Dish continued to lose high-value satellite TV subscribers in the fourth quarter, shedding 381,000 subs in the period as carriage disputes with HBO and Univision remain unresolved.
The Q4 losses compare to satellite TV declines of 121,000 a year ago, with Dish’s traditional subscriber base now shrinking at a rate of 10.5 percent, according to MoffettNathanson analyst Craig Moffett. In a research note Moffett wrote that this represents a “sharp acceleration” from the 8.7 percent year over year rate in the third quarter.
And while Dish has been heavily promoting its vMVPD Sling TV and reported adding 47,000 subscribers, Moffett points out that the live streaming TV service is not likely to be the source of meaningful profits.
In regards to satellite pay TV subscriber losses, Moffett wrote, “These are the subscribers that matter. They are the ones that actually make money.”
HBO has been blacked out on Dish systems since October, while many Univision channels have been dark since June after failing to reach new distribution agreements.
In the fourth-quarter, satellite TV churn climbed higher, hitting 2.07 percent.
On the company’s fourth-quarter earnings call, Dish CEO Erik Carlson said that together, HBO and Univision account for a little more than half of net subscriber losses (334,000) in the period. Carlson noted Dish could see more impact if the company can’t reach an agreement with HBO (which is now owned by AT&T) ahead of the forthcoming Game of Thrones premiere in April.
Dish Chairman Charlie Ergen said AT&T “has taken a very anti-competitive approach to carriage because they view Dish potentially as one of their larger competitors.” He acknowledged that some customers do leave Dish, “because HBO is a very strong brand and has strong content.”
Still he said others can live without it, or find ways to watch the content like going to a friend’s house or resorting to piracy.
The blackouts do put pressure on ARPU when subscribers flee, as Dish charges $15 per month for HBO and $10 per month for sister network Cinemax, Ergen noted. Lower-value Sling TV customers also impact ARPU, which declined to $85.46 for the full year in 2018.
Overall revenue for the quarter was $3.31 billion, down 5 percent from a year ago.
On the call, Ergen also said that Dish still doesn’t know whether the FCC will approve the company’s planned Narrowband IoT network build – which it must do to meet a March 2020 buildout requirement or lose some of its spectrum.
“Obviously, we’re past the point of no return at this point to do something different,” Ergen said. “I don’t think there should be any skepticism about Narrowband IoT or Narrowband IoT build out meeting our commitment for the FCC, because I think the rules are pretty clear in terms of flexible use.”
T-Mobile has raised questions as to whether Dish’s plan is even technically viable.
“Whether the FCC will deem a transparently unusable network to be a satisfactory solution to the March 2020 buildout requirement is unclear,” Moffett wrote. “We honestly have no idea whatsoever what (or when) the FCC will decide.”
Last year, Dish said it would spend between $500 million and $1 billion over the next two years on its initial network buildout, while putting a $10 billion price tag on a nationwide 5G network further down the line.