Dish Network lost 381,000 satellite TV subs in Q4 and added about 47,000 Sling TV customers as its core pay-TV business continued to suffer. But execs are hopeful that the worst is now behind it.
Dish Network LLC (Nasdaq: DISH), which ended 2018 with 12.32 million total pay-TV subs -- 9.90 million satellite TV customers and 2.42 million with Sing TV -- attributed a little more than half of those losses to the ongoing blackouts with Univision and HBO. It also believes that it is more or less over the hump with the additional defections it can expect from the impasse with those programmers. (See Dish Drops 334K Pay-TV Subs in Q4 and Dish Slaps Univision With Streaming Patents Suit .)
On the OTT side, with Sling TV , Dish also believes that it has put customers into the right packages and weeded out unprofitable customers. In addition, it has been making strides with add-on packages and services, like its cloud DVR and advanced advertising, to help ramp up ARPU at Sling TV, which trails behind the ARPU that it generates from its more profitable satellite TV subs. Still, Sling TV's Q4 2018 gains were well down from the 160,000 adds from the year-ago period.
"We remain bullish on live OTT," Charlie Ergen, Dish's chairman, said on Wednesday's earnings call. He noted that ad revenues for the service grew three-fold in the past year and that every Sling TV sub is now "margin positive."
Sling TV has gone through the "painful steps" of right-sizing customers and eliminating those that aren't profitable to help stabilize the business, Ergen added, stressing that the service won't be doing "crazy giveaways" just to hit a number that Wall Street wants.
AT&T, "to their credit," is going through a similar process now. "At some point there's a race to the bottom, until people realize they're at the bottom and people start climbing their way back up. I think we're… already past that for the most part," he said. (See AT&T's Pay-TV Biz Takes Big Hit as Promotional Subs Flee .)
Analysts are concerned about the declining state of Dish's satellite TV business. "Dish's traditional subscriber base is now shrinking at a terrifying 10.5% rate (accounting for hurricane-related reconnects a year ago), a sharp acceleration from the 8.7% YoY rate a quarter ago," Craig Moffett, analyst with MoffettNathanson LLC , said in a research note. "These are the subscribers that matter. They are the ones that actually make money."
Moffett added that Dish's argument that growing its OTT business as its satellite TV base wanes "is a bit thin," holding that gross margins on Sling TV "are likely close to zero."
Dish posted overall Q4 revenues of $3.31 billion, down from $3.48 billion in the year-ago quarter. Dish shares were down $2.61 (8.37%) to $28.65 in early afternoon trading Wednesday.
Light Reading will have more detail on Dish's wireless and 5G activities later today.
— Jeff Baumgartner, Senior Editor, Light Reading