By Shalini Ramachandran
Dish Network Corp. Chairman Charlie Ergen came out swinging
against the Comcast- Time Warner Cable merger and added fuel to
Wall Street speculation that Dish could reattempt a merger with
satellite-TV rival DirecTV.
The cable megadeal "certainly doesn't hurt the case for
consolidation" of the two satellite-TV giants, Mr. Ergen said. "If
you could take the No. 1 and 4" players in pay TV and put them
together, "it would be hard to see why you couldn't put the numbers
2 and 3 together."
DirecTV and Dish are the second- and third-biggest pay-TV
providers by subscribers, while Comcast Corp. and Time Warner Cable
Inc. are No. 1 and 4, respectively.
A Comcast-TWC merger would "send a seismic shift across our
industry" that "puts pressure on everybody" in the video and
broadband businesses in an "unprecedented" way, Mr. Ergen said.
"There's nothing that I can see that's positive about it for
anybody in the video or broadband or content business."
Previously, Dish and DirecTV executives have expressed that an
obstacle toward a combination could be the divergent strategic
paths the two have taken in recent years. Dish is pursuing an entry
into the wireless business, while DirecTV has said it doesn't see
the economics of wireless working out. Mr. Ergen said the different
strategies "don't necessarily make things impossible" and after the
Comcast-TWC deal, it "certainly makes us look at everything in a
different light."
Mr. Ergen echoed comments made Thursday by DirecTV Chief
Executive Mike White in pointing out that the cable deal would
concentrate broadband market power into one "nationwide player." He
added that the new merged company's leverage with TV channel owners
to negotiate lower programming costs would only lead to increased
costs for other distributors, as programmers would look to make up
the difference.
Dish said its management is assessing the impact of the deal and
will be putting together "options and impacts" to be shared with
its board of directors "shortly." Mr. Ergen said Dish hasn't yet
decided whether to formally oppose the deal.
Mr. Ergen's comments came as Dish said its fourth-quarter profit
jumped 38% as it added subscribers to both its pay-TV and broadband
services.
Dish has been the most vocal of pay-TV providers in
acknowledging the maturity of the pay-TV business and the
competitive threat of inexpensive online video. It has been adding
to its satellite broadband subscriber base while struggling to keep
growing pay-TV subscribers. Dish added 8,000 pay-TV customers in
the fourth quarter, down from 14,000 a year earlier. But its
broadband growth improved, adding about 80,000 net broadband
subscribers, up from 57,000 additions in the previous year's
quarter.
On the subject of wireless, Mr. Ergen made clear that Dish isn't
interested in going up against SoftBank Corp. of Japan, which
bought control of Sprint Corp. last year. The Wall Street Journal
has previously reported Sprint's interest in an acquisition of
T-Mobile.
"We're realistic to know we're not going to outbid SoftBank in
any transaction," Mr. Ergen said. "You're not going to see us
engaged in that fight."
Separately, Mr. Ergen said that he is "cautiously optimistic"
that Dish will come to a carriage agreement with Walt Disney Co.'s
channels "before the next conference call." The two companies have
been in months of extended negotiations past a contract expiration
deadline last fall.
Dish posted earnings of $288 million, or 63 cents a share, up
from $209.1 million, or 46 cents a share. The year-ago quarter
included a loss of $25 million from discontinued operations,
compared with a loss of $7.1 million in the most recent period.
Revenue rose 6.6% to $3.54 billion.
EchoStar Corp.--the set-top box maker that spun out of Dish in
2008--posted income of $4.5 million, or five cents a share, down
from $26.2 million, or 28 cents a share, a year earlier. Revenue
rose 2.8% to $808.1 million.
EchoStar said it reached a deal to acquire five satellites and
about $11 million in cash from Dish. In exchange, Dish will receive
two issues of preferred tracking stock that will track the
performance of the residential retail satellite business of
EchoStar subsidiary Hughes Network Systems LLC. The stock
represents 80% of the economic value of the business.
EchoStar said it expects the new satellites to generate about
$145 million in incremental revenue during 2014.
Michael Calia contributed to this article.
Write to Shalini Ramachandran at
shalini.ramachandran@wsj.com
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