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Dish Sees Subscriber Losses Mount, Blames Higher TV Churn on Price Hike

Satcaster swings to Q2 loss on impairment charge for satellites acquired via TerreStar and DBSD

Dish Network dropped 78,000 net subscribers in the second quarter, with the No. 2 satcaster attributing higher cancellations rates to its January rate increase.

The company ended the second quarter with 14.014 million pay-TV subscribers compared with 14.061 million in the year-ago period. In the second quarter of 2012, Dish posted a net decline of 10,000 subs.

While the second quarter is historically the weakest for pay TV operators, Dish’s contraction is another sign of stress on the sector as consumers seek lower-cost Internet video and over-the-air TV options. DirecTV, the top U.S. satellite operator, dropped 84,000 subscribers in the second quarter, ending the period with 20.02 million subscribers.

Dish’s core satellite TV business “appears to be entering the early stages of secular decline,” Moffett Research analyst Craig Moffett wrote in a research note. “Dish Network is losing subscribers, its churn rate is rising, its ARPU (average revenue per unit) is stagnating, and its programming costs aren’t going to stop rising.”

Dish said churn increased to 1.67% in the most recent period (up from 1.60% a year ago), chalking that up to its first programming package price increase in two years. In January, satcaster raised the price of its primary TV bundles between 7% and 20% with most packages rising $5 per month. Average revenue per subscriber for the second quarter increased 4%, to $80.90 compared with $77.59 in Q2 2012.

Over all, Dish posted a 1% increase in revenue to $3.61 billion for the quarter ended June 30. Satcaster reported net loss of $11 million versus to $226 million in net income in the year-ago quarter; in the most recent quarter, Dish took a $438 million impairment charge related to two of the three satellites acquired through the TerreStar and DBSD transactions.

On the satellite-broadband front, Dish added approximately 61,000 net broadband subscribers in the second quarter, bringing its broadband subscriber base to approximately 310,000, a 24% percent increase sequentially.

Currently, Dish is locked in a retransmission-consent fight with Raycom Media, resulting blackouts of 53 stations in 36 markets. Raycom says it is asking for same payments it receives from other operators, while satcaster claims the station group is seeking substantially higher rates.

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