Bernstein Forecasts 20% Decline in Subscriber Growth for DirecTV’s 3Q

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Sanford Bernstein is projecting that DirecTV will have a gain of 192,000 subscribers, down 20% from last year, when it reports third-quarter earnings later this week.

Wall Street analyst Craig Moffett offered the projection in a report Tuesday, just two days before DirecTV’s earnings call Thursday afternoon.

He anticipated that the nation’s largest satellite provider will have a net gain of 192,000 subscribers, versus 240,000 in the year-ago period. Moffett also warned that there are a number of reasons for concern about DirecTV.

“DirecTV's strength has been its high-end positioning,” Moffett wrote. “Peer Dish Network has struggled at the low end, with high churn and declining gross additions. By contrast, DirecTV has flourished, maintaining growth even as Dish reported its first ever subscriber loss by positioning itself as the best place to watch TV, and especially HDTV, at any price.”

However, Moffett added, “But companies with high-end positions have been under siege all across the economy. Expectations for DirecTV are now very high (much higher, for example, than for Dish), and there are more than a few reasons for concern.”

For example, he pointed out that AT&T reported a lost of 53,000 satellite subscribers in the third quarter.

“We estimate that AT&T’s loss of 50,000 subscribers was comprised of a loss of 100,000 DirecTV subscribers, and a net gain of 50,000 for Dish,” Moffett wrote.

He also noted that DSL growth has been “flagging,” and that many satellite customers get their broadband via DSL.

“It is a huge challenge to preserve video relationships with customers who take broadband from a  direct competitor, whether it be a cable operator or a video-enabled telco, especially when that competitor will inevitably bombard that customer with discounts and promotions inducing them to switch,” Moffett wrote.

“Perhaps not coincidentally, DBS subscriber growth has been strongly correlated with DSL growth over the past few years,” he added. “And DSL growth, which has already been reported, was very poor this quarter.”

Moffett also questioned whether customers will continue to pay $270 to $300 for the NFL Sunday Ticket.

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