Dish Network lost 281,000 pay-TV subscribers in the last quarter due to price increase and blackout of channels. Last year, Dish lost 81,000 customers and the monthly rate of customer loss increased from 1.71 percent to 1.96 percent.
The numbers are quite shocking. “While we were prepared for some weakness due to a number of programming disputes this quarter, we were not prepared for the magnitude,” said Philip Cusick, an analyst at JPMorgan Chase & Co.
Dish faced a huge challenge from the online streaming services that are available at low price. These online streaming services created a trend of cord cutting from the traditional satellite services. In order to meet the losses, Dish started its own online video streaming service, Sling TV, at $20 a month. It included live broadcasts from channels like ABC, NBC, USA Network, Bravo, and ESPN. However, the revenue from Sling TV could not benefit Dish in maintaining the profits at the satellite TV segment.
Furthermore, Tribune channels blacked out in 33 cities in Dish Network when the companies failed to come in agreement about the contract renewal. Dish is also having a carriage dispute with the NFL Network. MoffettNathanson analyst, Craig Moffett, said that, “Leaving aside the merits of either side’s arguments about right and wrong, what is clear is that Dish’s steady stream of programming disputes are having an increasingly obvious impact on the subscriber metrics of the core satellite business.”
“Granted, the second quarter is always the year’s worst. But the loss is much worse than last year’s 151,000, and it leaves their satellite TV subscriber base a shocking 7.5 percent smaller than it was a year ago. In a business that is ostensibly all about the operating leverage of the fixed-cost satellite TV platform whose costs are spread across a growing base of users, that’s an awkward place to start a conversation,” Moffett added.
Dish Network reported that their earnings growth rate is more than the expected rate, in spite of its subscriber losses. This is because of the increase in pricing of Dish Network channels. According to a statement released by the company, their share value rose to 88 cents, beating a projected value of 73 cents.
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