Dish Chairman Charlie Ergen On Intensifying Sinclair Carriage Fight: “We’re Not Interested In Taxing Our Customers”

Ongoing carriage friction between Dish Network and Sinclair Broadcast Group could soon intensify, with Sinclair warning that 112 of its local TV stations could soon go dark on the pay-TV provider.

In a press release, Sinclair said the stations, which serve 38% of Dish’s 11 million satellite and streaming customers, could vanish August 16 unless the parties can reach terms. Sinclair is the No. 2 owner of local stations in the U.S. It also owns a string of regional sports networks, a longtime Fox-branded portfolio acquired from Disney in 2019 after Sinclair led an investment consortium. Those RSNs, now under the Bally’s brand name, have been off Dish for more than two years.

In an earnings conference call with Wall Street analysts, Dish chairman Charlie Ergen was asked about the source of the dispute with Sinclair. “At the end of the day, it’s about money,” he said. “It’s about economics. That hasn’t changed in any programming negotiation that I’ve been involved with.” Known for decades for his brinkmanship in carriage negotiations, Ergen has waged long-term wars with HBO and Univision in recent years and drawn a line in the sand with costly sports programming. Resistance to increased carriage fees has only increased since Dish began to pivot as a company away from pay-TV and toward the wireless industry.

Asked if there is any link between a potential deal with Sinclair for the broadcast stations and one for the RSNs, Ergen did not sound any hopeful notes. “We don’t have any customers calling us on RSNs today,” he shrugged. “If the local channels were to go down, we would have more than one customer calling us the next day saying, ‘Where’s my local channel?’”

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As far as potential scenarios for sports, “We’re happy to talk about anything that’s creative and doesn’t harm our customers,” Ergen said. “But we’re not interested in taxing our customers when they don’t watch the channels. That doesn’t make any sense.”

Dish CEO Eric Carlson said viewership on broadcast is in decline. He noted downturns in ratings for the Tokyo Olympics as well as award shows and other live sports. Dish is “sympathetic” to local stations in general, Carlson added, because “a lot of them are in competition with their larger owners,” meaning increasingly streaming-obsessed network parents. NBCUniversal, he noted as an example, shifted Notre Dame’s football season opener to streaming service Peacock from its longtime home on NBC.

Local stations are affiliated with ABC, CBS, FOX and NBC affiliates. The mid-August timing of a potential blackout could jeopardize the start of the college football season later in the month, and then NFL games and broadcast premieres in September.

“We apologize to our viewers for the inconvenience this may cause,” said David Gibber, Sinclair’s general counsel, “although our programming will continue to be available either through other program providers or via over-the-air antenna reception.”

After years of acrimonious carriage fights, the marketplace has become a bit less turbulent over the past year or two as the future of pay-TV becomes more clearly one of managing decline. Most pay-TV operators have shifted their strategic focus to other areas, a general acknowledgement that the fee increases they counted on in the boom years are now much more scarce. Along with Sling, other internet pay-TV bundles like YouTube TV and Hulu + Live TV have also parted ways with regional sports networks, which blossomed along with the traditional bundle in the 1990s and 2000s.

Sinclair executives have said they have held talks with Major League Baseball, the NBA and other leagues about “enhancing” the linear RSNs with stand-alone streaming packages. While CEO Chris Ripley last week denied a report that the streaming outlet would cost a hefty $23 a month, he has said the plan is to launch it in the first half of 2022. The move is in line with other initiatives in TV sports. Amazon joined with Sinclair, private-equity firms and the New York Yankees to take over the YES network in 2019, and Amazon has started exclusive, in-market streams of select games.

Dish this morning reported second-quarter results that exceeded Wall Street analysts’ expectations. Earnings per share rose to $1.06 from 78 cents in the year-ago period, with revenue increasing to $4.5 billion from $3.2 billion in the 2020 quarter.

The company shed about 67,000 pay-TV customers in the quarter, falling to 10.99 million. Of those, 8.55 million are on Dish’s satellite platform, while 2.44 million customers get pay-TV through streaming bundle Sling TV.

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