with Joseph Clayton, President & CEO, Dish Network
During the Consumer Electronics Show, Steve Donohue, editor of FierceCable, sat down with Dish Network (Nasdaq: DISH) President and CEO Joseph Clayton. In addition to talking about Dish's broadband wireless and over-the-top video ambitions, the former Sirius XM chairman offers his thoughts on pay TV consolidation, CES, and 4K Ultra HD TV.
FierceCable: Sony announced that it plans to test a virtual cable product later this year. Is that something Dish would like to do as well?
Clayton: I'm a little confused by the announcement, to be honest with you, Steve. I believe they're referring to an Internet video, over-the-top video service. Of course, I think all pay TV providers are interested in it because it's a part of the market segment, from [ages] 25 to 35, that none of us address today as an industry.
These younger folks are not going to pay $100 a month for their content. They may pay $20 or $30. They're not going to watch going to watch 250 channels a year. They may watch 20 or 30, if that. And they're not going to watch it on a 60-inch, flat panel display. They're going to watch it on their smartphone or tablet or their PC.
FierceCable: Do you have any distribution deals that would allow you to offer live networks on the Internet?
Clayton: Some do, some don't. Most of them don't.
FierceCable: Can you quantify?
Clayton: I cannot. This is what's holding up Internet video. The programmers have to be willing to offer their content at probably a less price than they do today for linear TV, and they're concerned because that'll cannibalize their existing pay TV business. That is the conundrum.
FierceCable: Is Virtual Joey a product that you could use to launch an over-the –top video platform?
Clayton: Not by itself, no. Joey is an adjunct to the Hopper. Now the Hopper does have streaming capabilities, with Blockbuster @Home type services. But it's not the all-encompassing, low-cost type service that I believe that most people envision Internet video being.
FierceCable: Is Dish more focused on marketing technology than discounted programming, which used to be your selling point?
Clayton: You can only ride that horse so long, Steve. In a mature, saturated market that's not going to grow, you have to sell a better mix of goods, and you've got to differentiate your product better. That's why we brought out the Hopper technology platform. It offers benefits and features that nobody else has--PrimeTime Anytime, AutoHop, 2,000 hours of storage capacity, remote control finder, commercial-free SiriusXM music, Dish Anywhere capabilities, just to name a few. So I'm trying to differentiate our product using the hardware because everybody has the same content.
FierceCable: You've seen significant growth with DishNet satellite broadband in rural areas. If the technology improves, could you market that to cable broadband and DSL subscribers?
Clayton: I always start with the consumer. We believe the consumer doesn't really care how he gets his video. And we believe that satellite will always be the preferable, most cost-effective way for rural America to get their content, and even their broadband.
Suburban America, maybe it's fixed wireless, like some of the tests we're doing with nTelos, and with Sprint down in Corpus Christi. And ultimately in metro markets we believe wireless will be the technology. It doesn't mean anything to the consumer as long as they're getting their content reliably and cost effectively.
FierceCable: Can you offer any feedback from those broadband wireless tests--how are they going?
Clayton: It's too early to say. We just really started with a few thousand customers. We need more time under our belts to get a good gauge on it, and we need to expand it more before we know how viable it is. The initial results are good.
FierceCable: Can Dish compete in the long run with other pay TV providers if you don't have a broadband wireless product?
Clayton: Well, we better, otherwise we'll be gone. That's one of the reasons that accumulating wireless spectrum is so important to us. That gives us the bandwidth. The bandwidth gives us the capability to compete.
FierceCable: You used to work at Sirius. I'd love to get your thoughts on the deal that [Liberty Media (Nasdaq: LMCA) chairman] John Malone struck recently, and what that could mean for the industry, and cable consolidation. [Liberty bid to take full ownership of Sirius XM--a move would increase its market cap, and possibly help Charter Communications (Nasdaq: CHTR) acquire Time Warner Cable (NYSE: TWC)].
Clayton: All I can say is, I was a little surprised. But I know John Malone. I know [Liberty Media CEO] Greg Maffei, and they're really smart guys, so I'm sure this is a good deal for their shareholders.
FierceCable: If there is more cable consolidation, would that lead to a Dish merger with DirecTV (Nasdaq: DTV)?
Clayton: Let's start with yes, there is going to be more consolidation. That's just a function of business. That would make for a tougher competitor. As long as it provides more advantages to the consumer, it will be a good thing. But I don't think it forces us to run to DirecTV because even if we did merge with them, we're still in the pay TV box--a mature, saturated industry. The wireless business has a lot of growth, a lot of legs. That's our preferable approach from a strategic standpoint.
FierceCable: Dish is known for watching its expenses. I think you fly budget airlines yourself. Why do you spend so much money to market Dish at CES?
Clayton: This is the platform for technological innovation, and that's what makes us different. We are disruptors. We are most certainly innovators, and we are most certainly a consumer advocate. You're here today for a reason. This is where the press is at. Our press conference had over 350 people at it. I used to be chairman of the Consumer Electronics Association. I know the power that CES brings. That's why we're here. I'm surprised that others aren't. [DirecTV rival Dish didn't exhibit at CES].
FierceCable: Have you seen any new products or technology that you're interested in?
Clayton: I think Ultra HD, 4K, whatever you want to call it, I think it's starting to improve, and I can now see the difference between current HDTV and Ultra HD. Differentiation is going to have to be apparent to the consumer for it to work. The costs still have to come down. There has to be more programming content, and quite honestly, Ultra HD needs more bandwidth. I'm not going to put Ultra HD up for one channel, and take 20 down. There's an economical crossing that you'll have to get to first.
FierceCable: When will Dish launch Ultra HD?
Clayton: When it's economical, and the consumers ask for it.