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Dish Network on Friday said it lost 96,000 net TV subscribers in the second quarter, compared with a loss of 31,000 in the year-ago period and a record 413,000 in the first quarter of 2020.
The latest quarter’s figure included the loss of 40,000 net subscribers to the traditional Dish pay TV service, compared with a year-ago loss of 79,000, and the loss of approximately 56,000 net subscribers to the Sling TV streaming service, a swing from a year-ago gain of 48,000 customers.
The company ended the first quarter with 11.27 million total subscribers, including 9.02 million Dish TV subscribers and 2.25 million Sling TV subscribers.
“The COVID-19 pandemic has caused significant disruption in certain commercial segments served by Dish, including the hospitality and airline industries,” said Dish, led by chairman Charlie Ergen and CEO Erik Carlson. “As a result, Dish paused service or provided temporary rate relief for approximately 250,000 commercial accounts and removed those accounts from its ending pay TV subscriber count as of March 31, 2020. During the second quarter, 45,000 of these subscribers resumed normal service.”
Since the firm did not incur “significant” expenses related to the return of these commercial subscribers, they were added to the June 30 subscriber count “without being recorded as new subscribers” during the quarter, it said. The net effect was a subscriber count increase of 5,000 compared to the figure reported as of the end of the first quarter.
But Dish also noted “the positive impact of COVID-19,” including stay-at-home orders that resulted in “increased consumption of our pay TV services. The pandemic also has had “a positive impact on competitive pressures due to, among other things, a reduction in customers’ willingness to allow competitors’ technicians into their homes and delays and cancellations of sporting events that reduced the attractiveness of competitors’ promotional offers and services,” it said.
Dish CEO Ergen during an afternoon analyst call was asked about his persistent criticism of traditional pay TV players charging more to license channels as linear TV subscriber numbers keep falling as consumers opt for streaming services. Ergen argued Dish was faring well, and better than expected, as it held its ground on higher carriage fees during distribution agreement renewals.
“I think the rates should come down, and I think when we look at how much people watch something, and watch the cost-per-hour, we see those trends declining for a lot of people in the industry,” he told analysts. Ergen added Dish’s cash flow and loss of subscribers was better than projected affer the loss of regional sports a year ago when Sinclair, the owner of FOX Regional Sports Networks, removed their channels.
Ergen said not paying more for less amounted to simple math. “I think the incumbent operators look at their budget and just need to have a number to get to. We’re disciplined and positioned well. Maybe the trends will change, and I’m surprised it hasn’t gotten worse for us, but so far we’re doing well,” the Dish chairman argued.
Ergen also touted the possible and long-rumored merger of DirecTV and Dish as he looked to AT&T to divest itself of the satellite TV-delivered linear TV service. “I still think Dish and DirecTV (merger) will be inevitable. Could that be a month from now or ten years from now, that I don’t know,” he told the analyst call.
During the latest quarter, Dish’s earnings rose to $452 million, compared with $317 million in the same period of 2019, despite a slight revenue drop from $3.21 billion to $3.19 billion. A 5.8 percent drop in subscriber-related expenses to $1.89 billion helped the bottom line, driven by the lower average subscriber base and “a decrease in variable and retention costs per subscriber.”
In a regulatory filing, Dish said that the latter included previously announced job cuts due to the pandemic, but it didn’t provide details. “Due to the current economic climate, combined with changing needs of our customers and how we can best serve them, during the second quarter of 2020, we made the decision to reevaluate our organization,” the filing said “This included a focused set of staffing reductions to align our workforce to best serve our pay TV customers.”
Aug. 7, 10 a.m. Updated with comments from an afternoon analyst call held by Dish execs.
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