tv Titans at the Table Bloomberg June 27, 2015 8:00am-8:31am EDT
join me as charlie ergen dishes this out on titans at the table. betty: hello, i'm betty liu, welcome to titans at the table. charlie ergen has always been a fearless renegade. 27 satellites out of his car group calledled a echostar and unite an 80's. he started dish in the next decade, upending a traditional cable to the world. in the process, he became one of the richest men in america, worth nearly $20 billion. he stepped out of the spotlight in 2011, ending the ceo reins to joe clayton. isr years later, the founder back in the hot seat. video moving on to your second screen. like the satellite tv business and its early days, argan wanted to be at the forefront of this
change by creating a new over the top product called sling tv, and by aliens of dollars of assets, assets that he says could be used to build a legitimate competitor to at&t and horizon. when we first sat down with him, i asked him to describe this new frontier. now, we are in another transformation. one is that tvs itself is transferring. people are looking for at what they are want to watch, not paying for things they don't want to watch. they want to watch the tv everywhere. part of that is the technology of over the top allows customers to do that. the second transformation is wireless. the wireless industry where the world is going to be connected all of the time and there are only two ways to do it. one is with a wire and the other is wirelessly. we started on a mission five years ago to say we think we can be part of that revolution and the best place for us to enter the marketplace is in the
wireless side. betty: you have accumulated $60 billion in wireless assets. charlie: about 80 megahertz. it certainly is worth a fair amount of money. it is only really worth money when you put it to use and when you build a business around it and get discounted cash flows and that is what we are looking forward to doing. betty: does this remind you -- the transformation of television and the onboarding of so many millions of people wirelessly -- does this remind you of the early days of satellite television? charlie: it does. in the early days, everybody said, "why would anyone pay for a satellite dish?" the answer was simple. better picture quality, interactive, less expensive, more choices for the consumer.
the signal quality was more reliable. now people are asking the question, "why would you pay for ott?" ott eliminates some of the paying points. a lot of people don't pay for tv as we know it. we take away some of those points with sling tv so you don't have a contract, equipment to buy. you can go on vacation and take your service off for a month or two. you can go in and out of the service through the internet without any cost. it is immediate. betty: you can do it right away. charlie: you don't have to wait for an installer and somebody to come by. betty: you don't have to take a day off and wait for the cable guy. charlie: and it is less expensive. our basic package is $20. we have premium channels.
it attracts a lot of people, particularly younger people who are not paying for tv today or maybe at one time paid for it and said it was too expensive. we certainly are encouraged by the start of sling tv but we have a long way to go. we're not perfect yet. we knew it would be difficult but it is difficult because we are on lots of different devices and live tv is really hard. we are doing things that have not been done before. it reminds me a lot of when we started satellite television and we had all kinds of technical problems. we had to knock them down one by one and it took us about six months. we occasionally have a technical problem today. betty: obviously you resolved it then and you believe you have that same timeframe. charlie: we have resolved most of it. we had a choice to make.
get out there and find out what we don't know or wait and try to be perfect. we got out there probably a little ahead of ourselves but i think it will pay off for us now and for those people watching who did not have a good experience, try it again. betty: you have all of your cards close to your chest. wireless assets, sling tv -- you're looking at various options. when will you make your play? charlie: i think we have told people what we are going to do. i don't think there is really anything new. our dream would be to use our spectrum to enhance the way people connect and provide competition in the wireless business and broadband business. we can go to a lot of homes with wireless connections and they will not have a need for cable at all.
that provides meaningful competition where there is not much. i think we can do those things. how we do those things -- it is not that we haven't played our cards. we don't know. we don't know the best way to play that because you have to find companies that have a like-minded strategy. you like to have companies that move the same direction you want. we are not that big a company. betty: i think anybody would take a call from charlie ergen. charlie: certainly the wireless industry is controlled by two companies today. there are 20 times bigger than we are. they will make their moves and do their things and people will probably react. sometimes, you have to be ready to move when you see other things.
♪ betty: welcome back to "titans at the table" and my conversation with charlie ergen. for years, ergen has been buying up gold. the wireless kind. they are the airwaves that transmit your phone calls or video to your devices. analysts estimate ergen is sitting on $60 billion worth of this gold. maybe t-mobile. he would not confirm the rumors but i asked him if it would be logical for the two companies to team up. charlie: i think there are a lot of positives to that. if there are willing participants but they have done a fantastic job being the upstart company. john's team has captured the imagination of the public in terms of attacking the paying points we have in the wireless industry.
their network is similar to our spectrum position. it fits in that sense and obviously, they will need more spectrum. those things make sense. there are things that don't make as much sense. obviously, controlled by a german company that has strategic initiatives in europe and the u.s. they may not be in a position where they want to do anything. we have other options that may be more attractive to our board and shareholders. i think there is a number of options out there. certainly, t-mobile is an option. betty: speaking of the german owner, there are reports one of the reasons why a deal might not happen with t-mobile is they do not value dish shares as highly as you value them. there is a disconnect. charlie: i never can predict the stock market.
in the long run, we think the spectrum value we have -- we are probably undervalued with the spectrum position we have but we have to prove it to the marketplace. betty: undervalued by how much? charlie: i don't know. i can only speak as a shareholder. i still have the shares i had when we started the company. i believe in the long-term life of the company. i think our best days are ahead of us. i think it is how you can take advantage of the things that may happen in the marketplace to grow your business and you have to have a team that can adapt to change and be willing to change and i think we have that. our short-term focus is a merger, if approved, we want to see what the conditions -- we publicly have not opposed the merger but it needs to be meaningful conditions, particularly protecting consumers for broadband rights.
the option is coming up and there is a set aside for new competitors. us and other companies will want us to be higher. it is what stands in the way of real competition, the fact they control the vast majority of the spectrum so they have better coverage. betty: what is the number one condition you want to see for you to say "ok, this merger is ok"? charlie: i think the main condition is obviously at&t controlled a lot of the broadband pipes. what people do now is they bundle the video and broadband together where you really cannot pick the best video choice for yourself if you want the broadband. in some cases, they are the only provider. we want to make sure broadband is sold as a standalone item and at a fair price to consumers.
the other part is that they interconnect to the broadband pipe. the ramp to broadband -- you don't want that to be closed. net neutrality addresses some of that. you want to make sure these programs will survive court cases. betty: some people estimate the value of your wireless assets to be $60 billion or so. what will you do with those assets? you're going to have to partner with a wireless company but if you don't, might you spin off those assets? might you separate dish into video and wireless spectrum? charlie: we have looked at different structures. we continue to look at different corporate structures so that you may end up with assets in different formations and the
reason you would do that is to have flexibility for how they could get put to use and the timing. we have looked at that. we have not made any decisions on that yet. it is something worthy of looking at. betty: is there anyone out there you would never partner with? charlie: i don't think we would ever say never. the people i know in this industry i have a tremendous amount of respect for what they have done. they all have their strengths and weaknesses. i think the most important thing for us is ultimately what will the value be to our shareholders and who will make the best use of our spectrum? so we can change the way people live by this connectivity and how that does change lives. we have done some of that on a small scale with satellite tv. we were the first to do local to local. we were the first to have a dvr for the american public.
we have fought many battles. we have done a lot of good things. i hope our best days are ahead of us. if you change -- if you get people connected all the time, it changes every facet of your life from health care to education. it is a great digital divide conqueror because at all levels of the american economy, they all know how to use phones and tablets. even the children. betty: it is a great equalizer. charlie: i think we can have a positive impact on america and society in terms of making sure we bridge that digital divide and one of the ways we can do that is with connectivity. betty: when we come back, what is it like to work for ergen? i asked him about his reputation as a difficult boss and how he can revamp that image.
lowest ratings in the country for its work environment. ergen told me he is trying to change some things internally but also defended the culture he has built at dish. charlie: i am a really great guy to work for if you are a high achiever. if you just want a job, you will probably not like it too much. i think dish is a culture for those people who want to achieve something. there is some uncertainty, as you know, with what you can do with the wireless. it takes a little bit of bravery as a shareholder. i think even for employees, they like to know what will happen tomorrow but we don't always know. it is a special -- it takes trust in your management, a bit of an adventurous spirit to work here. you have to be more of a self-starter.
for those people who like that, we have people who started in the warehouse that are executives. people who are achieving their own internal potential and they are passionate about what they are doing. betty: if you were to write a management book, what would the title be? charlie: i couldn't write a book. but, i do think that the culture of a company is important and i think that companies don't have a good track record of surviving a founder. the ones that do have a culture that carries on. not to say a culture would not evolve but it is what carries on, not the people. once you establish a culture, you have to hire and train into that. we have made some mistakes in the past where we got complacent and did not do a good enough job upfront to make sure people
understood what our culture was about. what generally people like is they can make a difference. a lot of companies, it is a lot of data, analyzing. we have high expectations. if you are not used to that, you are not as comfortable. my kids would be in the track meet at school and the person who came in first and last all got medals for participating. we don't do that here. you don't get a medal for participation. betty: he thinks companies can be demanding while keeping their employees happy but it is clear for this ceo, winning is what ultimately counts. our conversation turns to competition. will there be a shakeout and who
will succeed? charlie: i think there will be some carcasses that don't make it. we just hope we're not one of them. you know, we don't mind other people being successful. we try to do it ourselves and think how we are going to be successful and we will be. betty: is it primarily on price? charlie: i think also user interface and how the user views. if you can pick it up and use it without an instruction manual. certainly, apple has pioneered that but we have done a good job of that ourselves. we have a lot of room for improvement on sling tv. now, we are 60 channels. we have to make improvements there but it will be flat on a number of issues. distribution, real estate.
a lot of issues but price will be one of the issues. betty: given that, is apple tv -- the fact they have not revamped in several years -- are they little too late to the game? charlie: i think we are still in the first inning. i think there is room for multiple entrants. betty: where do you see video in five years? charlie: in general, almost every video is in the cloud. we have access to that video and the next generation probably doesn't know video by channels, by comedy central. they know it by the program. there is a loss of identity probably that goes on between the networks and the shows.
netflix has proven that. you don't -- you get program info from discovery but you don't know it is their programming. i was always a little baffled why the programmers did that. you are just going to talk to your phone or device and say this is what i want to watch and it will pull it up. you'll not have to worry about pushing a button to record something, doing anything. you have access on demand. whether it is a 1930's movie or the latest sporting event. betty: you distribute content but would you ever go into creating content? charlie: i doubt it. we barely have expertise to do what we are doing today. we have no expertise on content. the only thing we ever created was a charlie chat. i would sit and talk to our
customers like this when i was ceo and it was a pretty bad show. that is the best we have ever done. betty: have you reinstituted that? charlie: i haven't. the phone is not ringing off the hook to bring back the show. betty: that wraps up this special "titans at the table" conversation with charlie ergen. you can find more episodes of our show on bloomberg.com, along with coverage of today's news and conversation with the world's business leaders. i am betty liu. thank you for watching "titans at the table."
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