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Ergen: “Pay-TV is a mature to declining business”

Charlie Ergen, CEO at Dish Network, told analysts during the company’s half-year results call that launching Sling TV, its OTT service, was necessary given that traditional pay-TV was a “mature to declining” linear TV business.

“We’re fundamentally looking at the economics of how we run the business, and we’re in a mature-to-declining kind of linear TV business as we know it. We think we’re at the beginning stages of OTT business that’s going to grow, that’s going to grow and accelerate.”

Ergen added: “If you bring a person in on the Sling side, of course your SAC is materially less, your ARPU is less, but the value that customer, when you think about how you do it, should be about the same. And so, when we focus internally now, this is how we focus on it, in terms of putting all our customers together saying, this customer doesn’t justify coming in on linear TV. As an example, he doesn’t buy as much. He doesn’t make a lot of sense for us to bring somebody into a skinny bundle at $99.99 at DISH when you have $800 SAC. It does make sense for us to bring that guy into a skinny bundle in Sling.”

Sling TV’s CEO Roger Lynch told analysts August 5th that it had 169,000 subscribers as at March 31st. The OTT service, owned by Dish Network, launched earlier this year. However, Lynch declined to break out the figure for June 30th.

Lynch added that Sling TV was targeting three categories of potential subscriber: “One is cord-nevers, which are mostly millennials. The second is cord-cutters and what we mean by that is people who cut the cord maybe sometime in the last four years, not necessarily people who are cutting the cord today. And then the final is supplementers, people who have pay-TV, but take Sling TV on top of that.

“Those are the three categories we expected to get subscribers from and we are getting them across all three, probably in that order. So the vast, vast majority of the subscribers that we take on do not currently have pay-TV at the time they subscribe to Sling TV.”

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