http://www.businessweek.com/articles/2013-01-02/dish-network-the-meanest-company-in-america

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Dish Network, the Meanest Company in America


Charlie Ergen, chairman and co-founder of Dish Network

Photograph by Jonathan Alcorn/Bloomberg

Charlie Ergen, chairman and co-founder of Dish Network

For 2012, the website 24/7 Wall St. determined that the worst company to work for in America was the Dish Network (DISH), the Englewood (Colo.)-based company that provides satellite TV to more than 14 million subscribers. To pick its winner, the site began by sifting entries on glassdoor.com, an online service where people gossip about their jobs. It was hardly the most scientific of methods. Still, the volume of miserable tales about Dish is impressive; 346 former or current employees had taken the time to write not-so-nice things about the company. On a scale of 1 to 5, they ranked their company an average of 2.2, beating Dillard’s (DDS) and RadioShack (RSH) for the spot at the bottom.

The most common complaints were long hours, lack of paid holidays, and way too much mandatory overtime. Some posts suggest that merely setting foot in Dish’s headquarters is a danger to the soul. “Quit” was the recommendation to one Dish employee who sought management advice. “You’re part of a poisonous environment … go find a job where you can use your talents for good rather than evil.” The roundup noted one other thing: The share price was up more than 30 percent for most of the year.

Ergen, circa 1999, with his satellite dish, the first to offer 500 channelsPhotograph by Steve Marcus/ReutersErgen, circa 1999, with his satellite dish, the first to offer 500 channels

Much of the malice, and value generation, can be traced to one man: Charlie Ergen, 59, the founder and chairman of Dish. Although he turned over the role of chief executive officer to former Sirius XM Radio (SIRI) head Joseph Clayton in 2011, Ergen remains the core of Dish—and its largest shareholder, with 53.2 percent of the outstanding shares and 90.4 percent of the voting rights.

Ergen founded Dish more than 30 years ago, installing satellite systems with partner Jim DeFranco. Dish is now the second-largest satellite TV provider in the U.S., with 26,000 employees. Ergen, according to the Bloomberg Billionaires Index, has an estimated net worth of $11 billion. That puts him among the world’s richest men and makes him one of America’s greatest entrepreneurial success stories. He’s also a living rebuke to a library of management textbooks that suggest fostering happy, self-actualized employees in a transparent environment of trust and communal effort is the path to wealth.
 
 
Michael Neuman knew the risks going in when he accepted Ergen’s offer to be Dish’s president and chief operating officer in 2005. Before Neuman, no president had lasted more than four years. Still, for Neuman, a man who’d known Ergen for more than a decade and had run a Dish-like satellite service in Canada, the opportunity was too tempting to pass up. Unlike its major competitor, DirecTV (DTV), Dish was fully integrated: It engineered, built, and sold all its own set-top boxes and ran its own installation fleet and customer service. (The company split in 2008, with EchoStar (SATS) building the boxes and Dish doing everything else. Ergen remains chairman of both companies.) “If you’re a student of management like I am, it was irresistible,” says Neuman.

At first, Neuman loved working at Dish. The company had attracted cable subscribers for a decade by offering clearer picture and sound for a cheaper price. Dish was so notorious for undercutting its competition, especially when it came to the cost of satellite dishes, that Preston Padden, former CEO of rival Rupert Murdoch’s American Sky Broadcasting, joked that the company’s slogan would one day be “Take this free dish, and we’ll buy a house to bolt it onto.” Digital cable had somewhat leveled the playing field, and for Neuman’s first few months on the job every day seemed to bring a new challenge.

Over time, Neuman says, he came to realize why former presidents such as John Reardon, who lasted less than a year, described Ergen as “pounding people into submission.” The hours were long, yes, but it was Ergen’s habit of unilaterally making decisions that most irked Neuman.

Although Dish had more than 100 people employed in its marketing department and reams of customer data to analyze, when it came time to figure out how much it was going to charge for satellite service, Ergen went into his office and came up with the final number alone. “It would be like the CEO of Kraft (KRFT) getting up in the morning and determining how much they were going to charge at retail for 12 slices of American cheese,” says Neuman. “It wasn’t that he didn’t invite input or share his thought process, because he did both. It’s just that he’d had his hands on the wheel for so long that he trusted his own judgment the best.”

What made it worse, Neuman says, is that Ergen was almost always right. Eight months after accepting the job, Neuman resigned.

Judianne Atencio left Dish not long after. As head of communications for a decade, she had witnessed some of the company’s biggest triumphs, including the successful launch of its satellites and the signing of its 10 millionth subscriber. She had also been around for some of its most crushing defeats, such as Murdoch’s last-minute cancellation of a planned merger and the federal government’s denial of another with competitor DirecTV.

“I didn’t have a life for 10 years,” she says. “I couldn’t even have a dog.” There were times when Ergen screamed so loud at Atencio that she packed up her stuff and had to be persuaded in the parking lot to return to work by an apologetic board member. A friend who had worked in the White House even tried to comfort her by saying, “Charlie’s like Clinton—he only screams at the ones he cares about.”

Ergen’s successor as CEO, Clayton, and friend in September 2012Photograph by Kris Connor/Getty ImagesErgen’s successor as CEO, Clayton, and friend in September 2012

Like a lot of former employees, Atencio’s relationship with Ergen was a complicated mixture of dread and respect. Early in her tenure, Ergen paid her and some other employees in cash and Dish stock options. Atencio’s personal finances were tight, and she had a mortgage payment coming due. She went to Ergen to ask for more money in lieu of stock options. He refused, saying she’d thank him later. It was classic Ergen, requiring short-term pain for long-term gain. Not long after, the company’s stock shot up in value, and Atencio profited handsomely.

Two years after she’d left Dish, Atencio saw Ergen and his wife, Candy, at a restaurant, and she went over to say hello. Atencio had started her own PR firm after leaving Dish, and she was taken aback when he told her how proud he was of her. “He’d always been so dismissive of employees,” she says. “Like we were just cattle to be put into a pen.”

The difference now, Atencio could see, was that she was an entrepreneur, someone Ergen could respect. But what she couldn’t figure out is why he kept staring at her. When she asked him, he said: “Did you get a face-lift?”

“I haven’t had a face-lift, Charlie,” she replied. “I just don’t work for you anymore.”
 
 
A self-described “country boy from Tennessee,” Ergen is capable of a Warren Buffett-style folksy charm. He often packs his own brown bag lunch and has lived in the same house for 20 years. He declined requests to participate in this article; he did permit Dish representatives to confirm facts.

Ergen and his four siblings grew up in Oak Ridge. His father was an Austrian-born nuclear physicist who worked on the Manhattan Project. Ergen’s first real job out of school was as an accountant at Frito-Lay. He quit to work as a professional gambler, with blackjack his preferred game. He was so good at counting cards that he has told reporters he was once tossed out of a Las Vegas casino.

At Dish, he still keeps a counter’s eye on the numbers. Up until a few years ago, as he noted at a recent talk at the University of Colorado, Ergen signed every check that left Dish headquarters, a process that took him three to four hours a week and left him with an unparalleled understanding of how money was moving out of the company. He still signs company checks today, though now that Dish has $14.3 billion in annual revenue and $2.4 billion in operating expenses, Ergen reserves his signature for anything over $100,000.

At Dish headquarters in Englewood, a suburb of Denver, the day begins no later than 9 a.m. Badges used to be the preferred method of entry into the building. But a few years ago, after noticing that some employees were taking advantage of the system by having others badge-in for them, Ergen upgraded to fingerprint scanners. If a worker is late, an e-mail is immediately sent to human resources, which then sends another to that person’s boss, and sometimes directly to Ergen.

Multiple ex-employees say it’s not uncommon to see Ergen publicly berate an executive for scanning in a few minutes late, even if that executive had spent the previous 12 hours at home working through the night. Neuman, when he was still president, refused to implement Ergen’s proposed strict badge-in policy. He worried it might be “demoralizing.”

At a quarterly meeting a few years ago, Ergen expressed frustration that some employees couldn’t make it to work on time when there was snow on the ground. As a solution, he encouraged employees to book nearby hotel rooms—at their own expense—when the weather report called for a few inches of powder.

Employees, both current and former, describe an Ergen-created culture of condescension and distrust. Vikas Arora, a manager on Dish’s international content acquisition team, had never worked anywhere else in the U.S. until he left the company last year. That’s when he discovered that “outside of Dish, people are actually treated like adults.”

Whereas many companies are doing their best to cater to millennials who demand flexibility among other benefits, Dish doesn’t allow its employees to work from home. It offers no company credit cards. And according to a former regional manager, for many years, if an employee expensed a meal where they’d tipped more than 15 percent, the extra amount was then subtracted from his paycheck, even if he’d only gone over by a nickel.

One employee, who still works for Dish and asked not to be named to protect his employment, described a rare gift from the company a few years ago. As in most quarters, Dish had set up a new-subscriber goal. When that target was met, the company told employees they didn’t have to come in on the day after Thanksgiving. It was, the employee says, the first and last four-day weekend he’s ever had in 10 years at Dish.

Turnover is said by many employees to be constant, and while no one knows exactly how many employees are laid off during regular quarterly cullings, all employees are aware of the company’s euphemism for the bloodbaths: “talent upgrades.” There’s a running joke on glassdoor.com that Dish is an acronym for “Did I sleep here?”

Ergen treats outsiders, including major investors, with equal disdain, and Wall Street gets little love from him. Longtime analyst Craig Moffett still remembers the first e-mail he received from Dish. It was 10 years ago, and he had just started his job as senior analyst of U.S. telecommunications, U.S. cable, and satellite broadcasting at Sanford C. Bernstein (AB). He asked if he could fly out to Denver to sit down with management to get a better idea of how Dish did business. The response: “We’re too busy creating value around here to sit down and talk about it. Thanks but no thanks.”

Moffett’s relationship with Dish hasn’t changed, even though Moffett has been ranked the No. 1 analyst in his field seven years in a row by Institutional Investor magazine. “I don’t think there’s a company like Dish on Wall Street,” he says. “It’s not hostility; it’s absolute apathy. They just don’t show any signs of being concerned with what the sell-side community thinks. I’ve almost given up trying to contact them. Eventually you get trained; it’s just not worth your time to ask.”

Some investors have gone to extraordinary lengths to buttonhole Ergen. During the 2008 presidential race, he hosted a $2,300-a-plate fundraiser for Hillary Clinton at his home. When the Clinton campaign team discovered that one of the attendees was a first-time donor to the Democratic Party, it offered him a private meeting with the candidate, according to someone with knowledge of the event but who agreed to speak on the condition of anonymity. To the campaign’s surprise, the man declined. “No, no, no,” he said, “I just want to meet Charlie.” (Ergen ended up supporting John McCain.)

Even the largest investors get the cold shoulder. Chris Marangi is a portfolio manager at Gamco Investors, which holds 4 million shares. Marangi says Dish goes out of its way to be uncooperative. Despite traveling to Denver often, he has yet to meet with Ergen or any other Dish executive. Like every other company, Dish sends out a press release at the end of the quarter to announce earnings. But Marangi contends that Dish sends its release out just late enough to be of no use to him and other analysts, so they’re forced instead to search through its 10-Q, the long Securities and Exchange Commission-mandated filing that can run more than 50 pages. “They’re probably the least transparent company of any I’ve ever dealt with,” says Marangi.

Yet Gamco, along with scores of other institutional money managers, continues to invest in Dish—and mostly because of Ergen. “Dish is run for shareholders, and one shareholder in particular,” Marangi says of Ergen. “It’s his money. And he’s got far more riding on the line than we do.”

Ergen has maintained majority voting interest in both his companies: over 90 percent in Dish and more than 75.6 percent in EchoStar. According to Bob Scherman, the editor of Satellite Business News, Ergen once said that former MCI Chief Executive Bert Roberts Jr. told Ergen that if he wouldn’t let Roberts buy Dish he might face a hostile takeover. Ergen, with almost complete control, laughed at him. “Good luck to you,” he told Roberts.
 
 
The only surefire way to meet Ergen has been in court. Under Ergen, the company has racked up a long record of suits and countersuits. What may seem like malicious paperwork to some is aggressive protection of the company’s interests to others. “Dish is unique in that it uses litigation as a profit center,” says Moffett. Other analysts agree.

“I may be the only CEO who likes to go to depositions,” Ergen said at the University of Colorado talk. “You can live in a bubble, and you’re probably not going to get a disease. But you can play in the mud and the dirt, and you’re probably not going to get a disease either, because you get immune to it. You pick your poison, and I think we choose to go play in the mud.”

In a 2001 deposition, Dish’s then lead counsel estimated that the company had employed more than 100 law firms in 10 years. Dish once even sued its own lawyers, Chicago-based Bartlit Beck Herman Palenchar & Scott, only to end up on the wrong side of a $40 million judgment and with an admonishment from a panel on behalf of the American Arbitration Association that its conduct—which included making claims of unethical conduct against the law firm that were “patently false”—was “egregious.”

Dish’s battle with TiVo (TIVO) over patent infringement took nearly a decade to settle. A federal judge once said of three Dish lawyers that their conduct didn’t “even meet law-school student behavior,” and “presented the saddest day I have seen in my many years in court.” (The lawyers were accused of filing lengthy briefs and motions with no merit as a stall tactic—a familiar charge leveled at Dish attorneys.)

Dish Network’s Cheyenne (Wyo.) uplink centerCourtesy DishDish Network’s Cheyenne (Wyo.) uplink center

Ergen, who has called himself a “dog with a bone” when he gets into a dispute, has let that willingness to go to war spill over into his personal life. When he wanted to build a road on Telluray, his 6,200-acre ranch in southwestern Colorado, neighbors objected because it cut through their property. What followed was another decade-long court battle that eventually ended in a partial victory for Ergen. He never ended up building the road, though, a detail that continues to confound John Steel, the lawyer who represented his neighbors. “We would have made any deal he wanted, but [Ergen] didn’t care,” he says. “He just has this pathological need to sue people.”

Dish is involved in two suits with the federal government, which claims the company is too aggressive in its telemarketing. It’s also in the midst of litigation with all four major broadcast networks over AutoHop, its new DVR feature that automatically skips commercials, which infuriates networks. At a recent meeting of TV executives, CBS (CBS) CEO Les Moonves summed up the industry’s opinion of Dish with a rhetorical question: “How does Charlie Ergen expect me to produce CSI without commercials?”

A blackout is the height of hostility between a carrier and a network. According to the American Television Alliance, a coalition of consumer groups and cable companies, no carrier is more willing to do battle than Dish, which is responsible for 22 of the 42 blackouts recorded since March 2010. DirecTV, with 5 million more subscribers, has been involved in six.

In 2006, Dish signed a deal to carry Voom HD Networks, a suite of 15 high-definition channels owned by AMC, then known as Rainbow Media and a subsidiary of Cablevision (CVC). When Dish soured on the deal in 2008, Voom effectively went under. The company’s offices were so small that it didn’t have a conference room large enough to lay off all of its 200 workers at once; it had to break the bad news in three waves.

Cablevision sued Dish, alleging a breach of contract, and the suit provided months of content for news outlets. Last June, in a clear play to pressure Cablevision, Dish dropped AMC Networks, home of such critically acclaimed series as Mad Men and Breaking Bad. Ergen presented the decision as one based purely on the bottom line. “We skew a little older and more rural,” he told Bloomberg News. “The vast majority of our customers don’t watch Mad Men.”

When Dish dropped AMC and its hit “The Walking Dead,” some subscribers went hungryPhotograph by Paul Morig/Getty ImagesWhen Dish dropped AMC and its hit “The Walking Dead,” some subscribers went hungry

When Cablevision’s case came before a court on Sept. 19, it did so after two years of setbacks for Dish. The trial began with an order to the jury to assume that Dish had intentionally destroyed documents that supported Cablevision’s claims. A Greek chorus of industry analysts was yelling for Ergen to settle. Ever stubborn, he and Dish waited three weeks. Days before Dish settled the case for $700 million and, as part of the settlement, agreed to return AMC to its lineup, a last-minute Cablevision audit uncovered an e-mail from a Dish executive to Ergen that seemed to suggest that he and the company had long planned to back out of the deal.

Ergen, leaving court during the trial, was chased by a New York Post photographer. Instead of disappearing into a waiting limo or calling a cab, Ergen, a former walk-on basketball player at the University of Tennessee at Knoxville, spent five minutes sprinting around a New York City promenade, ducking behind cars, and running up and down subway stairs in an attempt to evade the photographer’s lens.
 
 
“We’re a one-trick pony,” Ergen has said of Dish, which has a sole product: satellite TV. In a November earnings call, Ergen talked about how his five kids—most of whom don’t even have cable subscriptions—think he’s “crazy” to be in the pay-TV business. To address that, Ergen has spent nearly $3 billion in the past two years buying wireless spectrum from bankrupt companies and just received word of a favorable Federal Communications Commission decision that may allow him to deliver video to tablets and cell phones. He’s also made it clear that he’d like to try again to merge with DirecTV and have his own mobile network to compete with telecom giants such as AT&T (T) and Verizon (VZ), though a succession of recent wireless industry consolidations has possibly imperiled those plans.

Since Ergen relinquished the CEO role, Dish employees say the company has relaxed some. It is, according to the former regional manager, now possible to leave a 17 percent tip without incurring a personal charge. But austerity and meanness still have their place. In response to the economic downturn, it takes longer to accrue vacation days, and holiday parties have been scaled back. The company reports earnings on Feb. 22. It’s beaten estimates five out of the last eight quarters.

Hannan is a Bloomberg Businessweek contributor.

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