "distasteful" that Ergen's company would "engage in an ad campaign that touted its DVRs as 'better than TiVo' while continuing to infringe TiVo's patent." In 2009, Dish officially was sanctioned by the court. (The parties later settled.)

Perhaps most notoriously, there were the irate judges who officiated Dish's recent battle with Cablevision/AMC after Dish terminated a 15-year deal to carry the Voom networks, a suite of 21 little-watched HD channels such as Kung Fu HD and Film Fest HD. In the early days of the case, Dish was penalized for "bad faith" or "gross negligence" in the destruction of internal company emails. A visibly angry New York Supreme Court Judge Richard Lowe later threatened to launch an investigation unless Dish documents were turned over. The suit became so ugly that at one point, Dish executive Carolyn Crawford hit the father of the opposing side's lawyer on her way out of the courtroom. She later apologized in open court.

In a sexual harassment case in Maryland in 2005, a judge wrote that "EchoStar [was] guilty of gross spoliation of evidence." In a 2012 trademark dispute, a judge said of Dish lawyers that he had never encountered "such divisiveness or contentiousness" in his 17 years on the bench.

"Most corporations have an institutional bias against litigation and see it as necessary evil," says one network insider. "But for Charlie, that's how he likes to run his company. You'll never see him suing in his home state, though. Their name is mud in Colorado. Judges are on to them."

In fact, when Dish filed suit in May 2012 in an attempt to beat broadcasters to court and have a judge declare the Hopper legal, it did so in New York.

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Dish continues to be pugnacious at every turn. The Federal Trade Commission and Justice Department are jointly pursuing a lawsuit against the company for allegedly violating telemarketing sales rules by placing unwanted calls to millions of consumers. Dish also uses every opportunity it has to tout its Hopper as the tech product so great that the networks won't let anybody hear about it (even while telling judges that the Hopper is not so different from other DVRs).

Ambush spin is common at Dish. On industry news websites, employees regularly leave comments meant to slyly promote Dish services. One writer at AllThingsD was so fed up that in 2011, he penned a column titled, "Dear Dish Network: Your Spam Makes Me Sad. Please Stop." The press release issued by Dish in the Kaley Cuoco flap is another example. There was no source of the alleged CBS demand to delete her tweet, and CBS flatly denied it. Pushed to corroborate such an allegation, Dish spokesman John Hall will only say, "We were contacted by someone close to the situation who told us that CBS asked her to remove the tweet."

Barbara Roehrig worked at EchoStar during the mid-’90s and was the company's first female senior executive. She remembers constantly sparring with Ergen, who sometimes would threaten to walk into a room and fire all the employees he called the "craziness pack." "The modus operandi is yelling there, and it takes a toll," says Roehrig, adding that she still stays in touch with many in Dish's middle management who refuse to ascend to the company's executive ranks because of the emotional turmoil that it brings. "We've all been in the line of Charlie's ranting."

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