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.
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.
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.
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.” 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.)
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.
When Dish dropped AMC and its hit “The Walking Dead,” some subscribers went hungry. (Paul Morigi/Getty Images)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 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.
