Dish Network Slings Up More Losses

While it has slowed down a bit, the bleeding is far from over for Dish Network as its pay-TV subscriber losses pile up and its stock keeps swooning.

Despite continuing subscriber and revenue gains by its OTT video service, Sling TV, Dish Network LLC (Nasdaq: DISH) reported Monday that it lost another 94,000 pay-TV subs (net) in the first quarter, reducing its total video customer base to 13.1 million. While that loss represents an improvement from the 143,000 video subscribers that Dish lost in the year-ago period, it still doesn't offer much to cheer about and leaves the company's overall sub base down 8% from a year ago.

Moreover, unlike rival satellite TV provider AT&T Inc. (NYSE: T), Dish is still losing more satellite TV customers than it's gaining OTT video customers. While it added 91,000 Sling TV subscribers, the company lost 185,000 satellite TV subs. As a result, it closed March with 10.8 million satellite TV subs and 2.3 million OTT subs. (See AT&T Eyes Higher DirecTV Now Margins.)

Plus, in another unhappy omen for Dish, Sling TV's subscriber growth appears to be tailing off. The 91,000-sub gain came in well short of the Wall Street consensus forecast of 161,000 and even further below the 195,000-sub gain of the previous year period. "Sling's growth has begun to slow sharply," noted Craig Moffett, principal analyst of MoffettNathanson LLC .

Further, Dish is still seeing its ARPU, revenue and net income fall as its customer mix shifts more and more towards its low-margin Sling TV service. Overall pay-TV ARPU slipped to $84.50 in the winter quarter, down from $86.55 a year earlier. Total pay-TV revenue slid to $3.46 billion, down from $3.68 billion in the year-ago quarter, while net income fell to $368 million, down from $376 million a year earlier.

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Speaking on the company's earnings call Monday afternoon, Dish executives emphasized such positive results as lower churn rates and a higher credit profile for the satellite TV unit, recent awards for superior customer experience, lower subscriber acquisition costs, and higher ad revenues for Sling TV. They also defended their decision to plow more resources into Sling TV, such as expanding its cloud DVR service to more devices, despite the platform's stingy profit margins.

"There are going to be skeptics out there," said Dish Network Chairman Charlie Ergen. "We're going to take some arrows, so be it. But we're going to do the right economic thing."

Wall Street, though, was not exactly impressed by the results. In trading Tuesday, Dish's stock price plummeted to $29.81 a share, down about 12.1% on the day, as it continues to trail the overall market badly.

— Alan Breznick, Cable/Video Practice Leader, Light Reading

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