Conceding that delays in satellite launches hurt Dish Network competitively, CEO Charlie Ergen said Tuesday that the satellite provider will have 100 national HD networks and local HD channels in 100 markets by the end of the year.
“Obviously, almost everyone who wants HD wants their local channels in HD,” Ergen said during Dish Network’s fourth-quarter earnings conference call. “So you’re competitively challenged in markets where you don’t have it.”
Postponement of several satellite launches last year hamstrung the satellite provider’s efforts to expand its local HD offering, he told analysts. At the end of last year, Dish Network had about 70 national HD networks and local HD in 34 markets.
“I think we expect to be competitive with 100 channels that anybody else might have and 100 local markets that anybody else might have,” Ergen said . “Of course, it’s conditioned on satellite launches.”
In reporting its fourth-quarter results, Dish Networks saw a sizable slowdown, a 76% decline, in subscriber gains in the fourth quarter last year versus the year ago period. Performing below Wall Street’s expectations, Dish Network registered 85,000 new subscribers in the fourth quarter last year, versus 350,000 in the fourth quarter in 2006.
Ergen blamed both the economy and postponements of satellite debuts, which would have allowed Dish Network to expand its local HD offerings, for the company’s “disappointing” fourth quarter.
“Factor one is probably economic conditions and fewer housing starts, and the second factor would be competition,” he told analysts. “Because of delays of satellite launches that were originally scheduled to be in 2007 and will now be in 2008, we just didn’t have as many local markets for high-definition television to go out and advertise in in terms of the local channels, which are obviously important -- probably more important than the national channels, which we were in pretty good shape on.”
In March there will be a satellite launch, of AMC-14, which Dish Network will lease and use to expand its local HDTV and international offerings, according to Ergen. That will enable Dish Network to extend HD to 10 local markets a month through the end of the year, he said.
Then there is a second satellite launch in the summer, EchoStar XI, and one set for later this year, Ciel 2.
“Those are the three that affect Dish this year,” Ergen said. “One we can lease ... and two we own.”
He also said he wasn’t happy with improvements on the operational side, in terms of the handling of customer calls, for example.
Ergen also reiterated his position that Dish Network will only offer broadband – and make up a triple play – by partnering with other companies, not establishing its own high-speed data service.
“Both cable and phone companies are better positioned to do that, so obviously one of the things we can do is partner with people who already have broadband connections, as opposed to build that network ourselves,” Ergen said. “At this point, that is really the strategy we have chosen.”
Dish Network has deals to offer video in partnership with WildBlue Communications, which delivers Internet via satellite, and Clearwire, which delivers it terrestrially.
Ergen pointed out that Dish Network’s other partner on the triple-play, AT&T, as of April will no longer be selling DirecTV video service as part of a “bundle” in BellSouth’s former territories. That will be “a positive” to increase Dish Network’s presence in AT&T’s footprint, according to Ergen.
As to fourth-quarter subscriber counts, he noted that DirecTV and Verizon’s FiOS video service reported strong gains in subscribers, while cable operators saw losses.
“We did well with positive subscribers, vis a vis the cable industry, that came in with negative numbers,” Ergen said. “It appears we were more in the middle of the pack.”
Dish Network ended last year with 13.78 million subscribers, an increase of 675,000 from its 13.1 million subscribers at the end of 2006.