Charlie Ergen to head as CEO with Dish Network diversifying into new lines of business

Monday, Feb 23, 2015

Dish Network Corp. said Chief Executive Joe Clayton will retire at the end of March and will be succeeded by Chairman Charlie Ergen, who will take the helm as the satellite-TV company is pushing to diversify into new lines of business.

Mr. Ergen, the company’s mercurial, 61-year-old founder, stepped away from the CEO role nearly four years ago. As chairman he helped game out Dish’s major strategic moves, including investments to enter the wireless business and a recent plunge into streaming TV.

Now, as he assumes day-to-day control once again, Mr. Ergen faces the challenge of capitalizing on those bold bets by finding revenue growth that can counterbalance stagnation in Dish’s core pay-TV business. Dish lost subscribers overall in the first three quarters of 2014 and analysts expect more losses in the fourth quarter when the company reports results Monday.

By some measures, the U.S. wireless industry is already mature: The number of U.S. wireless subscriber connections, including cellphones and tablets, amounts to more than the entire U.S. population, according to CTIA, the wireless industry trade association.

But in an interview, Mr. Ergen said he views the industry as “relatively in its infancy” and sees a world of wireless-enabled devices beyond tablets and smartphones, from refrigerators to cars to smartwatches ? that will “lead to tremendous growth.”

Mr. Ergen estimated the number of devices supported by the U.S. wireless industry will jump from some 340 million today to tens of billions in the next 10 years. “Some people in the [wireless industry] today run the business as a mature business, but behind the scenes they clearly see that this thing has got another 50 years to go,” he said.

Dish’s road to enter the wireless business has been bumpy. The company won a surprisingly large number of wireless licenses in a recent government auction, but is facing criticism from major wireless carriers and some government officials for setting up bidding vehicles in a way that allowed it to secure $3.3 billion in discounts intended for small businesses.

Mr. Ergen brushed off those criticisms. “We basically played by the rules and bid economically for the auction,” he said, adding that Dish will further comment “at the appropriate time.”

While it has amassed spectrum—the frequencies that carry wireless transmissions—Dish still doesn’t have the cellular network it needs to offer service to customers. Its attempts to court partners or buy other wireless carriers like Sprint Corp. over the past few years have largely been unsuccessful.

Mr. Ergen said early results show that Sling TV, Dish’s $20-a-month Web video service, which launched commercially earlier this month, is attracting customers who aren’t subscribing to pay TV today.

We “know that millions of people every year are cutting the cord,” Mr. Ergen said. “You’re better off with half of a loaf—$20 a month—than you are with getting nothing out of that customer.”

Mr. Clayton, 65, will step down and leave Dish’s board on March 31. Mr. Ergen said he has learned from the outgoing CEO about interacting with employees and “making hard decisions where not everybody in the room wins.” Mr. Ergen long had a reputation for micromanaging subordinates, which helped create a tough workplace culture at Dish.

“I think I am going to be a better CEO than I was before, and part of that will be some of the things I learned from Joe,” Mr. Ergen said. “I never had a mentor, myself.”

Mr. Clayton was behind the launch of Dish’s controversial Hopper digital video recorder and automatic ad-skipping feature, a technology that triggered lawsuits by major broadcasters. It is the “best product we’ve ever done,” Mr. Ergen said.

Mr. Ergen also credited Mr. Clayton for helping to lay the groundwork for Sling TV and for grooming a crop of young leaders inside the company who have “the ability to take on full responsibility” in the future.

As the company’s wireless and online video initiatives “become bigger parts of the business” Mr. Ergen said he would consider whether someone else is better for the CEO job.

“I’m not afraid to fire myself again,” he said.

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