Dish Delivers Blockbuster Q4


Dish Network, after several quarters of
customer losses and declining prospects, appears to have
turned the corner, reporting a net new customer gain in
the fourth quarter and embarking on a strategy it says is
focused on driving growth through better products, better
service and stronger marketing.

The No. 2 U.S. satellite-TV provider added 22,000 net
new subscribers in the fourth quarter, a marked improvement
over the 156,000 customers it lost in the same period
in the prior year and soundly beating analyst consensus
estimates of 5,000 net new customer additions.

Lower churn in the quarter — 1.55% compared to consensus
estimates of 1.67% — seemed to make the biggest
impression on analysts, who said that efforts to retain and
attract quality customers appear to be paying off .

“In our view, churn is the key metric by which Dish’s
operational performance must be judged,” Credit Suisse
media analyst Stefan Anninger wrote in a research report.
“And from this perspective, 4Q11 was a solid quarter,”

Dish CEO Joe Clayton said in a statement that the turnaround
was a result of rebranding efforts the company initiated
in the quarter.

“By introducing new Blockbuster-branded services, we’ve
begun to turn the tide in subscriber
losses while continuing to face
increased competitive pressures,”
Clayton said in a statement.

Dish unveiled several Blockbuster-
type services in the period
— most notably its Blockbuster
Movie Pass streaming-video service
— and extended those transformative
efforts into January at
the Consumer Electronics Show in
Las Vegas. At CES, Dish unveiled a
broadband joint venture with ViaSat
that will deliver 12 Megabitper-
second high-speed data service to rural communities,
a whole-house DVR product dubbed the Hopper and a new
Kangaroo-themed logo, all aimed at rebranding Dish as a
fast-moving, leading-edge content-delivery company.

On a conference call with analysts, Clayton said that the
pay TV market is shifting rapidly and that Dish is moving
with it, adding that the pay TV market is nearing the saturation

Clayton still believes pay TV has potential for singledigit
growth, but other segments, like the Hispanic market
and business markets, have higher growth rates. That’s
where he said Dish will redouble its efforts to address in

And while Clayton prepares for the future — he told analysts
to “stay tuned” for a revitalized marketing program
centered around the new-product offerings — the biggest
piece of Dish’s future puzzle is still missing. Dish spent
about $3 billion last year assembling 40 MHz of wireless
spectrum, which it said it will use to construct its own
broadband network, most likely with a partner. But before
Dish can do anything with those wireless licenses, it
needs a waiver from the Federal Communications Commission
to offer the service.

On the conference call, Dish chairman Charlie Ergen
said he hoped that the situation could be resolved as soon
as March 12.

Without that waiver Dish would have to rethink its strategy,
including possibly selling the spectrum. Any sale
would likely be at a loss because the licenses wouldn’t be
as valuable without the agency waivers.

But Ergen was optimistic, adding that President
Obama’s broadband initiatives to increase competition,
innovation and availability of wireless high-speed Internet
service are tailor-made for the satellite giant.

“We have a history of being very disruptive in the video
business. I think we would be disruptive in the wireless
business,” Ergen said. “So that gives us some degree of
confidence that we would meet the standard to grant the
waiver. If so we’re prepared to enter the business and go
full-force to make a business out of it. It would transform
not only our company but transform the way people use
wireless in the United States.”