EchoStar Incites Lifetime Viewers

Jan 16, 2006  •  Post A Comment

Now Charlie Ergen has women mad at him.

The chairman and CEO of EchoStar has frequently angered programming executives by yanking networks off his satellites in the midst of contract negotiations.

Since dropping women-targeted Lifetime and its sibling Lifetime Movie Network on Dec. 31, Mr. Ergen has incurred the wrath of groups including the National Council of Women’s Organizations.

Cable operators and rival satellite provider DirecTV have joined with Lifetime to take advantage of the situation by urging viewers to get the channel back by dropping EchoStar’s Dish Network.

Lifetime last week launched multimedia campaigns in several markets urging viewers to “Take Back Your Lifetime” and “Switch From Dish.” Cable operator partners included Comcast in Denver, Dallas, Houston and Albuquerque, N.M.; Time Warner Cable in New York, Houston and Raleigh-Durham, N.C.; and Charter in Greenville, S.C.

The network was also the subject of rallies in a few markets.

The dispute is largely about money, with the two sides making wildly divergent claims. Mr. Ergen was quoted as calling Lifetime “greedy” for seeking an increase of 76 percent.

“That was an abnormal rate increase. We did 322 channel deals last year and only three of them we were unable to close,” an EchoStar spokesperson said. EchoStar had already planned a rate hike before it yanked the Lifetime networks.

Mr. Ergen is known as colorful character who is willing to play hardball, said analyst Matthew Harrigan of Janco Partners. Perhaps seeing Lifetime as a less-than-formidable foe, he wants to win this battle “so that the next time [he] goes up against people, they can see what they have in store,” Mr. Harrigan said.

A Lifetime executive said the network is seeking an increase of about 4 cents a month for the two channels. At that price it would still cost far less than other, less-viewed channels, the Lifetime executive added.

Lifetime, owned by the Walt Disney Co. and Hearst, also negotiates carriage deals for the Hearst-Argyle television stations. At the end of last year EchoStar signed a deal with Hearst that pays the stations for carriage, and some speculate that EchoStar may be compensating for that by being tougher on Lifetime.

Because of Lifetime’s dedication to women’s causes, the network has drawn support from more than 50 organizations and advocates, who signed an open letter urging Mr. Ergen to restore the network. The letter was run as an ad in the New York Times, Denver Post and the (Denver) Rocky Mountain News. EchoStar is based in Denver.

And when Mr. Ergen reportedly claimed that Lifetime was playing politics, he heard from the National Council of Women’s Organizations.

“Dish has no right to decide for women that they should not have all of the viewing options for which they have paid-especially their favorite networks. The only disservice to women in this dispute is keeping Lifetime off the air,” the NCWO said in a statement.

“It’s an economic issue, not a political issue,” the EchoStar spokesperson said.

EchoStar has feuded with other networks in past. Because of a dispute over the carriage of hockey games, OLN is not available on Dish Network. And in recent years, EchoStar has pulled some Viacom networks, including CBS and MTV, as well as Disney-owned ABC Family.

Contract Dispute Costly for Channels

Not being on EchoStar costs Lifetime Entertainment Services a lot of money.

Operators like EchoStar pay 29 cents per sub for Lifetime and 9 cents per sub for Lifetime Movie Network, according to estimates by Kagan Research. Applying those numbers to EchoStar’s 12 million subscribers, Lifetime loses $3.84 million for every month it’s not on Dish.

The dispute could also eventually hurt Lifetime’s ad revenues, although for the short run losses in viewers will be paid for in make-good ads.

“We’ll wait and see what the ramifications are,” said Andy Donchin, head of national broadcast for Carat USA. “They’ll take care of us for sure.”

But eventually, if Lifetime continues to lose 15 percent of its audience, not only in distribution but in ratings, “I think it’s something we need to talk about,” he said.