Nearly Half of Dish Net Subscriber Losses in Q1 Were From Univision, HBO Blackouts
Though “churn attribution” isn’t a “perfect science,” it’s “fair to say” that a "little less than half" the 266,000 in Dish pay-TV net subscriber losses in Q1 were from the Univision and HBO blackouts, said CEO Erik Carlson on an earnings call Friday. Dish and Univision resolved their differences near the end of the quarter. “There’s nothing new to report” in the HBO impasse, which started in November (see 1811070030), said Carlson.
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AT&T wants Dish subscribers to “pay for HBO whether they want the channel or not,” said Carlson. "We recently met again with AT&T" to resolve the impasse, but "they only offered different words with really the same meaning," he said.
“Dish has made it apparent that they have no interest in carrying HBO,” emailed HBO spokesperson Jeff Cusson. “We have made extremely reasonable offers and received no true level of engagement in return.” Removing HBO services from Dish’s platforms “harmed” subscribers, and is “an unfortunate and damaging tactic that Dish resorts to time and time again,” said Cusson. “AT&T has not been involved in these talks and HBO would like nothing more than to restore HBO and Cinemax to our fans on Dish and Sling.”
Carlson sidestepped questions about the likely impact on Dish Q2 churn as the HBO blackout continued into last month’s Season 8 debut of Game of Thrones. Dish can capture viewership data from customers’ set-top boxes, but won’t share the “level of detail” it knows about “trends,” he said when asked how many subscribers watched Game of Thrones before the blackout. HBO is “a powerful brand out there,” but “people like Dish,” and not all are abandoning the service because they can’t get the channel, said Chairman Charlie Ergen.
The stock closed 4.4 percent higher Friday at $35.08 despite unflattering Q1 numbers. Besides the pay-TV net sub losses worsening to 266,000 from 185,000 in Q1 a year earlier, Sling TV net subscriber adds were 7,000 compared with 91,000. Revenue declined 7.8 percent to $3.19 billion. Profit fell 7.6 percent to $339.76 million.
“We want to build value every day,” said Ergen. “I don’t believe Erik and team built value in Dish last quarter,” he said, as Carlson kept silent during the unusually public dressing-down. “They are very close to building in value,” and have the “tenacity and focus” to be able to do so, he said.
Ergen doesn't think "we've built value in Sling the last year," he said later on the call. "That's disappointing to me, because every day I walk in, I try to manage by building value." Sling has "made progress" on some of its "internal" metrics, said President Warren Schlichting, joking to analysts they now heard the rebukes that Ergen voices to him privately every day. "We continue to march forward," said Schlichting.
Dish has no plans or desire to sell its pay-TV business, despite shrinking subs, because “video is important,” said Ergen, quickly adding he would listen to any credible offer: “Is it as important as maybe we thought two or three years ago? I’d say maybe not quite as important as we thought.”
The linear TV business needs to “change,” said Ergen. There are “probably some things you can do to the linear TV business that long-term will be better” for providers, he said. Linear TV “has way better content across the board than you would see on a Netflix or an Amazon or Hulu that people are paying for,” but it’s “hard" to find the content, and "there’s a lot of commercials,” he said.
Past public FCC “skepticism” about Dish’s ability to execute on its “phase one” narrowband IoT buildout strategy by the March 2020 deadline (see 1808030039) created a lasting “overhang” that Ergen worries could impede Dish’s ability to raise the $10 billion needed to fund its “phase two” 5G wireless network buildout, he said. Regulatory doubts about Dish in the 5G and IoT space "may not be the reality, but it’s certainly the perception, in terms of risk factors that we don’t think should be there,” he said.
Dish has the “capital” it needs to build out phase one by March, said Ergen. But in “raising money” for phase two, “I don’t know that we can solve the FCC overhang until we build our network and meet our internal deadlines that we have here, and just execute.”
Where the FCC “wants to go” on 5G is “exactly where this company wants to go,” said Ergen. “This FCC, to their credit, wants this country to lead in 5G. I don’t think it’s possible to lead in 5G without someone entering the marketplace with a new build of 5G and all that 5G can do, and the architecture that’s required to do that.” The regulator declined comment.