LAS VEGAS — EchoStar Holding Corp. said Monday it would provide digital-to-analog converter boxes to consumers at essentially no cost once a government rebate is factored in.
It’s a bold move that positions the Douglas County-based satellite-TV company at the forefront of the coming digital transition.
“No company has really stepped up and said, ‘Let’s make this transition happen.’ Today, EchoStar has said we will make these products available for $39.99,” EchoStar chairman Charlie Ergen said at the 2008 International Consumer Electronics Show. “There is no reason why the digital transition can’t take place, and there’s no reason it should cost anyone a dime. We want to take leadership in that.”
The federal government has mandated that network broadcasters cease sending analog signals in February 2009. People without a digital TV set, digital cable or satellite service will have to purchase a digital-converter box. The government has begun a coupon program, allowing for two $40 coupons per household to subsidize the cost of the box. Other manufacturers have said they would sell boxes for $60 to $80.
When EchoStar’s box goes on sale in March, customers can go online or to a retailer that carries EchoStar to redeem their coupons, which are now available.
Ergen said EchoStar would initially lose money offering the converter boxes at $39.99, but the new spinout focused on set-top-box technology is cash-rich, according to Carl Vogel, president and vice chairman of Dish Network.
“With $1 billion in cash, we have the flexibility to build markets where we need to,” Vogel said.
Last week, EchoStar Communications Corp. split into two companies. Dish Network is the nation’s second-largest satellite-TV business, with 14 million subscribers, and EchoStar is the equipment business.
Sling Media, now a wholly owned subsidiary of EchoStar, will also sell EchoStar’s converter box with the Sling name on it. The hope is that people without pay-TV service will purchase a digital-converter box from EchoStar and will turn to the Dish Network when they decide they want service.
“You’re not going to make an impact being the same as everyone else,” Ergen said. “We think others will eventually follow.”
The converter box and other announcements were well received by analysts in attendance at the show.
“I commend them for thinking ahead and positioning themselves as part of the solution and not part of the problem,” said Craig Moffett, Sanford T. Bernstein & Co. senior analyst. “Everybody is going to wake up one morning and realize that the digital transition is coming like a freight train and there will be 14 million people standing on the tracks.”
April Horace, equity-research analyst for Denver- based Janco Partners, said EchoStar would probably make up the cash loss on the converter boxes by selling large volumes.
“It’s also very positive FCC positioning as opposed to the cable companies,” she said.
Cable providers have been at odds with the Federal Communications Commission regarding a number of policies that could potentially place tight regulation on the industry.
Sling Media co-founder and chief executive Blake Krikorian was also on hand to discuss new developments with the company since EchoStar acquired it last fall. The company introduced the Sling Player for BlackBerry mobile devices, which allows users to view content from their DVRs on a BlackBerry.
“We’re all about connecting consumers to the content they love,” Krikorian said. “Video entertainment is not just about the living-room television, but the living-room television is the hub.”
Sling also introduced the Sling Modem, a cable modem with Slingbox functionality inside. Krikorian said a cable partner for the modem would be announced this week at the show.
Kimberly S. Johnson: 303-954- 1088 or kjohnson@denverpost
Other EchoStar announcements Monday:
• A price freeze on most Dish Network packages until 2009. (The DishDVR Advantage Package.)
• Dish Network plans to expand to 100 local HD channels this year, as well as 100 national HD channels.
• Dish Network will offer specialized interactive TV content to subscribers surrounding the 2008 election. It will be called “Dish Election 2008.”
• The introduction of Echo Star’s ViP211, a set-top box that allows Dish customers to hook an external hard drive to the USB port to enable DVR functionality.
Kimberly S. Johnson can be reached at kjohnson@denverpost.com or 303-954-1088.
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