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Dish Drops 134,000 Satellite-TV Subscribers in Q1, Blaming Programming Disputes

Dish Network dropped a net 134,000 satellite-TV customers in the first three months of 2015 — with the satcaster blaming ongoing programming spats for the sizable loss.

The company, in a regulatory filing Monday, cited competition for the subscriber loss as well as “multiple programming interruptions and threatened programming interruptions” with Turner Broadcasting, 21st Century Fox and certain local TV stations. In particular, Dish said it suffered lower activations and higher cancellations because of the loss of Fox News Channel and other entertainment networks starting in the fourth quarter 2014 and continuing into Q1. Fox News returned to the Dish lineup in mid-January.

Meanwhile, the extent to which Sling TV — the company’s new lower-priced package of Internet channels launched in February — potentially cannibalized Dish’s core pay-TV biz was not immediately clear. Dish did not disclose the number of Sling TV customers it signed up in the period; the company may shed more light on the results on its earnings call with analysts Monday. [UPDATE, 9:15 a.m. PT: Dish execs declined to disclose how many Sling TV customers it has signed up to date, but CEO Charlie Ergen said the “vast majority” did not previously have a pay-TV service.]

The company reported revenue of $3.7 billion for the quarter ended March 31, up from $3.6 billion in the year-ago period. Net income of $351 million nearly doubled for the most recent quarter, compared with $176 million in Q1 2014.

Revenue and profits were driven by Dish’s pay-TV price increases, which went into effect in January. Pay-TV average revenue per sub for Q1 was $86.01 per month, compared with $82.36 in the year-ago quarter.

Dish closed the first quarter with 13.844 million pay-TV subscribers, down 253,000 from 14.097 million at the end of Q1 2014.

“Dish’s video business is dying a slow death,” analyst Craig Moffett wrote in a research note. The satcaster’s Q1 sub loss was the company’s worst Q1 ever, he noted. And while Dish topped Wall Street earnings estimates “more than all of the beat was attributable to the miss in gross additions (fewer customers acquired means less expense),” Moffett wrote.

By comparison, rival satcaster DirecTV added a net 60,000 new subscribers in Q1 — a historically strong period for the pay-TV sector. DirecTV said it had its lowest first-quarter churn rate in six years.

Meanwhile, Dish added about 14,000 net broadband-satellite subscribers in the first quarter, bringing its broadband subscriber base to approximately 591,000. That’s compared with net adds of 53,000 broadband subs in the first quarter of 2014.

On another front, Dish — which has a large amount of holdings of wireless spectrum — is being probed by the FCC for tactics it used to acquire $13.3 billion worth of spectrum in the agency’s recent AWS-3 wireless auction. The company claimed it qualified for $3.3 billion in discounts intended for small businesses, by teaming with smaller carriers. Dish has said it complied with regulations, claiming Verizon Wireless and AT&T have used the same approach; the telcos have denied that allegation. Dish hasn’t spelled out what it might do with the wireless spectrum it owns the rights to, but has suggested it could be used for broadband and wireless video, while it might also sell those holdings to another company.

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