Peter Kafka

Recent Posts by Peter Kafka

Dish Network Doesn’t Want to Blow Up TV. It Wants to Pay Less for It.

Does Charlie Ergen really want to blow up the TV business, using his ad-skipping “Auto Hop” feature?

You can make that case, and if you want to hear an entertaining rendition of it, check out Peter Lauria’s live-on-tape report from Times Square here.

But here’s a less-dramatic reading of Ergen’s ambitions: Like everyone else in America, Ergen likes TV, a lot. He just wants to pay less to watch it.

TV programmers have been able to push up the price for their shows, year after year, even as the audience for those shows gets smaller and smaller. Their latest move: Convincing pay-TV operators to pay them “retrans” fees for the four broadcast networks, which are theoretically supposed to be available to anyone in the country, free of charge.

The pay-TV operators have been taking those fees and passing them along to consumers, because it’s easier to do that than anything else.

And in that context, Ergen’s ad-skipping feature makes a lot of sense, because it freaks the networks out, for obvious reasons. So if the courts let it stand, then Ergen finally has real leverage when it comes to fees: If the networks won’t lower them, he’ll torch their ads.

There is another way to negotiate with the programmers: Just don’t carry their stuff at all. And that’s what Ergen is threatening to do with AMC TV, the people who bring us “Mad Men” and “Breaking Bad.” While a bunch of us really love those shows, the majority of pay-TV viewers don’t watch them, so Ergen’s bet is that he can live longer without AMC than it can do without his fees. But he can’t afford to do that with the broadcasters, who still have mass reach.

Still, note that even in that case, Ergen isn’t saying that he doesn’t want to carry “Mad Men,” et al, on his service — he just wants to pay less for it.

“Obviously there’s a price where an [AMC Networks] product makes sense. We just don’t think that’s where we are today,” he told investors earlier this month.

My hunch: That’s what he’s saying to NBC, Fox, CBS and ABC, too. He’s just using technology and the courts to deliver the message.


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