Dish Network's pay-TV business continued to crumble in Q1, as the company lost a combined 230,000 satellite TV and Sling TV customers, ending the period with a grand total of 11.06 million.

While those losses were steep, they did represent a marked improvement versus the 413,000 total pay-TV subscribers that Dish lost in the year-ago period.

Dish's satellite TV business shed another 130,000 subs in Q1 2021, a bit better than a projected loss of 139,000, ending the quarter with 8.69 million subs.

Dish's traditional satellite churn improved to 1.3%, more evidence that the company's "rural stronghold strategy is working well" and helping to moderate its rate of satellite TV subscriber declines, Craig Moffett, analyst with MoffettNathanson, explained in a research note.

Dish's satellite TV numbers have largely improved across the board of late thanks to a focus on rural US markets that are unserved or underserved by broadband. However, that advantage could be fleeting amid the Rural Digital Opportunity Fund auctions and other federal stimulus projects in the works that will pour billions into rural broadband.

With 5G and wireless now viewed as the "core" of Dish's business, "the satellite segment doesn't matter much anymore anyway, at least for equity valuation," Moffett explained.

Sling TV, the company's OTT-TV service, failed to fully capitalize on the cord-cutting trend, losing 100,000 subs in Q1 2021, worse than the -40,000 expected by Wall Street. Q1's results shrunk Sling TV's sub base to 2.37 million, effectively erasing two quarters of growth.

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It's not yet clear if a recent Sling TV promo that offers a deep discount ($10 per month on the first month of service) along with access to Sling TV's premium cloud DVR offering has helped to move the subscriber needle in recent weeks.

All told, Dish's video subscriber base has contracted by 5.6 million subs, or 40% off its peak of 14.3 million in Q1 2020, according to Moffett.

Speaking on today's earnings call, Dish Chairman Charlie Ergen repeated his stance that a Dish-DirecTV merger is "inevitable," even as AT&T prepares to spin off its pay-TV business via a deal with TPG Capital.

While such a merger might create synergies and deliver a company with more pay-TV scale, it would have no material effect on industry growth rates. "With gross additions this low, there isn't much juice left here," Moffett noted.

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— Jeff Baumgartner, Senior Editor, Light Reading