Dish Loses 151,000 Pay TV Subscribers in Second Quarter

Charlie Ergen
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Dish chairman Charlie Ergen

Dish chairman Charlie Ergen told analysts that the removal of three Univision channels for satellite TV and Sling TV subscribers as part of a carriage dispute was likely "permanent."

Dish Network on Friday reported higher second-quarter earnings as it lost fewer pay TV subscribers, and also signaled no early end to an ongoing carriage dispute with Univision Communications.

The satellite TV company, led by chairman Charlie Ergen and CEO Erik Carlson, lost 151,000 net pay TV subscribers, including its Sling TV streaming service, in the quarter to end it with nearly 13.0 million, down from 13.3 million in the year-ago period. In the year-ago quarter, the company had lost 196,000 net subscribers.

Dish reported a net gain of 41,000 Sling subscribers in the latest quarter to 2.34 million. It lost 192,000 traditional pay TV subscribers in the latest quarter for a total of 10.65 million at the end of June.

Dish executives on an analyst call addressed an on-going carriage dispute with Univision Communications that followed the removal on June 30 of three Univision networks from Dish's satellite TV system and over-the-top Sling TV service after the two companies could not agree terms on a new carriage agreement.

"I believe this one is probably permanent," Ergen said, as he argued Univision sought a 75 percent increase in programming fees from Dish to carry its channels, where the Dish founder and chairman said he saw "declining value" for content. He added Univision has falling prime TV ratings, has lost World Cup soccer and a restructuring of content operations at Univision saw the departure of chief content officer Isaac Lee.

"We look at what is happening with our customers and where is the price value is shifting," Ergen said. Dish CEO Erik Carlson echoed those comments when he told analysts: "Univision continues to insist on rate increases with no bearing on its performance."

Dish is offering a $5 per-month credit to its Dish Latino and Sling Latino subscribers, and has supplied a free over-the-air antenna so subscribers can continue to receive Univision channels. Univision on Monday in a statement said Dish TV’s loss of nearly 200,000 subscribers in the second quarter was in part due to the removal of its Spanish-language networks.

"In fact, we are concerned Dish’s decision to turn its back on Hispanic audiences, a growing community that already accounts for nearly 20 percent of Dish’s subscriber base, will exacerbate such losses going forward," Univision said.

But Dish contends Univision content can be accessed elsewhere, whether via over-the-air antennas or from Univision via its Univision Now direct-to-consumer offering. "The customers at Dish who really want Univision will find another way. They can go directly to Univision and pay $7.99 (a month), they may get it from one of our competitors, or put up an antenna," Ergen said.

Dish's earnings for the second quarter reached $439 million, or 83 cents per share, compared with $40 million, or 9 cents per share, in the year-ago period. The year-ago period was negatively impacted by litigation expenses, net of related taxes, of $280 million. The second quarter of 2018 benefited from non-cash adjustments related to the adoption of the new revenue recognition accounting standard, net of related taxes, of $33 million.

Dish's quarterly revenue of $3.46 billion was down from $3.64 billion in the year-ago period.

Aug. 3, 1:00 p.m. Updated with comments by Dish chairman Charlie Ergen and CEO Erik Karlson made during an analyst call.