Dish’s Satellite Performance Is Clouded

May 15, 2008  •  Post A Comment

As Bruce Springsteen would put it, Dish Network this week may have taken “one step up, two steps back.”
Trailing U.S. satellite leader DirecTV in both subscribers and high-definition channels, Dish may be falling further behind, despite its recent announcement that it was nearing DirecTV’s inventory of almost 100 HD channels.
Dish, whose 13.8 million subscribers lag DirecTV’s 17 million, said this week that its first-quarter revenue was $2.81 billion, trailing the $2.83 billion average analyst estimate in a Thomson Financial survey.
More importantly, Dish’s subscriber turnover rate rose 15% from a year earlier to 1.68%; it added 35,000 net new subscribers, down from 310,000 a year earlier.
DirecTV said last week that it had 275,000 net new subscribers while fiber-optic operators AT&T and Verizon are growing the subscription base for their respective U-verse and FiOS services.
“We continue to view Dish as well-run, but— to a degree—it is in the wrong place at the wrong time,” wrote Sanford C. Bernstein’s Craig Moffett in a note to analysts this week.
Dish, in a regulatory filing this week, cited “the effectiveness of certain competitors’ promotional offers and market perceptions of the availability of attractive programming, particularly the relative quantity of HD programming offered,” for its higher turnover.
The company also said this week that it’s adding 22 high-definition channels, including Bravo HD, Travel Channel HD and USA HD. Dish followed that announcement, though, by discontinuing 15 Voom HD channels, which are part of Cablevision’s Rainbow Media unit, dropping Dish’s HD choices back down to about 80.
“At the low end, Dish’s ‘everyday low price’ value proposition suddenly appears vulnerable against cable’s economically advantaged triple play,” Moffett wrote. “At the high end, Dish has been outflanked by DirecTV’s ‘best HDTV’ positioning. Churn is eroding the base.”


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