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HD Boom May Have Helped DirecTV, Hurt Dish

Feb 28, 2008  •  Post A Comment

Is the HD boom a blessing or a curse?
That’s what some investors in satellite television services may be asking this month, after the two largest U.S. satellite TV delivery companies said the increase in high-definition programming may have had opposite effects on their bottom lines.
This week, Dish Network said fourth-quarter earnings trailed analyst estimates as the company added 85,000 subscribers in the quarter, down from 350,000 a year earlier. Net income rose 14% to $175 million as sales increased 12% to $2.89 billion.
“Other multichannel video providers may have more successfully marketed and promoted their HD programming packages and may also be better equipped to increase their HD offerings to respond to increasing consumer demand for this content,” the company said in an SEC filing this week. Dish had about 50 HD channels at the end of last year, about half DirecTV’s number.
Dish’s analysis of its place in the HD universe contrasted with that of larger competitor DirecTV, which earlier this month said fourth-quarter earnings beat analysts’ estimates as revenue jumped 17% to $4.88 billion. DirecTV, which had 16.8 million subscribers at the end of last year compared with 13.8 million for Dish, saw its subscriber turnover rate fall to 1.42% from 1.57% a year earlier, largely on the popularity of its HD programming.
“This 15-basis-point reduction in monthly churn to 1.42% was largely due to the significant growth in customers with HD and DVR services, increasing from about 30% of our subscriber base last year to over 40% this year,” DirecTV said in a Feb. 13 statement.
Dish’s fourth-quarter earnings of 39 cents a share trailed the 45-cent average in a Thomson Financial survey, which estimated sales at $2.86 billion. Dish’s 1.7% subscriber turnover rate exceeded the 1.6% estimate of Citigroup analyst Jason Bazinet.
The benefits of Dish’s steady subscription increases may be “partially offset by rising competitive risks from cable and telco competitors,” Mr. Bazinet wrote in a note to clients Wednesday. He assigned a “buy/high risk” rating to the stock, which fell 4.8% on Feb. 26, the day Dish announced its earnings.

32 Comments

  1. If they want to continue to grow, they should consider stopping the HD Tiering with extra charges for new channels added. I have a habit of shunning anything but the HD channels and would love to have a full a la carte option.
    Right now, the bill is $125+ /mo and growing. If the cable guys get their act together ( hear me, Time Warner), and price their HD aggressively, DirecTV could lose subscribers.
    Operationally, they operate less effeciently than the worst utility.
    They ship crap HD DVR’s (of their own make), and resist requests for replacement of faulty machines. I had a HD DVR box in my bedroom that had such a noisy fan that ran around the clock, stop and start, that it would wake us up in the middle of the night. It took 4 calls to different customers service agents to convince them to replace it. After being told that the boxes run hot (they do), and noisy fans were a normal condition, and lastly, that they only replace one box a year (this was my second defective box in 6 months), I finally got a sympathetic agent and supervisor to send a replacement. It functions silently now, thanks.
    Oh, and yes, if they send a replacement box, they just add the new unit rental to your bill. They don’t remove the monthly charge until you call them to remove it. And then they only will refund 2 months of incorrect charges, if you didn’t notice the extra charges. They had slipped me into a ‘no statement mailed’ account, so how would I know?
    My Wish list:
    1) Offer an All HD, no SD channel subscription
    2) Return to TIVO boxes and their menu software
    3) Remove XM radio from DirecTv; I already have a home subscription with more channels and better sound
    4) A wireless internet connection (or least a wired net connection) for updating software
    4) Improved customer service
    5) More HD channels
    6) More HD channels

  2. the direct tv has nothing on really to watch and the prices keep going up and up. when are they going to start showing some oringinal and things we have already seen on regular tv. and then they go off the air at 11pm.pacific time because everything is sheduled for eastern time. then they go to paod programing in other words commericals as if they don’t have enough commercials during the show and on the show you are watching. and everytime they a little something new they raise the price again. this is getting rediculous. some thing has to be done. or they are going to price theirselves out of business. this is the time for other companies to become more competitive don’t you think or doesn’t anyone care anymore????????

  3. We have had nothing but billing errors with Directv, just about every month for the past six months. When we threaten to switch to the competition, we get free movie channels or a $5 credit each month for a year. Also, I resent paying for commercials!

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