Dish Loses 25,000 Subs In Q2

Becomes First Satellite Operator To Lose Customers: Analyst

By Linda Moss -- Multichannel News, 8/4/2008 11:37:00 AM

After seeing an ongoing slowdown in customer growth, Charlie Ergen’s Dish Network actually lost 25,000 subscribers in the second quarter, the satellite company reported Monday.

Dish Network, which ended the quarter with roughly 13.79 million subscribers, set an ignominious mark in the process.

"The subscriber loss reported by Dish Network was the first ever by a satellite operator in the U.S.," Sanford Bernstein analyst Craig Moffett said in a report Monday.

This year’s second-quarter subscriber loss is in stark contrast to second quarter 2007, when Dish added 170,000 new subscribers.

But even 2007’s second-quarter subscriber gain was down compared with the second quarter in 2006, when Dish gained 195,000 subscribers. Subscriber growth had been continuing to trend downward.

Dish has seen its customer gains slow down due to the troubled economy, the sour housing market and what CEO Ergen has said were operational problems and glitches at the company.  

In its 10-Q filed Monday, Dish reported that its gross subscriber gains were 752,000 in the second quarter versus 850,000 in the year-ago period. Monthly churn in the quarter was 1.87%, up from 1.68% in the year-ago quarter.

“Our gross new subscribers, our net change in subscribers, and our entire subscriber base are negatively impacted when existing and new competitors offer attractive promotions or attractive product and service alternatives, including, among other things, video services bundled with broadband and other telecommunications services, better priced or more attractive programming packages, including broader HD programming, and a larger number of HD and standard-definition local channels, and more compelling consumer electronic products and services, including DVRs, video on demand services and receivers with multiple tuners,” Dish reported in its 10-Q.

“We also expect to face increasing competition from content and other providers who distribute video services directly to consumers over the Internet,” Dish said.

For the second quarter this year, Dish recorded total revenue of $2.91 billion, a 5.6% increase compared with $2.76 billion for the corresponding period in 2007.

Net income totaled $336 million for the second quarter, compared with $224 million during the year-ago period. Basic earnings per share were 75 cents for the quarter, compared with basic earnings per share of 50 cents during the same quarter last year.

Dish Network is in the middle of a contract dispute with GolTV and Citadel Communications. The satellite company dropped the soccer-centric cable network and four of Citadel’s Midwestern stations last Friday, when its carriage deal with GolTV and its retransmission-consent agreement the broadcaster all expired.

Dish Network has a second-quarter conference call set for noon today, Monday.

“We believe our gross new subscriber additions have been and are likely to continue to be negatively impacted by weak economic conditions, aggressive promotional offerings by our competition, the heavy marketing of HD service by our competition, the growth of fiber-based pay TV providers, signal theft and other forms of fraud, and operational inefficiencies at Dish Network,” the company said in its 10-Q.