Will Dish Network Dare to Drop ESPN?

Dish Network CEO Charlie Ergen is threatening to drop Disney-owned sports powerhouse ESPN from his satellite service because of its high cost.

The possibility that the fourth-largest carrier could go without a key network is at the center of negotiations in Denver as the clock ticks toward a Sept 30 deadline when the current Dish Network-Disney/ABC contract expires. Ergen said he knows Disney is looking for steep increases in fees per subscriber for its networks. But he said it might be time for a cable or satellite distributor to take a long-term view "that sports isn't something they have to have." Instead, he suggested, it might be better to offer customers a lower price. "While they'll lose customers initially," said Ergen, "they will gain customers long term.” Most analysts believe Dish and Disney eventually will reach a deal. But SNL Kagan's Robin Flynn points out that even if Dish drops ESPN, the service will still carry lots of other sports. Amy Yong, an analyst with Macquarie Securities, said Dish also could take a tough stand because losing ESPN probably won' t have much impact on its stock price. That's because "the driver" of Dish' s shares is now what happens with its spectrum assets and wireless rather than its video offerings.