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With a Whopper of a Disney Deal, Charlie Ergen Gets a Head Start on the Web TV Race

You can't deliver Web TV without TV deals. But now Dish has a big one, before anyone else.

Asa Mathat
Peter Kafka covers media and technology, and their intersection, at Vox. Many of his stories can be found in his Kafka on Media newsletter, and he also hosts the Recode Media podcast.

Intel tried and failed. Sony says it’s going to try, but it has a long way to go. Google, Apple and Microsoft haven’t even started, at least officially.

But as of right now, it looks like Charlie Ergen may be first to launch a real “over the top” TV service, which would deliver actual network programming you want to see, over the Web.

Ergen and his Dish Network satellite service have earned this pole position via a new distribution deal with Disney that solves a bunch of problems for both sides — and, perhaps crucially, gives Ergen the right to use some of Disney’s most valuable networks in a Web TV service, if he launches one.

That’s the first time, at least to my knowledge, that any would-be Web TV operator has reached a deal with a major programmer. It doesn’t mean that Ergen is ready to launch a Web TV service tomorrow, but it does mean he has a significant first step on everyone else.

For the near term, the Dish/Disney deal is a big one because Ergen has agreed to limit a feature on his “AutoHop” DVR, which lets viewers automatically fast-forward past the commercials on ABC’s shows. In exchange, ABC will stop suing him — though other broadcasters, whose programming remains skippable, are still fighting with him — and has hammered out a long-term deal to provide Dish customers with programming from ESPN, ABC and its other channels.

From the outside, that sure makes it seem like Ergen’s past arguments about trying to get TV networks to adopt smarter ad technology were just things he said — so he could get what he really wanted from the networks — not things he meant. But hey, sometimes that happens.

What’s most interesting is that Ergen has also won the ability to show some of Disney’s key networks on a Web TV service.

Here’s the press release language: “The extensive and expanded distribution agreement grants DISH rights to stream cleared linear and video-on-demand content from the ABC-owned broadcast stations, ABC Family, Disney Channel, ESPN and ESPN2, as part of an Internet delivered, IP-based multichannel offering.”

And here’s a bit more from the release, attributed to ESPN boss John Skipper: “We are creating opportunities to add new subscribers and introducing the value of a multichannel subscription to a small subset of broadband-only consumers”.

All of which means, in English: If Ergen actually wants to go ahead and launch a Web TV service, Disney will let him package its five most-valuable channels — in a bundle, not “a la carte” — as part of the offering.

Ergen will still have to cobble together other deals with other programmers, but those may come easier now that he’s got Disney on board.

Do note that line from Skipper about a “small subset of broadband-only consumers”: Disney and ESPN are still card-carrying members of the TV Industrial Complex, which means their business is predicated on the existing model, where almost everyone who watches TV gets a traditional pay-TV subscription.

And they don’t think that business is going away anytime soon — for starters, Disney is locked into a series of long-term deals with pay TV providers that ensures the basic business will be intact for years to come.

And again, note that Disney is still requiring Ergen to sell its stuff on the Web as a bundle — if you want to watch ESPN on Ergen’s theoretical Web TV service, you’re going to have to pay for Disney, too. But that does mean you don’t have to pay for ESPN2 through ESPN12 (or whatever), so Ergen could theoretically offer his subscribers a “skinnier” — and less expensive — bundle on the Web.

We’ll see. Ergen and Dish are great negotiators, but they have yet to prove that they have the ability to operate a heavy-duty consumer Web operation, which they will certainly need if they’re going to sell a compelling broadband TV service. And none of this means anything if they don’t get more rights.

But it sure is going to be fun to watch them try.

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