Ergen dangerously hops onto the pay-TV bashing bandwagon

Daniel Frankel, FierceCableLAS VEGAS--Monday's Dish Network (NASDAQ: DISH) press conference at the Consumer Electronics Show was as jarring as a ride across the outback in a pouch.

It started off with CEO Joseph Clayton being escorted onto the Mandalay Bay stage by a small marching band of kangaroo-costumed players, a reference to the Hopper DVR the executive would soon laud.

Clayton delivered a short but rather impressive presentation of new Hopper features: a 4K version that works with any TV; a whole-home music feature that costs nothing extra for subscribers; nifty new program interfaces and remote controls, that also come with no monthly bill increases.

Having existed in a loveless, month-to-month marriage with DirecTV (NASDAQ: DTV) for several years, waiting to be swept off my feet by a better offer, I was impressed. Dish just rolled out a lot of added value without upping consumer cost. That's how you keep pay-TV relevant, I thought.

Five minutes later, Roger Lynch, the former head of advanced technologies for Dish, who has been put in charge of Dish's new over-the-top division, declared pay-TV not relevant at all.

"Pay-TV is a saturated market, and frankly a declining one," the Sling TV CEO told the room.

What? Dish thinks pay-TV is done? Then what were all those cute stuffed kangaroos on the tables about?

Certainly, Sling TV offers a pretty bold and compelling proposition, too. Speaking for myself, live sports is the only thing that keeps a pay-TV company dinging my Amex for $100 every month. If you give me ESPN and ESPN2 over the top for $20, I've got the playoffs of virtually every major American sport, not to mention a good chunk of the regular seasons, locked up at a fifth of the price.

My wife will continue watching Downton Abbey on Amazon Prime. My sons will continue to forsake all linear TV video for YouTube and Madden 2015 on Xbox One. You can keep the whole-home music and 4K. Maybe I'm a cord-cutter after all.

Just as Dish chairman Charlie Ergen said in several quarterly earnings reports leading into the much-anticipated debut of Sling TV, Lynch described the product as a tool to target a vast, dissonant army of millennial cable-eschewers. Get them in the pay-TV family before it's too late, the expressed theory goes.

But in attempting to reach these young consumers by simultaneously condemning pay-TV to obsolescence, Ergen seems to be playing a dangerously duplicitous brand messaging game.

Is Sling TV a serious threat to the pay-TV business? Right now, it's one of those things that a lot of smart media technology people seem to have varying opinions about. Analyst Craig Moffett thinks it's a problem for the legacy industry, releasing a note Tuesday titled, "Ladies and Gentleman, Please Start Your Worrying."

However, speaking at Citigroup's 2015 Internet, Media & Telecommunications Conference Tuesday, Comcast Cable (NASDAQ: CMCSA) EVP and CEO Neil Smit downplayed the Dish product as merely "test and experimentation."

I think having the third biggest operator in the pay-TV adopt the marketing slogan "Take Back TV" to promote over-the-top services might represent a very real and different kind of threat.

Sure, Ergen and Dish have to innovate, and IP distribution is certainly a good direction to go, but does the marketing have to throw the legacy business under the bus? The slogan might appeal to younger consumers who have been told by tech blogs that the traditional pay-TV business is not cool. But it seriously undermines a hunt Dish still has 14 million dogs entered to.

In fact, the "screw pay-TV" brand message proliferates across Ergen's investments. Take EchoStar's Sling Media unit, from which the Dish chairman borrowed the Sling TV moniker.

Sling Media, which still markets the venerable Slingbox, even has a new marketing campaign that leverages the shortcomings of TV Everywhere (see graphic, below).

Sling TV chart

(Source: Dish)

In short, Sling Media is saying the Slingbox is the only sure way to watch TV where and when you want to. And rather than merely target cable like the two satellite companies have traditionally done, Sling's negative comparison also includes DirecTV, AT&T U-Verse (NYSE: T) and Verizon FiOS (NYSE: VZ).

In Dish's negative marketing campaign, Skinny Arms Rob Lowe and Meathead Rob Lowe aren't so alone anymore. They've got a pet kangaroo joining them.--Daniel