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An Open Letter to Charlie Ergen

Author:   Matt Deatherage  
Posted: 3/9/04; 12:36:00 PM
Topic: An Open Letter to Charlie Ergen
Msg #: 731 (top msg in thread)
Prev/Next: 730/732
Reads: 11900

Charlie Ergen
CEO, Dish Network
CEO, Echostar
CEOofDishNetwork@dishnetwork.com

Dear Mr. Ergen:

I had heard a few months ago that Echostar and Viacom had not yet resolved their dispute over fees and retransmission, but I had assumed that, like every major dispute other than DirecTV and Disney a while back, this one would be resolved before it got on the air.

I watched last night's "Charlie Chat" on Dish channel 101, where you said that Viacom refuses to be reasonable, and that Viacom is "demanding rate increases nearly four times the rate of inflation." You said in the chat that Viacom was demanding 40% rate increases. You made several comments about how Dish Network might now have more bandwidth to carry other channels now that Viacom's channels wouldn't be on Dish Network. You also noted that you'd be holding another "Charlie Chat" today for customers in the fifteen cities where Dish Network can no longer retransmit Viacom-owned CBS local stations, and said that you'd invited CBS head Mel Karmaizin to participate in the chat, because "we're not afraid of Viacom's point of view."

You said that the crux of the dispute was about Viacom "forcing" Dish Network to purchase "channels that carry very little added value to our package line-ups." (That phrasing is from your online FAQ about the dispute.) At least once, you mentioned how awful it is that all these big companies own so many channels and can force you into such problematic situations through their market power.

I have been a Dish Network subscriber for nearly four years, and I have rarely heard such unapologetic spinning and hypocrisy from someone not seeking political office.

First, as Forbes reported last week, "one of [Echostar's] own lawyers admitted in a San Francisco court Viacom was asking for an average 7% rate increase," not the 40% you insist on spinning to reporters and customers. A source said Viacom has now dropped that to 5%. Viacom says that they're asking for an increase of $.06 per subscriber for the right to carry all the non-premium Viacom channels. Your own decision to refund customers a measly $1 per month while Viacom's channels are absent, out of fees ranging from $35 to $75 per month, belies your spin.

Second, while you say you are "not afraid of Viacom's side of the story," that doesn't seem to be true. Not only did you spin the cost increases beyond recognition, you've been blocking Viacom's text. For several days, Viacom has put crawlers across the bottom of the screen on its channels, including MTV2 and Comedy Central, presenting its spin on the story. But as soon as Dish Network technicians notice this, they superimpose a black bar over the text so that Dish Network subscribers cannot read it. If you weren't afraid of Viacom's spin, why be afraid of letting people read it? Why not just follow it with your own?

Third, to hear you, Mr. Ergen, complain about big media power is to think your customers are idiots. In previous "Charlie Chat" programs, we got to listen to you telling us how Echostar's proposed purchase of DirecTV would be "good for competition," and how one company owning all personal satellite programming the United State would never result in the kind of media power you now bemoan from Viacom.

If you think the new channels Viacom wants you to carry are of "little or no value" to customers, why are you afraid to mention what they are? You hint at one point that NickToons is involved, but you say "channels." What channels are they? Why don't we get to choose to purchase them if we want?

If Viacom is lying about $0.06 per subscriber per month as a fee increase, why don't you tell us the real numbers? You say that you won't tolerate smaller satellite companies getting a better deal than Dish Network does, but Viacom says (and you don't dispute) that it's offering you the same terms as DirecTV and Comcast, and you want a better deal. Yet Dish Network routinely offers better deals to new customers than to existing customers, so why do you suddenly have the jones to treat older and more reliable customers better than new ones?

I enjoy the Dish Network programming. The channel line-up is greater than on DirecTV for my needs, the cost is slightly lower, and it's been obvious to me that Dish Network is hungry for more customers, so you try to please us. But your company is isolated and insular. You refuse to follow DirecTV's route and open your service to third-party equipment, save a very few overpriced options from JVC. You now offer an HDTV-capable system with digital video recorder for $999, and even cheaper to new subscribers, but you refuse to license the indispensible TiVo software for any of your digital recorders. Your service is nothing more than a digital VCR - I cannot record shows by name whenever they're on, or get suggestions about programs I'd like to watch.

I've been a TiVo user since three months after I became a Dish Network subscriber. Last year, I purchased an HD-capable TV, and the stand-alone TiVo no longer provides acceptable quality - the Dish receiver decompresses the MPEG-2 video from the satellite, but the TiVo must then recompress it and decompress it to record it on its hard drive. In most cases, that introduces substantial artifacts. The way to go is to dump the MPEG-2 stream from the satellite directly to the hard drive, as your recorders do - but since you won't put TiVo software on them, I'd have to give up the vast majority of what makes a digital video recorder useful. I don't want to have to watch the program guide and adjust my recordings as programs get rescheduled. I don't want to have to figure out that I could see Good Eats at midnight instead of 8PM when The West Wing is new; the DVR should do that for me. TiVo has for years; yours does not.

Later this month, TiVo will release HD-capable DirecTV-TiVo units that do everything I want, except that the only satellite provider will be DirecTV because you refuse to either license TiVo software or make your signals available to third-party equipment manufactuerers who might license TiVo software. I'll have to give up channels I like, such as HBO Comedy, NASA TV, BYU TV (which has some good concerts by the school's music programs), superstations I watch every day, Starz Cinema, Starz Family, and Showtime Beyond. I'll pay more per month for the privilege, too.

And yet I'm going to do it, because TiVo is that important. I had been dithering about it in my mind, but your unbelievably hypocritical spin on this Viacom dispute has erased those doubts in my mind. I'll miss the channels, but I'd regret staying with such an isolated service even more than giving more money to Rupert Murdoch.

If you could fix the Viacom dispute within 24 hours, and deliver TiVo-enabled HD recorders with all the same features as the competition by June, I'd probably stay with Dish Network. Otherwise, at least I won't be around to lose Good Eats when you start decreeing someday that Scripps-Howard is being "unreasonable."

You say on the air that you personally will read every letter sent to this address, so I'll post any reply you send - even a form letter. I like Dish Network's programming and price, but the company has become too much to deal with.

Sincerely,

Matt Deatherage

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