Posts tagged ‘Dish Network’

Now That Mandates Are Effectively Legal, Here is The Next One

You have to watch politicians' commercials

The Dish Network, in its continuing effort to attract new viewers, introduced a new DVR called the Hopper earlier this year. The Hopper's main appeal is that it allows you to skip past commercials entirely, and unsurprisingly, TV networks aren't very happy about this. But guess who else is unhappy?

At a Wednesday hearing on video distribution held by the Communications and Technology Subcommittee of the Energy and Commerce Committee, [Rep. John Dingell, D–Clueless] complained that the service will allow potential voters to skip past important commercial messages.

"I've got an election coming up, like all my colleagues," Dingell said, during his questioning of Dish Network Chairman Charlie Ergen. "We all put political ads on the local stations to reach our constituents. The Hopper potentially limits the ability of every member of this subcommittee to reach constituents to help them make up their minds on Election Day.

"Do you understand and appreciate the concerns that the politicians up here on the dais and other politicians everywhere will feel about that, yes or no?" Dingell asked.

Really This Much Value Left?

Dish Network is going to buy Blockbuster out of bankruptcy for $320 million.  I am frankly floored there is that much value.  I have found that one can make a surprising amount of money riding an obsolete business down over the years if it is managed correctly -- but this is generally for product businesses.  Retail businesses are really hard to ride down because you need to be closing stores every year and that is hard to do cost-effectively given typical lease terms.  Never-the-less, I expected the winning bid to be from a liquidation company, someone like the folks who took wound down Circuit City.

But the purchase by Dish Network implies that the buyer wants to continue operating Blockbuster in some form, and the identity of the buyer implies some sort of on-demand or streaming service.  But what does Blockbuster offer?  Is the brand valuable in this context, or a liability?   Does it have customer loyalty with a segment (old people?) who have so far shied away from Netflix / Hulu?  Does Blockbuster have favorable royalty / licensing contracts with studios that are transferable to other video delivery models?

If I had to guess, I would bet on the latter.  There have been examples of whole businesses built from legacy contracts.   One of the best examples is a little noticed contract Carl Icahn had with TWA, which spawned a huge new travel agency and later really helped to build  Here was the story:

When TWA got a loan from Carl Icahn, an almost unnoticed part of the deal was that a certain travel agency owned by Icahn, small at the time, would be guaranteed TWA tickets at a healthy discount off the lowest published fares.  This agency, with this boondoggle, grew to enormous size as  TWA, beyond the reasons listed above, therefore had a second reason for not wanting to publish their lowest possible fare.  Normal limitations that most airlines could set on how many seats would be available at their lowest fare could not be enforced by TWA.  If they offered a new $100 fare, could blow out an unlimited number of tickets at $80 or less and TWA would have to accept it.  Therefore, by offering discounts unpublished via Priceline, TWA prevented the travel agency from getting inventory even cheaper.  And so, a huge portion of the early Priceline inventory was TWA.  (ironically, after the American Airlines acquisition of TWA killed the deal, the URL was bought by … Priceline.

I wonder if Blockbuster has something of similar value in their royalty / licensing agreements?