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Dish Network Buys Blockbuster

Satellite Technology

Satellite Technology Feature Article

April 06, 2011

Dish Network Buys Blockbuster

By Gary Kim, Contributing Editor

Dish Network Corp. has won a bankruptcy auction for Blockbuster, offering about $320.6 million for the movie-rental chain, the Wall Street Journal reports. Dish, unlike some of the other bidders, has said it would keep some of the stores open as retail locations to support sales of Dish services. 

Some may question the wisdom of that move, but Apple (News - Alert) also was highly criticized for opening its own retail stores. There now is recognition that the retail outlets now play a huge role in Apple's sales and support process, though. Likewise, mobile service providers have found retail locations to be crucial for selling mobile services. 

But Blockbuster also brings other assets that do mesh with the current Dish strategy, including the Blockbuster online and kiosk vending services. Dish also has been making other moves in the mobile and on-demand video business, though some analysts might claim they do not yet fully understand what the grand strategy is. Neither would Dish CEO Charlie Ergen, either, at this point. Rather, Ergen seems to understand that the TV business is changing, and that mobile and online services are part of that future. 

Dish also earlier acquired DBSD North America, Inc., a hybrid satellite and terrestrial communications company, for approximately $1 billion. DBSD has a license to operate in 8 MHz worth of spectrum. 

Frontier Wireless, the wholly owned subsidiary of Dish, also owns 168 licenses in the 700 MHz range, covering about 76 percent of the U.S. population. The licenses represent 5 MHz worth of spectrum. There has been speculation about what Dish might plan to do with such spectrum, but the purchases of other assets supporting terrestrial mobile service with satellite backhaul suggest a possible move into a video service usable by mobile devices. 

It is possible to use the same approach to deliver signals to fixed locations such as homes, but bandwidth constraints would make an on-demand service difficult. A more logical approach would be linear video or multicast services based on use of mobile devices. 

Sister company Echostar, for its part, owns Slingbox and now Hughes (News - Alert) Network Systems, which gives Echostar a new international business revenue stream, enterprise networks and an owned satellite network offering significant new wide-area distribution capability. Whether those assets might play a role in Dish strategy is not immediately clear. 

What does seem logical is that a couple of the Dish assets could be used to create a mobile-focused video service. A technology known as TDtv supports mobile multicast content, delivering as many as 14 high-quality, 300 kbps video streams channels using only 5 MHz of unpaired spectrum. It contains a built-in uplink capability that will allow for some digital video recorder features as well. 

For its part, Clearwire (News - Alert) also has been talking to satellite concerns about creating some sort of mobile TV service as well, though nothing concrete seems to have emerged from those talks.  

CEO Charlie Ergen has not been shy about suggesting that if an entrepreneur wanted to get into the TV distribution business today, that person might well take a "Netflix" style, over the top approach, rather than launch satellites or even build cable networks. Another analogy Ergen has used in the past is fixed and mobile voice service. Essentially, he has likened satellite-delivered TV to fixed-line voice, while online video is more like mobile voice. In other words, the original business was TV by satellite, but the future business will be online. 

That doesn't mean Ergen sees an abrupt change, but a change is coming, he believes.

Dish Network and EPIX, the premium entertainment service from Paramount, Lionsgate and MGM, have announced that Dish Network satellite TV customers who subscribe to EPIX Programming automatically have free, unlimited on-demand, online access to content using as well. 

DISH Network customers who subscribe to DISH Platinum now have access to more than 3,000 films and additional EPIX programming via anytime and anywhere in high definition and standard definition. 

"DISH Network is committed to offering not only the best video content available but also the ability to watch it anywhere, which is why our partnership with EPIX is an important step in the expansion of the already robust lineup of popular movies available online and on-demand at,” said Dave Shull, senior vice president of programming for DISH Network. 

There might not yet be a clear grand strategy for how Dish uses all the new assets, but it is clear enough that Ergen wants to fashion a business model that is built more on mobile and online video, and less on satellite video delivered to fixed locations. 

Gary Kim (News - Alert) is a contributing editor for TMCnet. To read more of Gary’s articles, please visit his columnist page.

Edited by Jennifer Russell

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