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Dish Narrows TV Subscriber Loss in Q4 but Drops Sling TV Customers For the First Time

Dish Network continued to feel the cord-cutting sting in the fourth quarter of 2019: While its total subscriber losses in the period were not as bad as the year earlier, the company dropped 94,000 Sling TV over-the-top customers — the first time its OTT service lost subscribers since launching in 2015.

Dish’s net pay-TV subscribers decreased by 194,000 in Q4, compared with a net decrease of 334,000 in the year-ago quarter. That included a 100,000 drop on the satellite TV side (to 9.394 million total at year-end) and the decline in Sling TV customers, to 2.592 million.

The sequential decline in Sling TV subs — which the company has positioned as a lower-cost model designed to offset the steadily eroding satellite TV biz — comes after Dish announced a 20% price hike for Sling TV’s Blue and Orange packages, to $30 per month, in December. The company also dropped the Fox sports regional networks from Dish TV and Sling TV last July, before the RSNs were acquired by Sinclair Broadcast Group.

Dish beat Wall Street earnings expectations, posting revenue of $3.24 billion (down 2.1% year over year) and net income of $389 million (up from $337 million in the year-ago quarter).

In addition to competition from rival cable and satellite TV operators, “We also face increasing competition from content providers and other companies who distribute video directly to consumers over the internet,” Dish said in its 10-K filing Wednesday. The company cited a laundry list of OTT services including those from Netflix, Hulu, Apple, Amazon, YouTube, Disney, Verizon, AT&T, ViacomCBS, Starz, FuboTV and Philo. Dish also noted that as of October 2018, both Dish TV and Sling TV have been without HBO and Cinemax channels, “as we and AT&T have been unable to negotiate the terms and conditions of a new programming carriage contract.”

Thanks to price hikes, Dish’s average monthly revenue per pay-TV subscriber in Q4 increased to $87.02 (up from $85.55 a year earlier). Pay-TV churn rate in the period was 1.56%, and improvement over 2.07% in Q4 2018.

Meanwhile, Dish is set to become the fourth wireless player in the U.S. market pending the final closing of the T-Mobile/Sprint merger, which beat a court challenge from state attorneys general last week.

Under Dish’s $5 billion deal with T-Mobile and Sprint, the satellite TV operator will acquire Sprint’s prepaid wireless businesses including Boost Mobile along with spectrum in the 800-MHz band and will enter into a seven-year mobile virtual network operator agreement with the new T-Mobile. That was required as a condition of the DOJ’s approval of the T-Mobile-Sprint merger, on the theory that it will establish Dish as a fourth competitor in the U.S. wireless market.

Under FCC build-out requirements, Dish has committed to offer 5G broadband service to at least 70% of the U.S. population by June 14, 2023, with respect to its 600-MHz and AWS H Block spectrum licenses, along with rollout commitments for other spectrum holdings. Since 2008, Dish says, it has directly invested over $11 billion to acquire wireless spectrum licenses and has made over $10 billion in non-controlling investments in certain wireless entities.

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