Dish's Ergen Admits Hopper Ad-Skipping is Kinda, Sorta About Leverage

'I Don't Want to Kill Ads,' Ergen Says

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So what's the real reason the Dish Network rolled out its TV-commercial-skipping technology? At an AllThingsD conference on Monday evening, Dish Network Chairman Charlie Ergen, the man with an insatiable appetite for agitation, initially said that the company's tech is not chiefly about creating leverage in negotiations to carry broadcast-TV networks. Later, however, he hinted it could have that effect.

Charlie Ergen
Charlie Ergen

"It obviously got people's attention in a way that we didn't get their attention before," he said.

Still, he said, the AutoHop feature of the Hopper DVR, which enables commercial-free playback on automatically-recorded broadcast prime time, is mainly about a different kind of leverage: pushing broadcasters and other cable and satellite providers to start evolving their offerings in ways that are better for consumers.

"I don't want to kill ads," Mr. Ergen said. "I think advertising is great."

The problem, he says, is that commercials are often irrelevant to the audience watching them. In the meantime, online TV upstarts are starting to incorporate advertising in a way that at least attempts to keep the viewer in mind.

Mr. Ergen spoke fondly of Hulu's Ad Swap feature, which lets viewers choose which ads to watch, calling it a "step in the right direction." He says he's pitched broadcast networks on the idea of running, fewer better-targeted commercials using Hopper consumption data that he believes will end up generating more revenue and insights for them, but to no avail.

Instead, Dish Network finds itself in litigation with the networks that he says will "ultimately decide the fate of commercials." If the broadcasters win, "it would outlaw DVR," he claimed.

"You can fight change or you can embrace change," he added. "And I believe it's less risky long-term to embrace change. You can either lead it and make the rules, or you can be a fast follower, or you can be a slow follower and pay more."

Those leading change right now are mainly internet companies. Netflix has already withstood pressure and is here to stay, Mr. Ergen said, calling himself a "fan" of the service and its new "House of Cards" series "brilliant." He also thinks there is room for Amazon to build a real cable competitor since it can afford to subsidize its video content initiatives even if they are not currently financially self-sufficient. And he likes what he sees in Aereo, the web TV service that has also found itself at the center of litigation for letting its subscribers stream broadcast TV channels. "Genius stuff," he said.

In Mr. Ergen's view, these companies will either force one of the big satellite or cable providers to break the TV bundle paradigm and offer a la carte subscriptions, or draw off enough consumers to make them the new leaders of "TV."

"More than likely we'll sow the seeds of our own destruction and someone like Amazon or Netflix will [break the bundle] for us," he said.

Mr. Ergen also commented on Dish's ads that tout the role the Hopper can play in the death of TV commercials. The spot, he said, is "not an ad that the networks are going to run." Instead, the campaign is meant to build buzz in social media and elsewhere on the web.

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