Mere minutes into debunking a report from Parks Associates lauding the pay TV market for slowing subscriber declines to a plateau (slow week), Dish Network slides in and takes the job right off our hands – reporting 334,000 subscriber losses for Q4 2018 to make it a net crater of 920,000 for the full year. As usual, the major outlets were quick to take this as gospel, forgetting to discredit the Sling TV gains, in which case Dish Network actually lost 1,125,000 satellite TV subscribers in 2018.
This is only the second time Dish Network has suffered satellite losses exceeding 1 million and we are more than tempted to bet Parks it won’t be the last. The US operator lost 1.27 million satellite subs in 2016, which was followed by a slowdown to 995,000 in 2017, before spiking again last year. That’s a funny looking plateau.
So, once again Sling TV stepped in to paint a slightly rosier picture, as the OTT video service added just over 200,000 subscribers in 2018 to surpass 2.4 million. There are 9.9 million subscribers remaining on the Dish TV service, while Sling TV now has 2.4 million subscribers, with growth slowing down substantially during 2018 but up by almost 1 million from two years prior.
Dish Network is a big fan of sneakily concealing quarterly additions for Sling TV. Looking back, we count 2.37 million Sling TV subscribers at the end of Q3, meaning Sling TV added a measly 47,000 in Q4. At least that shows improvement from the 26,000 subs added in Q3, but still represents a decidedly disappointing end to the year given the positive Sling TV uptake seen in the first two quarters of the year and indeed the past two years.
Such dramatic deceleration in Sling TV’s popularity is perhaps more concerning news for Dish Network in the long run than the relentless battering its satellite TV business is taking. If dropping irrecoverably below the 10 million pay TV subs mark wasn’t a wakeup call, then Sling TV uptake almost grinding to a halt is sure to send alarm bells ringing – with plan B falling way short of what Dish requires if the operator is to survive as a video business. The lack of a firm contract, as is the case with skinny bundles, means customers are churning in and out, although at least we can rest assured that Dish does not count those who are on free promotional offerings as part of its total Sling TV subscriber count, or so it promises.
On a positive note, Dish Network President and CEO Erik Carlson said on the company’s earnings call, “We found that customers are incredibly sensitive to performance and the ad experience in Sling continues to improve and by that I mean we’re delivering on DAI driven advertising, programmatic, addressable and cross platform.”
Poor excuses are rife in this industry and Dish Network decided to throw the blame over to rival operator AT&T this time around, as well as Spanish-language FTA TV network Univision. Dish cites the removal of certain channels by AT&T and Univision as having a direct negative impact on its subscriber base, including Sling TV, by as much as half its net subscriber loss of 334,000 for the quarter, compared to net additions of 39,000 in the year-ago quarter.
“This decrease in net Sling TV subscriber additions is primarily related to increased competition, including competition from other OTT service providers and to a higher number of customer disconnects on a larger Sling TV subscriber base, including the impact from Univision and AT&T’s removal of certain of their channels from our programming lineup,” stated Dish.
As a result, ARPU fell again by over $1 to $85.46, albeit still a relatively high figure. Fourth quarter revenue therefore fell to $3.3 billion from $3.5 billion in the year earlier period, while net income suffered a hefty kick in the teeth to the tune of a $1 billion decline to $337 million for Q4.
Full year 2018 revenue was $13.6 billion, down from $14.4 billion in 2017, while subscriber-related revenue fell from $14.3 billion to $13.5 billion. Net income for the year came in at $1.6 billion, compared to $2.1 billion in 2017.
It was the same old story as Dish tried to balance the scales with some good news about 5G and IoT network build outs, but ultimately once more management failed to come up with a strategy to its chronic TV erosion problem.