Industry News..Dish Network

[Chinatown]

Just One Dish in a Crowded Buffet
By Anders Bylund

It hurts to lose a friend. EchoStar Communications (Nasdaq: DISH), better known as the parent company of satellite-TV provider Dish Network, is learning that the hard way. For years, most of the new Dish subscriptions came from a cross-promotion affiliation with AT&T (NYSE: T). Now that AT&T is less committed to the relationship, the pace of new satellite TV sign-ups is dropping.

With a good buddy at its side, EchoStar watched its subscriber base increase by about 15% a year from 2002 to 2004. But when AT&T decided to focus on developing its own TV delivery system over fiber-optic cable, EchoStar's subscriber growth dropped to 10.4% for 2005. The trend continues, with EchoStar's latest earnings report showing just a 9.2% uptick over the same quarter last year to a total of 12,265,000 subscribers.

In all fairness, though, getting the cold shoulder from AT&T isn't the only thing hurting EchoStar's net growth these days. The television market is fiercely competitive, and it's becoming harder and harder to earn a share of consumer attention. EchoStar has to deal with cable companies like Comcast and Time Warner Cable, the new wave of phone companies like AT&T and Verizon looking to enter the market (and America's living rooms) through what used to be a simple phone line, and massive DVD sales from the likes of Amazon.com (Nasdaq: AMZN) and Wal-Mart.

Wait, there's more. Netflix (Nasdaq: NFLX) is growing its DVD-by-mail rental audience at a furious pace, with an existing subscriber base of nearly 5 million already. And traditional TV producers like CBS and Disney's ABC are exploring different ways to get their content to viewers over the Internet, either through their own websites or with partners like Apple's (Nasdaq: AAPL) iTunes Music Store.

Finally, there's EchoStar's arch-nemesis: DirecTV (NYSE: DTV), the only other option for satellite-TV service. DirecTV is facing the same challenges as EchoStar, but it hasn't had any massive subscriber-recruiting partnerships to fall back on. Instead, DirecTV keeps spending money to make money. If you think there's a lot of DirecTV advertising in your mailbox and on TV, you're absolutely right. Where EchoStar spent 15.6% of its revenue this quarter on subscriber acquisition and retention programs, DirecTV opened the marketing checkbook to the tune of 26% of revenues.

Both satellite companies are experiencing monthly churn rates of around 1.5%, meaning that about 20% of their subscribers at the start of the year will no longer be customers by the end of it. Overcoming customer churn is one of the reasons why subscription services like Dish Network need to keep acquiring new customers just to maintain market share, let alone grow it.

All of this added up to revenues of $2.29 billion for the quarter, up 13% over last year and in line with what the analysts were expecting. Earnings of $0.33, however, fell far short of the targeted $0.43 per diluted share. If you back out a $74 million charge for the TiVo (Nasdaq: TIVO) lawsuit judgment that may or may not be upheld in the next round of appeals, you can add a bit more per share to the results, so it's really up to the court system whether EchoStar came close to expectations this quarter. Any way you slice it, the bottom line was much thinner than the $0.69 per share in last year's comparable quarter.

Rumblings about a merger between DirecTV and EchoStar are making the rounds again, but antitrust regulations make such a pairing unlikely. The satellite-TV providers are doing what they can to stay in the game, rolling out better receiver boxes and launching more satellites, all with an eye to increasing the amount of content they can serve up to you and me.

They are also dabbling in video on demand, but cable companies have a slight edge there, for boring, technical reasons. But the subscriber count keeps increasing, and satellite dishes are popping up on rooftops everywhere like wild mushrooms.

To me, EchoStar isn't screaming "buy me!" at this point, but if the company can find a way to reverse the dropping subscriber growth, there could be good times still to come. I'm waiting until I can see some proof of renewed growth, though.

[AndrewP]

To me, EchoStar isn't screaming "buy me!" at this point, but if the company can find a way to reverse the dropping subscriber growth, there could be good times still to come. I'm waiting until I can see some proof of renewed growth, though.

 :rolleyes: Does he knows that Dish Network has 29 national HD channels now?

[gparris]

:rolleyes: Does he knows that Dish Network has 29 national HD channels now?

The info in only found in the satelliteguys forum, but for some reason, it is not available (at least to me) on the Dishnetwork site yet.

(These most recent 4 HD additions...are these available only with the 211 and 622 HD receivers, right?)

I wonder when these 4 are going to be listed on Dish's site, what the pricing is and when the 4 HD locals are available in Milwaukeeland...got some folks asking.

[AndrewP]

It will be available first week of June. Only 211 & 622 receivers. StarzHD will be part of Starz pack, others should be a part of HD pack, no extra charge.
Milwaukee locals HD are on the list for this year.

[foxeng]

:rolleyes: Does he knows that Dish Network has 29 national HD channels now?

HD doesn't drive subscriptions for either E* or D*.

[bradsmainsite]

Well up in this area that statement would not be true. :confused:

Thats not to say the rest of the country isn't, but other retailers I talk to are saying pretty much the same thing as myself, but we might be isolated cases.

[foxeng]

Well up in this area that statement would not be true. :confused:

Thats not to say the rest of the country isn't, but other retailers I talk to are saying pretty much the same thing as myself, but we might be isolated cases.

Just because they are buying displays doesn't mean they are buying HD service. There is still a large disconnect between the two.

[bradsmainsite]

Just because they are buying displays doesn't mean they are buy HD service. There is still a large disconnect between the two.

Yes the ones that we do are buying the HD service especially if they are TWC subscribers because they can receive so much more for the same monthly price.

Again I don't know about national averages, but around here thats what we are doing, and people are very satisfied with their Dish network service.

[jkane]

I have HD capability but will not give up the cost of the receiver hardware yet.  I keep threatening, but my biggest problem is that I can't watch live TV anymore!  A HD recorder is way to expensive.  Some day I'll get HD from Dish.  But my TV was bought for DVD viewing, not HD.

I am a hard core "die before going with cable ever again" person, so don't tell me about their deals.   :p

[bradsmainsite]

I have HD capability but will not give up the cost of the receiver hardware yet.  I keep threatening, but my biggest problem is that I can't watch live TV anymore!  A HD recorder is way to expensive.  Some day I'll get HD from Dish.  But my TV was bought for DVD viewing, not HD.

I am a hard core "die before going with cable ever again" person, so don't tell me about their deals.   :p

Just updated my post don't want confussion that I'm pushing TWC because were not!  WE PUSH DISH OR DIRECTV and OFF AIR RECEPTION!!

Hope that clears up any confussion of were I stand.

[Racer47]

WE PUSH DISH OR DIRECTV and OFF AIR RECEPTION!!

I wish that was Dish Network's strategy. It seems like a huge waste of money to put 200 copies of network tv on satellite. And now they will be putting up 200 HD copies. I think it would have been better to stick with off air for locals. Without all the locals, many less satellites are needed, less complicated dishes without multiple lnb's and ku band, plus now they need to convert all HD boxes to mpeg4 to pack in more HD locals. It seems to me like Dish would have been better off with no locals on satellite, better integration of off air signals into their boxes and maybe even give a new customer a $100 credit to use to put up an antenna. That would make a clear choice between Direct and Dish. Let Direct spend all that money and make the customer pay more in monthly fees. Let Dish go the low cost route and let the customer pay less per month for satellite and use an antenna for digital locals. I've had Dish since about '98 and like it, but the monthly cost is getting a bit high.

edit - I said ka band but I meant ku band

[bradsmainsite]

Finally a man after my own heart! :bow:

[Joseph S]

Yeah, just put up East and West Coast nationals. Eliminate the locals issue altogether.