Dish Adds Subscribers for First Time Since 2017 on Sling TV Gains

Charlie Ergen
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Charlie Ergen pictured before a House Subcommittee hearing in December 2001.

Charlie Ergen's company continued to lose traditional pay TV subscribers in the third quarter.

Charlie Ergen's Dish Network on Thursday said it added 148,000 net TV subscribers in the third quarter as growth at streaming service Sling TV outweighed a continued customer drop in the traditional pay TV business.

Dish, which has consistently cited competition and has also been affected by carriage disputes, ended September with 12.18 million subscribers, up 148,000 from the end of the second quarter in June. The user count included about 9.49 million Dish pay TV subscribers, down about 66,000 from the end of the second quarter, and more than 2.686 million Sling TV subscribers, up about 214,000 from the end of the second quarter.

In the third quarter of 2018, Dish had lost 341,000 net pay TV subscribers. Univision and Dish at the end of March settled a carriage dispute that started when talks hit an impasse in June 2018. But a dispute with AT&T-owned WarnerMedia's HBO has continued.

The quarterly net subscriber gain marks the first such gain for Dish since it added 39,000 in the fourth quarter of 2017, which included 75,000 sub reactivations in Puerto Rico and the U.S Virgin Islands following a hurricane. When excluding hurricane impacts, its last quarterly sub gain was in the third quarter of 2017.

Ergen, on an afternoon analyst call, held out little hope that the former Fox Regional Sports Networks will return to his distribution platforms anytime soon, as Dish remains locked in negotiations with the Sinclair Broadcast Group. "Trust me, the vast, vast majority of our customers do not watch a single second of regional sports content on our network," Ergen said.

The RSNs have been dark on Dish and Sling since July 2019, and Ergen insisted his company won't settle with Sinclair at too high a price just to offer them to his subscribers. "We'd rather have a deal. We like Sinclair. … But as a company we're not going to subsidize regional sports," he said.

Ergen was also asked about the potential market impact from Warner Media and its TV networks HBO, TBS/TNT and CNN getting set to launch the streaming service HBO Max at a cost of $15 per month, the same price as HBO but with more TV shows and movies.

"I think it's going to be a good product. It will be tougher for linear distributors because HBO was requiring at least from us to guarantee a certain number of subscribers, and obviously that's difficult to do if you're competing against HBO themselves and they stick a lot of programming on HBO Max," Ergen said.

"It will certainly give leverage to distributors in future negotiations, as you might be able to get some product from TNT, TBS, CNN or Cartoon Network on HBO Max," he added.

As for the wider and expanding streaming space, Ergen said the coming streaming wars — where Apple TV+ and Disney+ will launch against WarnerMedia's HBO Max and NBCUniversal's Peacock to battle Netflix — will be a brutal one. "It's going to be interesting to see how content providers navigate, because people aren't going to watch more TV, or materially more, and there's a lot of great programming out there, and they're going to spend about the same amount of money, and there's going to be a lot of mouths to feed," he argued.

Dish during the latest quarter reported third-quarter earnings of $353 million, or 66 cents per share, compared with $432 million, or 82 cents a share, in the year-ago period. Revenue totaled $3.17 billion for the three months ending on Sept. 30, compared with $3.40 billion during the same period of 2018.

Ergen was also asked Thursday about Dish possibly merging with DirecTV as AT&T eyes possibly offloading its satellite video offering, or at least collaborating in a fast-changing marketplace. That gave Ergen a chance to recall AT&T's feud last year with Dish over HBO while the companies negotiated a new distribution pact.

"There's industrial logic for Dish and DirecTV to be doing things together, and there's industrial logic for Dish and AT&T to be doing some things together. But when somebody puts a gun to your head with HBO and says you will carry HBO and lose money, that's not a door opener for us, as a company," Ergen told analysts.

Dish on Thursday also unveiled a rights offering to raise approximately $1 billion. A rights offering gives existing shareholders the right to buy additional shares in proportion to their existing holdings. Ergen, who beneficially owned approximately 51.6 percent of Dish Class A and Class B common stock as of Oct. 31, "has informed Dish that he intends to fully exercise all subscription rights allocated in respect of the shares he beneficially owns," the firm said. " To the extent any subscription rights would expire unexercised following the expiration of the rights offering, Mr. Ergen also intends to purchase all shares of Class A common stock that are not subscribed for by stockholders in connection with the rights offering. Dish expects to enter into a commitment letter with Mr. Ergen memorializing this intention."

Dish has said it would enter the U.S. wireless market as the fourth nationwide facilities-based network competitor. It has said it has committed to the FCC to deploy "a facilities-based 5G broadband network capable of serving 70 percent of the U.S. population by June 2023."