Dish Network’s Ergen Blasts CNN in Hint of Future Fights

Dish Network Corp. founder Charlie Ergen said he may permanently drop Time Warner Inc. channels such as CNN and TBS over rising programming costs, a trend he sees continuing as pay-TV faces competition from Web viewing.

Dish has already blacked out some channels from Time Warner’s Turner Broadcasting, including CNN and the Cartoon Network, in a contract dispute that began last month. Ergen said Turner is asking for double-digit percentage increases in fees for CNN, while viewership is down by half.

“Twenty years ago CNN was a must have,” Ergen said on a earnings conference call today. “It’s not a top 10 network today anymore.”

The pay-TV industry is adjusting to long-term changes, including rising program costs, declining audiences and the growing popularity of Web-based viewing. Those have sparked megamergers, such as Comcast Corp.’s plan to buy Time Warner Cable Inc. and AT&T Inc.’s proposed purchase of DirecTV. Dish, the No. 2 satellite TV service, has been joined by some other media companies in challenging the Comcast deal.

Sal Petruzzi, a Turner spokesman, declined to comment.

Ergen said he is prepared for Turner’s TBS and TNT to leave Dish -- a move he described as “more painful.”

Meanwhile, Internet-only rivals such as Netflix Inc. and Inc. continue to expand their TV programming, pressuring services such as Englewood, Colorado-based Dish, which lost 12,000 TV subscribers in the most recent quarter.

“The industry is changing in a sense, because of the different methods of getting content today,” Ergen said. “I don’t anticipate that the cable companies, satellite companies, and phone companies are all going to carry the same 10 groups like it is.”

Bargaining Chip

The talks with Turner may be a bargaining chip in Dish’s plan to introduce a low-cost, Internet-based pay-TV package by the end of this year. Ergen agreed to limit the use of his ad-skipping AutoHop technology earlier this year in return for the right to put Walt Disney Co.’s ESPN and Disney Channel on his planned Web-based system.

Dish is also in contract talks to renew its rights to programming from CBS Corp., owner of the most watched network.

Ergen was less critical of CBS, while questioning the company’s decision to offer its programming over the Internet. CBS’s plan to let consumers buy a monthly Web subscription won’t be good for pay-TV distributors “because customers have a choice to get it somewhere else,” Ergen said.

The network’s strong viewer ratings make it a channel distributors need to carry, he said.

“They’ve done a marvelous job with content creation,” Ergen said. “So, I would certainly think that you’ll see them on Dish.”