Dish drops plans to aim Blockbuster at Netflix


Dish NetworkDish Network is giving up on plans to turn its Blockbuster video-store chain into a Netflix competitor. Plans broke down when regulators took longer than expected with satellite transmission approvals. Plan B is moving into effect, see below.

Dish Chairman Charlie Ergen has planned to turn the once-mighty video store chain he bought out of bankruptcy in April 2011 into a locations to sell Dish mobile devices that could be used to stream Blockbuster movies. The plans broke down when U.S. regulators didn’t immediately approve a waiver allowing Dish to use its satellite spectrum for terrestrial data and voice transmission, reported Bloomberg.

Ergen said he believed the government would approve Dish’s plan in 2011 as it had done for Philip Falcone’s LightSquared. The government later denied Falcone use of his spectrum due to GPS systems interference concerns, causing LightSquared to file for bankruptcy. To avoid a similar outcome with Dish, the government slowed down the approval, which is still waiting for the results of the FCC rulemaking.

Ergen’s airwaves, which Dish agreed last year to purchase from DBSD North America and TerreStar Networks for about $3 billion, require new handset devices with a chip that links the satellite spectrum to terrestrial towers. The government’s delay has caused Ergen to change his mind about selling those products in Blockbuster stores.

“When your lease runs out on the stores, you can’t re-up because you can’t make enough money from just selling DVDs,” Ergen said.

So, Dish has begun the process of closing stores that no longer make strategic sense, a plan that will allow Dish to turn a profit on the $320 million acquisition, Ergen said. Some Blockbuster DVD-rental stores can still make money in rural regions. About 900 U.S. stores remained as of August, a fraction of the thousands Blockbuster once operated.

The company has other plans for Blockbuster on which Ergen declined to comment. Dish has spent “a lot of time” talking with cable networks about an Internet streaming service for live programming, although the service is probably still “years away,” Ergen told Bloomberg. “Worst case, we’ll take our money after having wasted some time, not much money, and life goes on.”

Here’s what that looks like, as we’ve reported: Dish wants to jump in the arena of offering network programming online, as well as over the bird. Let’s face it, eyeballs are moving in droves to the internet for programming and entertainment. Dish wants to be there as well as everyone else.

See the Bloomberg story here