The Dish on the Dish Network
Blockbuster Video. The once booming rental chain has been on financial life support for years. Not since the Reagan Administration has it been a powerhouse for home entertainment, and truthfully, it may never be again. Blockbuster gave up the ghost late last year when it closed over 900 stores and filed for bankruptcy. With no hope in sight, the iconic brand was destined to drift off into irrelevancy. That was until CEO of the Dish Network, Charles Ergen, swept down in his angelic-redemptive glory with gobs of cash, $320 million to be exact, and applied a financial defibrillator to jolt the rental chain back to life. So, was this a smart move on the Dish Network’s part, or was Blockbuster simply DOA?
Upon announcing the decision, business/financial critics immediately began voicing negative opinions about the acquisition. Tech News blogger David Zatz tweeted that he and several financial analysts felt that the decision, “did not compute.” Mike Fleming, a Deadline New York reporter, could not process why Dish would make such a purchase when there are far superior movie rental options out there, stating, “Blockbuster’s brick and mortar strategy was exposed as a dinosaur strategy when the other services began to rise, the behemoth moved too slowly adapt to the times and lost its turf in the process.”
Almost simultaneously Dish put out a press release to stem concerns about the purchase being risky. In the document, the CMO laid out Dish’s future intentions with Blockbuster and addressed the opportunities its acquisition provided for the company. The following is break down of the key talking points of the memo:
· Blockbuster is a “highly recognizable brand.” Dish feels the brand familiarity will generate immediate trust and interest in new content offerings.
· Blockbuster provides Dish with “multiple methods of delivery.” Its by-mail, streaming, kiosks, and store locations provide a unique opportunity for Dish’s content offerings.
· The bricks and mortar stores provide “cross marketing opportunities”. This will give Dish opportunities to sign new subscribers by providing incentives to current Blockbuster member’s and engaging with them in-store.
· Dish commits to “re-establish Blockbuster’s brand as a leader in video entertainment.” Dish feels there is an opportunity through Blockbuster’s established relationships to cut deals with studios to provide content faster than competitors.
So far, this overtly positive and perhaps a bit naïve messaging approach is working. Since the press release stocks have remained relatively stable. However, since this is a recent acquisition it will take time for investors to fully evaluate the risks associated with the purchase. Ultimately, Dish will need to elaborate more specifically on what’s their strategy involving this colossal purchase.
Evaluation
Aside from where I stand on the Dish Networks actions, (they are insane), I find myself being even more critical of their communication effort. This announcement came as a complete surprise to many analysts, in fact, some were completely unawares that Dish was even considering such a purchase. I think it may have faired the Dish Network well to get the word out earlier and let their stakeholders know that they were mulling over this decision. By doing so they could have better gauged how the market would react and reevaluate how to publicly approach the decision.
Now, assuming that Mr. Ergen and company are completely convinced that the move was brilliant, then they need better convey what was brilliant about it. If they have some brilliant plan, if they have some super-enlightened ingenious approach in harnessing the power of Blockbuster, then put it out there. Don’t generate a vague, safe, and preposterously naïve press release that states the obvious. We know it’s a highly recognizable brand, we know it has multiple methods of delivery, etc. But what does this mean for the Dish Network? How are you going one-up Netflix? Hulu? What is Dish going to do with the brand that will bring it back from the grave, with a vengeance?
To be fair, they came closest to doing this when they mentioned the possibility of faster delivery for new movie releases. That’s a good start Dish, now elaborate.
Maybe I’m jumping the gun, maybe the ground-breaking press release that will answer every concern a stakeholder could conjure up is being put together as we speak. But if this bit of communication is all they currently have to reassure its publics, its potential investors, then I can understand their concern.
(The attached video talks about the acquisition, mentions some of the key points in the press release, includes analyst speculation as to possible approaches for Dish, then ends with tidbits from analysts who are skeptical about the deal.)
