Sponsored By

Street Pounds Dish for Sub Losses

Shares fall more than 10 percent after the satellite giant reports losing 19,000 net subscribers in the second quarter

August 10, 2010

3 Min Read
Street Pounds Dish for Sub Losses

Dish Network LLC (Nasdaq: DISH) shares dropped more than 10 percent Monday after the company reported that it lost 19,000 net subscribers during the second quarter. Founder and CEO Charlie Ergen skipped the company’s earnings call -- which also drew some attention from Wall Street analysts. (See Dish Reports Q2.)

"Charlie and his family are traveling on holiday,” Dish EVP of sales, marketing, and programming Tom Cullen told analysts. “Don’t expect any Charlieisms to quote this quarter," he added, referring to Ergen’s penchant for using direct and colorful language while discussing Dish and its competitors.

Cullen blamed the subscriber losses on a poor economy, which has hurt consumer confidence, coupled with customer service issues at Dish Network. Subscriber churn was also spurred by a "pay-in-advance type of product" that Dish began marketing in 2009, but Cullen said Dish wouldn't detail how many of those customers have dropped service after their initial offer expired.

While Dish has improved its customer service operations, Cullen said, "No excuses. We still have a long ways to go."

While Dish Network lost more than 19,000 subscribers during the second quarter, rival DirecTV Group Inc. (NYSE: DTV) reported late last week that it added 100,000 US subscribers during the same period. [Ed. note: Several major US MSOs also lost basic video subs in the quarter, but made up for it in digital upgrades and new voice and high-speed Internet sub adds.] (See Dish Reports Q2 and DirecTV Adds Record Subs in Q2.)

Dish executives wouldn’t provide any guidance on subscriber expectations for later in the year. Noting that the pay TV sector "appears to be reaching saturation," Cullen said Dish is focused on retaining the subscribers that it has and deploying new products and services, including TV Everywhere components and set-tops that can handle MPEG-4.

"We believe we’re positioning ourselves to provide consumers with the best value and best damn video experience they can get in the country," Cullen said, pointing to Dish's strategy of delivering video to consumers both in the home and remotely through its SlingPlayer applications.

At least two analysts told executives that they wanted to hear from Ergen, and one analyst complained that Dish executives weren’t providing them with a clear vision for the company's future.

"This is a maturing sector. It is very competitive, and we will continue to focus on retaining the customers that we have. But as far as any long-term M&A or corporate expansion discussions -- not that we’re not having those -- we're not ready to share them publicly," Cullen said.

It’s not clear whether the subscribers Dish has lost are abandoning the company for another provider, or cutting the cord on pay TV in general. Cullen said that, while Dish hasn't seen "significant evidence of widespread cord cutting," he noted that the company does not have "precise data as to whether it's occurring today...

"The general economic environment is not helping us one bit."

Dish shares closed Monday at $18.72 each, down $2.12 (10.17 percent) for the day.

Also worth noting from Dish’s second-quarter earnings:

  • While Dish Network plans to integrate the Google (Nasdaq: GOOG) TV platform into its HD-DVRs this fall, Cullen predicted it would be "several quarters" before the product has a material impact. "We’re going to roll this out and deploy it somewhat surgically and selectively and learn from it." (See Google TV Comes Out, the World Tunes In .)

  • Dish provided an update on its litigation with TiVo Inc. (Nasdaq: TIVO), which sued the company for patent infringement. Dish noted that oral arguments for the en banc review of a Federal Circuit Court of Appeals ruling in the case is scheduled to begin on November 9. The company said it expects a decision to be issued this spring. (See TiVo Shares Dive on Court Decision.)

  • Cullen estimated that about 60 percent of Dish Network customers subscribe to broadband Internet service from another provider -- "But don't hold me to that."

    — Steve Donohue, Special to Light Reading Cable

Subscribe and receive the latest news from the industry.
Join 62,000+ members. Yes it's completely free.

You May Also Like