Dish Drops 196,000 TV Subs Overall in Q2, Misses on Earnings After Massive Telemarketing Fine

Charlie Ergen

Net income hurt by $280 million fine for violating 'Do Not Call' law

The bloodletting for Dish Network continues: America’s No. 2 satellite operator reported a net decline of 196,000 pay-television subscribers in the second quarter of 2017, and missed Wall Street expectations for both revenue and profit.

For the second quarter of 2017, Dish reported revenue of $3.64 billion (down 6% year over year) and diluted earnings per share of 9 cents. Financial analysts expected Dish to report revenue of $3.72 billion and EPS of 74 cents.

Dish’s net income of $40 million for the period — dropping 91% from a year ago — was hurt by a record $280 million fine that a federal district court ordered the company to pay for violating the “Do Not Call” telemarketing law. Under the June 5 ruling in the case brought by the U.S. government and several states, Dish is subject to certain compliance reporting and monitoring requirements for third-party telemarketers. If Dish violates the conditions of the court order, it will be barred from conducting any outbound telemarketing for two years.

At least Dish’s sub loss for the most recent quarter wasn’t as bad as last year: In Q2 2016, the operator reported its worst-ever quarterly subscriber loss, dropping a net 281,000 subs (including an estimated decline of between 315,000 and 330,000 traditional satellite TV customers). Dish lumps together both satellite and Sling TV over-the-top customers in reporting subscribers, forcing investors to guess at how poorly its core satellite biz is faring.

Overall, now that Dish and other major operators have reported Q2 sub declines that weren’t as terrible as anticipated, “this suggests stabilization for 2Q17 vs 2Q16,” RBC Capital Markets analyst Steven Cahall wrote in a research note Thursday. He added that Time Warner and Scripps Networks Interactive both continued to see “stable universe sub declines” in the 2% range for Q2, while Discovery’s cable networks were closer to 4% declines.

Other big pay-TV operators also saw negative sub growth in Q2, which is historically a weak season for the sector. But the damage hasn’t been as bad as some had feared. While AT&T had a record loss of 351,000 U-verse and DirecTV satellite accounts (offset somewhat by DirecTV Now gains), cable giant Comcast had a not-too-horrible net decline of 45,000 residential video subs and Charter Communications and Verizon shored up sub declines versus the year-ago quarter.

As of June 30, 2017, Dish had 13.332 million pay-TV subscribers, down from 13.593 million at the end of second quarter 2016.

Dish, searching for a way to stop the customer drain, launched the “Spokeslistener” marketing campaign earlier this year centered around empathizing with consumers instead of leading with a price/value message.

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  1. Joe says:

    In 2 years Dish will be filing Chapter 11. The company is bleeding subscribers and lay offs aren’t far off for their employees. The change in customer service from working the subscribers on bills to just cutting off service is backfiring.

  2. Mary Bradley says:

    No worries from this customer. We had Direct tv years ago. We hated it. We have now been with Dish for probably 18 years. They are far superior in their offerings and even with their price packaging. I would never go back to Direct TV. Now, they just need to get their shit together and be the great company that they can be.

  3. Marcia Killingsworth says:

    I think the HORRIBLE Hopper update (I totally agree with Ms Bates) was too late for it to affect these figures. But Dish plays a risky game with customers. It must continue to offer ALL of its channels – no cutbacks on what it may feel are marginal – because niche marketing is critical in the Peak TV environment.
    And I rely on Dish, so STRAIGHTEN UP, guys. You’re a lifeline to many, especially in rural areas. Don’t let us down.

  4. Margaret Bates says:

    Probably because og the crummy update to Hopper!

  5. “stop the subscriber drain”. dish might start with reducing its monthly charges–which have escalated too fast for many customers to justify paying.

  6. Bob hopson says:

    I have been saying for a couple of years now dish needs to stay with what they know. “SATELLITE TV”. And not do cell phone screens washing machines smart homes or sales to every customer. Dish thinks they offer “best in class service” but let me tell you this service went away when sales demand hit the techs!

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