Dish Network and Turnergate

Dish Network

Dish Network has reported its third-quarter profits, which missed Wall Street profit expectations, while customers are apparently leaving the satellite provider for competitor DirecTV or cable options, some in light of what is being called Turnergate. Turner Broadcasting and Dish are around two weeks into a dispute over the contract to carry Cartoon Network, CNN and other channels, which were removed from the airwaves, upsetting a number of loyal subscribers.

Dish Network’s Chairman Charlie Ergen has called the loss of the Turner Broadcasting package a non-event. Ergen has indicated that the loss of CNN is not an issue with all the other news networks on Dish, and Disney has a number of options to replace the missing Cartoon Network and Boomerang kids’ networks. Yet, this non-event seems to see a number of subscribers canceling their service and moving to other providers of television programing.

The report showed that Dish lost 12,000 subscribers this last quarter. Already in this new quarter, anticipation is the loss of subscribers will grow to dangerous levels unless Dish and Turner can come to an agreement. However, neither side seems to be ready to come to any sort of agreement and the question about Turner’s two staple networks, TBS and TNT. Those channels were not included in the contract that pulled Cartoon Network and CNN from the air. Turnergate could get much worse for Dish Network if those channels are not renewed when their contracts come up. While Ergen may feel that the loss of the channels in the current Turner contract are a non-event, Dish may lose more subscribers than they can afford to lose if those channels disappear from their channel lineup.

And it appears it could get even worse for Dish. Negotiations are coming soon with major network player, CBS. If CBS negotiations with Dish Network break down, that could take away NFL games, NCAA football and basketball, and programing like NCIS and other highly popular programing from the subscribers. Some industry experts feel that the loss of the current Turner package as a slow bleed, and the potential loss of TBS, TNT, and CBS would be a death-blow to Dish Network.

Dish Network is also taking hits from services like Hulu, iTunes, Netflix and other online content providers. At prices a fraction of what a regular priced contract is from Dish, many people have not just left the satellite provider for lower cost options, but have also left DirecTV and cable companies.

Turner’s TBS has been a staple of pay-TV for decades. Considered America’s first Superstation, TBS has been the home of major sporting events over the years, including the NCAA’s March Madness tournament and TNT and TBS are staples of the NBA and recently signed a new contract with the professional basketball league. The loss of the programing on these two networks may kill off one the two major satellite providers in North America.

Turnergate may be a death hold for Dish Network, and the nonchalant attitude by Ergen towards the current loss of popular channels may be the wrong path for the pay-TV provider to go. Not providing the content that consumers are paying for is not likely not going to bode well for Dish Network.

By Carl Auer

The Wall Street Journal
Market Watch
Photo by Dave L – Flickr License