Dish Network counted subscriber losses for both its satellite and streaming pay TV businesses, totaling 462,000 across both vMVPD Sling TV and Dish TV.
“In regard to subscribers for all our brands, we simply didn’t execute according to our expectations,” said Dish CEO Erik Carlson on Friday’s quarterly earnings call.
It compares to combined losses of 230,000 subscribers in the first quarter of 2021. On the satellite side, Dish ended the quarter with 7.99 million customers, after shaving 228,000 in the period. Dish attributed the losses to lower gross new activations and higher churn rate. Dish TV churn in Q1 reached 1.59%.
The trouble adding new gross subscribers was related to less demand and Dish’s local programming dispute with Tegna, along with steeper competition including pricing promotions offering combined broadband, video and/or wireless service, according to a 10-Q filing.
“There’s no doubt there was a bit of a [churn] bump in Q1 because of Tegna and obviously price increases. But I would look for our run rate to be closer to traditionally where we had been pre-Covid,” Carlson said.
The Dish and Tegna dispute resulted in nearly 3 million Dish TV customers in 53 markets losing access to broadcast channels in October, including networks affiliated with CBS, Fox, NBC and others. Tegna and Dish reached a new carriage deal in February to return the programming.
In Q1 Sling TV’s subscriber tally stood at 2.25 million, after losing 234,000 net subs in the first three months of 2022 – more than double than the 100,000 it lost a year ago. Dish attributed the losses to more cancellations than expected following the football season and fewer activations.
In the 10-Q filing, Dish stated that it continues to experience increased competition, including other subscription video on-demand and live-linear OTT service providers.
“In the second half of the year we didn’t finalize the re-engineering of the platform and user interface,” Carlson said regarding Sling. “We had a tough quarter, but we’re optimistic that we can leverage the platform and our messaging and high-value products and great experience to reach customers whose overall video content bills are too high but still want the excitement of live TV.”
The chief executive also pointed to new hires for Sling to strengthen leadership, specifically Gary Schanman as EVP and president, in April. Schanman, whose background includes SVP of Spectrum video products for Charter and several roles at Cablevision (now Altice), along with new and existing Sling leaders “will be focused on increasing market share and driving profitable growth for the business,” Carlson said.
Dish instituted price increases in the first and fourth quarters of 2021, while Sling TV got a price hike in at the start of 2021, which helped bump average revenue per user. Pay TV ARPU was up 6.2% to $99.44, though Dish didn’t break out Sling TV and satellite separately.
“Our focus on the Dish TV side is really acquiring the right customers and making sure they are profitable and given a great experience,” Carlson continued.
Total Dish revenue was down 3.7% to $4.33 billion, with operating income down 36.3% to $550 million.
Need for an ‘un-carrier’ approach to video?
Carlson said that Dish for several years has been focused on redefining target markets for the Dish TV product, with a focus on more rural customers.
“The majority of our customers are in rural America,” he said.
And with the direct-to-consumer marketplace “kind of exploding,” Carlson expects to see some consolidation and aggregation of content coming down the pipeline.
He pointed to Dish’s Hopper platform, which aggregates Netflix along with Amazon Prime Video and YouTube today. And the launch of Android TV Hopper Plus allows users to download a variety of apps.
“The great thing about the Hopper is not only can you skip those commercials, but you also have a whole experience versus maybe a Roku in one room and Chromecast in another and a Fire OS TV set,” Carlson said. “We’re eyes wide open on what’s happening with broadband and competition.”
In the linear TV space, Dish Chairman Charlie Ergen said the commercial load is still heavy and the biggest complaint Dish gets is 15-16 minutes of commercials, adding “that’s difficult to watch.”
Ergen thinks video content providers need Dish to help make content better, saying if younger-generation viewers are watching two hours of TikTok, that’s two hours not spent on Discovery – even giving a shoutout to T-Mobile for its “Un-carrier” ways on the mobile side.
“We maybe need a bit more of T-Mobile’s un-carrier approach to consumers in the video business,” he said. “Nothing makes people innovative more than having their trends reverse on them.”
As for whether a merger of DirecTV and Dish should happen, “I’ve said that Dish and DirecTV is inevitable,” Ergen noted.
Overall, Dish reported a 1.1% drop in service revenue and total revenue, which hit around $3.13 billion and $1.18 billion, respectively. Equipment sales were down 4.5% over the year ago period to $37.8 million.
Operating income was down 2.7% year over year to $752 million.