Analyst Hints of Subscriber Loss

[spear61]

Buried in today's Wall Street Journal AT&T/Dish article. Analyst hints that for a the first time ever, a satellite provider (Dish), may have a net decline in subscribers during the second quarter.

http://online.wsj.com/article/SB121380020570684431.html?mod=2_1571_leftbox

[BNUMM]

I have my doubts about Dish losing subs. Installs are slow now but people are still dumping cable. I believe last quarter someone predicted a loss for Dish but it didn't happen.

[RAD]

Installs are slow now but people are still dumping cable.

That's why D*, AT&T Uverse and Verizon FIOS are all seeing increases in their subscriber base.

[James Long]

I believe last quarter someone predicted a loss for Dish but it didn't happen.My thought exactly. Things are tough all over so I won't say DISH will never have a quarter with a net loss, but it was predicted for last quarter and DISH still had net adds.

That's why D*, AT&T Uverse and Verizon FIOS are all seeing increases in their subscriber base.Not to mention DISH ... since this is a DISH themed forum. :) Up is up!

[skippytym99]

My thought exactly. Things are tough all over so I won't say DISH will never have a quarter with a net loss, but it was predicted for last quarter and DISH still had net adds.

Not to mention DISH ... since this is a DISH themed forum. :) Up is up!

Does any one know the net subscriber gain for dis vs direct

[spear61]

Does any one know the net subscriber gain for dis vs direct

Probably best to look at 12 month period (end of March-end of March) since the last quarter or so has been not so hot for Dish.

Dirctv has approximately 17 million subscribers and reported a net increase of 847,000 for the last year. If you are looking at growth, you need to add another 71,000 to that number (total increase of 918,000) since Directv did an audit and recently wrote down their old customer base by that amount.

Dish has approximately 13,8 million subscribers and added 300,000 in the last year.

[Richard King]

I wouldn't be at all surprised to see them lose some subs this qtr. The combination of Directv continuing to lead in HD and Dish dumping Voom, which eliminates a unique programming option will come back to hurt them. After the past couple of days and the drops in their price I am still tempted to pick up some shares though.

[finniganps]

How many satellite subscribers actually get HD? I would guess it is under 30% (I could be wrong). My point is I don't think HD offerings are going to lead to a net loss at this stage.

[harsh]

If you are looking at growth, you need to add another 71,000 to that number (total increase of 918,000) since Directv did an audit and recently wrote down their old customer base by that amount.Since when does canceling a customer become retroactive to a prior period?

If they were claiming 71,000 customers that weren't really customers, it seems they were understating their past churn.

[James Long]

How many satellite subscribers actually get HD? I would guess it is under 30% (I could be wrong). My point is I don't think HD offerings are going to lead to a net loss at this stage.From all indications you are correct on the "under 30%" - although channel additions and the introduction of the $10 Essentials package (and the $29.99 Absolute package). Probably closer to 10% than 30%.

EVERYBODY loses customers every quarter. It's gaining new ones that is the key. Gain more new customers than you lost and it's easy to "forget" those lost.

DISH added 730k subscribers 1Q 2008 - down slightly from the 890k subscribers added in 1Q 2007. Even with all of their faults, hundreds of thousands of people chose to sign up. The lost customers, 695k 1Q 2008 and 580k 1Q 2007, are taken away from that to get the net.

DirecTV added 964k subscribers 1Q 2008 up very slightly over the 929k they added 1Q 2007. Their net subscriber additions were up about the same ... 275k for 1Q 2008 vs 235k for 1Q 2007. But that shows a LOSS of 689k and 694k subscribers for the respective quarters. Even discounting the 71k lost in the audit DirecTV lost 619k customers 1Q 2008.

It must be nice losing 600k-700k customers and coming out ahead. :)

But on topic, if DISH does post a net loss for the first time in my memory I expect it will be small. DISH still has the budget TV market and the cheapest way of delivering HD to satellite subscribers. The sky isn't falling. :)

Since when does canceling a customer become retroactive to a prior period?

If they were claiming 71,000 customers that weren't really customers, it seems they were understating their past churn.DirecTV says:
As discussed above in "Key Terminology," during the first quarter of 2008, we had a one-time downward adjustment to our subscriber count of approximately 71,000 subscribers related to commercial equivalent viewing units. This adjustment did not affect our revenue, operating profit, cash flows, net subscriber additions or average monthly subscriber churn.

In March 2008, we implemented a change in DIRECTV U.S.' commercial pricing and packaging to increase our competitiveness. As a result, during the first quarter of 2008, DIRECTV U.S. made a one-time downward adjustment to the subscriber count of approximately 71,000 subscribers related to commercial equivalent viewing units.It was a "one-time downward adjustment" as part of a package change. :)

[spear61]

Since when does canceling a customer become retroactive to a prior period?

If they were claiming 71,000 customers that weren't really customers, it seems they were understating their past churn.

It was an audit of their commercial accounts. Probably had something to do with multiple boxes under one account that may or may not have been active (a hotel or something like that).

[icoczar]

It was an audit of their commercial accounts. Probably had something to do with multiple boxes under one account that may or may not have been active (a hotel or something like that).

He also implied At&t might hook up with Directtv. AT&Tjust dropped Direct TV in the BellSouth states and switched to Dish about a month ago. The analyst is wrong.

[RAD]

He also implied At&t might hook up with Directtv. AT&Tjust dropped Direct TV in the BellSouth states and switched to Dish about a month ago. The analyst is wrong.
When that decision was announced, to go with E*, they (AT&T) said that when the E* contract ended later this year they would reevaluate the situation and maybe switch.

[phrelin]

Hmmm. Well, I don't know how all the analysts got from here to there regarding operational relationships or subscriber counts, but the note held by the insurance subsidiary of AT&T has an interest rate of 3% and a stock redemption strike price of $60.25 a share. If I had that note for obvious reasons (interest rate is crap and Dish stock at $30.00) I'd ask Dish to buy it back now also, because I'm watching all the DIsh 8-K's for the past month and know that Dish has the cash now. Here's the key text of the subject Dish 8-k filing:
Item 2.04 Triggering Events That Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement.
On June 12, 2008, DISH Network Corporation (the “Company”) received a notice from Gateway Rivers Insurance Company (“Gateway”), a wholly-owned subsidiary of AT&T Inc. (“AT&T”) and the assignee of all of AT&T’s rights and interest in the 3% $500,000,000 Convertible Subordinated Note due July 21, 2010 issued by the Company and convertible into the Company’s Class A Common Stock at $60.25 per share (the “Note”), stating that Gateway was electing to require the Company to repurchase the full principal amount of the Note together with accrued but unpaid interest thereon. The Company currently has sufficient cash and cash equivalents available to repurchase the Note and does not anticipate that it will need to pursue financing to repurchase the Note on the anticipated repurchase date. From an earlier May 28 8-K: Item 1.01 Entry into a Material Definitive Agreement.
On May 27, 2008, EchoStar DBS Corporation (the “Company”), an indirect wholly-owned subsidiary of DISH Network Corporation, entered into an Indenture, between the Company, the guarantors named on the signature pages thereto and U.S. Bank National Association, as trustee, relating to the Company’s issuance of $750 million aggregate principal amount of its 7.75% Senior Notes due 2015 (the “Notes”). A copy of the Indenture is attached hereto as Exhibit 4.1 and incorporated herein by reference. For a description of the material terms of the Indenture and the Notes, see the information set forth below under Item 2.03, which is incorporated by reference into this Item 1.01.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
On May 27, 2008, the Company issued $750 million aggregate principal amount of Notes pursuant to the Indenture. The Notes were sold in a private placement to (1) “qualified institutional buyers” in reliance on Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”) and (2) outside the United States to persons who are not “U.S. persons” (as defined in Rule 902 of Regulation S under the Securities Act) in compliance with Regulation S under the Securities Act.
The Notes bear interest at a rate of 7.75% per annum and mature on May 31, 2015. Interest on the Notes will be payable....Dish just borrowed lots of money at 7.75% and I have a 3% note that I can ask them to buy back. Yeah, I'm doing this because I'm worried about their subscriber loss.:nono2:

[James Long]

DISH is buying terrestrial bandwidth and may be buying a slightly abused satellite. There is plenty for them to spend money on. :)

[phrelin]

DISH is buying terrestrial bandwidth and may be buying a slightly abused satellite. There is plenty for them to spend money on. :)Yep. I don't know if Dish borrowed enough, but apparently Gateway Rivers Insurance Company didn't want to sit on a 3% note until 2010. Who can blame them? It's "market value" had to be no more than 40% of its face. But apparently it had an option to force repurchase which they exercised. If Dish needs that $500,000,000 they'll have to borrow it at around 8% which means that the cash flow is going to require higher revenues.

But I really don't believe this transaction is an indication that anyone over at AT&T was contemplating altering business relations with Dish. There might be other indications, however.;)

[oldsmoboat]

We have been with Dish for 3 years since we moved out into the sticks. Satellite is the only option for high speed internet also.
We will likely move to an area that is serviced by cable and I am looking forward to seeing what they have to offer.

[lee635]

Every provider is seeing hard times with gas prices so high. Consumers are edgy about their jobs and the economy, and subscription TV is not a necessary utility.

I suspect that the grand total of all consumer subscription tv accounts from all sectors (cable, satellite, other) is going down right now. Probably more bleeding at the cable side, but no one is going to post slam bam numbers right now.

[Blowgun]

Others have mentioned HD as a possible reason, I'd like to point out the CSRs as an even bigger reason. Many CSRs need to be retrained and the overseas shops closed.