DBS Reaches New Heights with TV Advertising

[Gregg Lengling]

Subscriber additions for DirecTV and EchoStar's DISH Network are on a record pace, and so is TV marketing for both companies, said John Hill of Schwab SoundView in research released Wednesday.

The Wall Street analyst said TV marketing for the two satellite TV companies reached record levels at the end of the second quarter in June, with both achieving total TV ad units combined of around 160,000. That compares to less than 40,000 total TV ad units combined for June 2003. The numbers cited by Hill come from CMR data.

"(Subscriber additions) for the two combined also hit another record in the quarter," Hill said. "Gross adds remain closely correlated with TV and overall marketing levels."

Hill said DirecTV and DISH Network are taking different approaches in terms of TV marketing. They typically only overlap in cities with a weak cable operator, or in a market that has a low penetration of multichannel customers or has seen a recent increase in cable rates.

During the second quarter, DISH Network targeted markets served by Comcast, Insight and Charter, Hill said. The company usually works in smaller markets, and during the past year has marketed more on television in Louisville, Ky., than any other market, Hill said. Louisville has about 16 percent of Insight's subscribers.

DirecTV took aim at markets served by Time Warner Cable, Charter and Brighthouse during the second quarter. The company typically targets larger markets, and has put a particular focus on cities with at least one FOX broadcast station, Hill said. Time Warner Cable and Brighthouse have high concentrations of FOX stations in their markets, such as New York, Greensboro, Houston, Orlando and Tampa.

"Satellite's targeting appears to have had a cumulative effect on subscriber growth at Insight, Charter, and most recently Time Warner Cable," Hill said. "Cox is still relatively - but no longer absolutely - avoided."