Businessweek: Dish Starts Falling to Earth

[riffjim4069]

The satellite TV network is struggling to keep subscribers from fleeing. But it could be too late.

Source

Not long ago, Charlie Ergen was the scourge of cable TV. By offering bargain prices and competing head-on with struggling cable operators, his Dish Network (DISH) satellite company snatched away millions of subscribers and nearly caught up with its bigger rival, DirecTV (DTV). Now, Dish is losing altitude faster than a dying satellite, and Ergen is looking like an also-ran.

Ergen declined to comment, but not much is going right these days. Having added fewer subscribers than analysts projected in the first quarter, Dish could shed at least 37,000 of its 13.8 million customers this quarter, says Sanford C. Bernstein & Co. (AB) analyst Craig E. Moffett. That would be the first time a satellite TV player has lost subscribers since the industry began its growth spurt a decade ago, he says. Meanwhile, AT&T (T), which accounts for a big chunk of Dish's new subscribers by bundling video with its phone and Web offerings, recently said it plans to ditch the company by yearend and possibly hook up with DirecTV. "Dish," Moffett says, "is between a rock and a hard place."

CEO Ergen says he "wasn't as aware of the operations" as he should have been

Full Article

 

[mdonnelly]

Saying Dish "missed the high definition revolution" is way off base. Dish was ahead of the curve in HD programming for years, has the best HD DVR available, and still has an advantage over almost all cable systems.

 

[chidancer]

Meanwhile, the competition gets hi tech in customer issues....

Perhaps they might follow the lead of a competitor who obviously is interested in keeping "an ear" to the consumer market by means of the employing technology already out there. Have been through the original Voom crash and burn years ago when Satellite Guys was simply trying to help keep Hi Def growing, and now we have another company who just doesn't get it. Check out Comcast's current attempted solution to customer problems Come on Charley, Observe and implement creative solutions! http://www.nytimes.com/2008/07/25/technology/25comcast.html?_r=1&partner=rssnyt&emc=rss&oref=slogin

 

[Peter Parker]

Actually the consensus forecast is for modest gains. we will see what it really is on Aug.4.

 

[riffjim4069]

Saying Dish "missed the high definition revolution" is way off base. Dish was ahead of the curve in HD programming for years, has the best HD DVR available, and still has an advantage over almost all cable systems.

I'll agree...we loved our 622 (still the best on the market), their HD offer was the best in the industry for almost 2-years thanks to the unfortunate demise of VOOM DBS, and the overall value was top-notch. However, the author should have focused more on how they fell asleep at the wheel, and DirecTV and others are now lapping them:

- DirecTV's marketing is killing E*! Heck, D* even managed to grow their HD customers with only a handful of HD channels, while E* had almost 40 post VOOM DBS.

- E* used to provide the best value. Nowaways, D* is providing more for less, and there is no way E* can match the Triple Play/Homerun bundles being offered by Cable and the Telcos.

- E* failed to capitalize on multiple opportunies when they were the HD Leader for almost 2 years. Besides their pathetic marketing campaign, they created some really really confusing promotions and programming packages.

- The issues involving HD-Lite, VOOM, TiVo, etc. matter to many of their higher end customers. That's why many of us are jumping ship.

 

[jwestpfahl]

AT&T in the recent analyst conference call downplayed their recent contract issues with Dish as normal business decisions. AT&T indicated that they need satellite service to resell as 40% of their market will be unable to be served by U-Verse. While AT&T may ultimately dump Dish for DirecTV, I think the main reason why they want out of their current contract with DISH is they had an opportunity to do so. They will probably want to structure a new contract differently than the current one by maybe offering satellite service in selective areas. I can see them wanting no satellite service here in Chicago where they are trying to expand U-Verse, but offering satellite service in the more rural areas.

 

[mdonnelly]

I'll agree...we loved our 622 (still the best on the market), their HD offer was the best in the industry for almost 2-years thanks to the unfortunate demise of VOOM DBS, and the overall value was top-notch. However, the author should have focused more on how they fell asleep at the wheel, and DirecTV and others are now lapping them:

- DirecTV's marketing is killing E*! Heck, D* even managed to grow their HD customers with only a handful of HD channels, while E* had almost 40 post VOOM DBS.

- E* used to provide the best value. Nowaways, D* is providing more for less, and there is no way E* can match the Triple Play/Homerun bundles being offered by Cable and the Telcos.

- E* failed to capitalize on multiple opportunies when they were the HD Leader for almost 2 years. Besides their pathetic marketing campaign, they created some really really confusing promotions and programming packages.

- The issues involving HD-Lite, VOOM, TiVo, etc. matter to many of their higher end customers. That's why many of us are jumping ship.

I can agree with most of that. I disagree about Direct offering more for less. The Dish HD Only package is the best value in television programming, IMHO.

And while PQ matters to many or most of us, the vast majority aren't in a location where FIOS is available, AT&T doesn't offer enough bandwidth for three or more HD sets, and the difference in PQ between Dish and Direct isn't significant enough to warrant changing providers.

 

[Peter Parker]

AT&T in the recent analyst conference call downplayed their recent contract issues with Dish as normal business decisions. AT&T indicated that they need satellite service to resell as 40% of their market will be unable to be served by U-Verse. While AT&T may ultimately dump Dish for DirecTV, I think the main reason why they want out of their current contract with DISH is they had an opportunity to do so. They will probably want to structure a new contract differently than the current one by maybe offering satellite service in selective areas. I can see them wanting no satellite service here in Chicago where they are trying to expand U-Verse, but offering satellite service in the more rural areas.

The AT&T move was rumored for some time. They basically want to make the two sat providers compete and I don't blame them. the contract with DISH just wasn't the best deal that AT&T could get and they took advantage of an opportunity to modify or replace it.

 

[Stargazer]

Maybe Charlie Ergen, in which is not aware of the operations, should become aware again, and become more involved if he isn't. I thought he would have been more aware than he is unless he is letting someone else run the show while he is at his mansion relaxing most of the time or taking those nice vacations. If he cannot handle it then maybe he should sell and relax with what money that he has before Dish Network starts going the other way and loses money.

 

[nelson61]

I read with interest until I reached the part about their probably having to combine with Directv. Anyone that thinks the FCC would let that happen is either a poor researcher or biased.

 

[riffjim4069]

Actually the consensus forecast is for modest gains. we will see what it really is on Aug.4.

Geronimo, just curious...what are your sources? Craig Moffett does a decent job at reporting the industry and his use of the qualifier "at least" leads me to believe E* will be reporting a net loss. As I recall, the 1Q numbers were flat (very small increase?) and there has been a string of bad news during 2Q...AT&T and VOOM to name just two....and E* is trying to battle a 15% increase in defectors.

Plus, I have never seen as many "I have been with Dish Network since 1996 and am leaving for D*" threads as I have in the past few months. With Verizon (expecting FiOS TV to announce adding 300K new TV subscribers) and AT&T getting it full-swing this summer, I expect a lot of unhappy customers are now with FiOS/U-Verse.

We shall see...

 

[Peter Parker]

Yes moffett does agood job. But there are other voices and i honestly think that you are quoting that particualr voice because you agree with his conclusion.

But take alook at yesterdy'as Reuters article on DirecTV which said

"But growth is still seen better than that of rival DISH Network Corp (DISH.O: Quote, Profile, Research, Stock Buzz), which positions itself as a low-cost provider of satellite TV and has suffered operational missteps compounded by the poor economy. The analysts expect DISH to have added between 19,000 and 75,000 net subscribers."


they clearly see DISH as lagging DirecTV but not actually losing subs---though that certainly could happen. Also if you go to any of the financial analyst websites you will find a real mixture of opinions on the stock but the consensus would be "hold" not "sell"

having said all that sub count and growth is just one factor that influences an opinion to buy, sell or hold. Heck last quarter DISH had disappointing sub growth (after a few here predicted a decline) but had better earnings.

i don't have a crystal ball. I used to be part of a group that sponsored a quarterly contest on sub growth for each provider. My track record was not horrible but I never hit the mark and there usually several others that came closer than I did. i just don't think that you can look at just one article or just one forecast. No knock on Moffett.

 

[riffjim4069]

I read with interest until I reached the part about their probably having to combine with Directv. Anyone that thinks the FCC would let that happen is either a poor researcher or biased.

I think a merger is bound to happen, in time, given the competitive landscape for video service is changing. Verizon is going to have more than 2 million TV customers by years end, AT&T appears to be getting serious about rolling out services....not to mention smaller Telco, like Cavalier Telephone & TV, who offer IPTV service.

Personally, I don't understand what is wrong with D* and E* sharing satellites (especially locals) and common DBS architectures. I feel they will have to consolidate their satellite fleets in order to survive in the future. Heck, profits margins are already razor-thin.

 

[VaberMan]

While not the Dish supporter I once was I am excited about this Newsweek report. Why? I hope Charlie gets a little upset and pushes for something big. Something to separate E* from D*. What that is I don't know but the buying public is seeing a difference now and it's not in E*'s favor.

 

[wayne231]

My take on things as a stock holder of both companies, is that Charlie would love to sell the "programing" part of Dish Network and be the supplier of STB to others, especially Directv.

 

[Peter Parker]

In the past E* has proposed sharing locals and also swapping slots at the locations they share. DirecTV has never been willing to do that.

I may be wrong but I believe that they do share some PoPs in some DMAs. Does anyone else know if that is the case?

 

[riffjim4069]

Yes moffett does agood job. But there are other voices and i honestly think that you are quoting that particualr voice because you agree with his conclusion.

But take alook at yesterdy'as Reuters article on DirecTV which said

"But growth is still seen better than that of rival DISH Network Corp (DISH.O: Quote, Profile, Research, Stock Buzz), which positions itself as a low-cost provider of satellite TV and has suffered operational missteps compounded by the poor economy. The analysts expect DISH to have added between 19,000 and 75,000 net subscribers."


they clearly see DISH as lagging DirecTV but not actually losing subs---though that certainly could happen. Also if you go to any of the financial analyst websites you will find a real mixture of opinions on the stock but the consensus would be "hold" not "sell"

having said all that sub count and growth is just one factor that influences an opinion to buy, sell or hold. Heck last quarter DISH had disappointing sub growth (after a few here predicted a decline) but had better earnings.

i don't have a crystal ball. I used to be part of a group that sponsored a quarterly contest on sub growth for each provider. My track record was not horrible but I never hit the mark and there usually several others that came closer than I did. i just don't think that you can look at just one article or just one forecast. No knock on Moffett.

Thanks! I don't follow the DBS markets, and Mr. Moffett is the typically the only source I see posting analysis without digging for information. Dish may very welll wind up adding subs, but this article does not sound good.

 

[Peter Parker]

I will point out to you that we had a lot of similar forecasts here in trhese forums back in may. In the earnings call DISH announced that they added 39K subs. everyone in these forums leapt on that statistic and called it disappointing (even though many of them were loss). In fact in the thread about the earnings call NO ONE mentioned what the earnings were or that they had risen substantially.

What happened in the market? the stock rose.

Forums like this are a great source of info on technical maters. But they are not that reliable on financial matters. We will know soon. We will actually have an announcement BEFORE the call. Again I have no crystal ball but I suspect that it will be another qarrter that it is particularly flat. BTW a 30k loss of subs would not be all that significant-(nor would a 30k increase) ----except that it would be the first net loss in over 10 years.

 

[MikeD-C05]

ITs time for DISH to realign everything they are doing. First thing is to eliminate the DVR fees per receiver and make it per account. Then they can stop the extra fees they charge for no access fees , no phone line connected etc. Years ago when they had the 501 /721 dvrs they had NO DVR FEES at all. Directv charged back then about 9.99 per account to have a dvr. THis forced DIRECTV to lower their price to 4.99 to compete. In turn CHarlie decided to get in on the dvr fees and started charging per receiver. Good for profit but bad for competing against the competition. THe other nonsense fees they charge also piss off the customers. The no phone line connection fee of 5.00 on dual tuner receivers , the 39.99 fee for external hard drives that YOU buy yourself seems very greedy to me , since the change made was a simple software change on DISH's part.

Then there is the confusing hd options they will soon offer. TUrbo blow hd packs that only new subs can get , but the old subs will also use these names for hd but they won't have the same meaning. The dvr advantage pack should be easy to understand like this :

top 100 dvr advantage for 39.99/top 200 dvr advantage for 49.99/top 250 dvr advantage for 59.99.

INstead you have to add the top 200 and then add the bonus pack for 10.00 more to get to top 250 and another premium pack for another 10.00 to get the hd pack added ... etc . You have to be a damn accountant figure out the confusing ways they market things. CONFUSION rules at DISH. I often have to come here or other web boards to get clarification on the many different ways they market new things like programming etc because it is so damn messed up the way they come up with these things. NExt week the podcast has DISHNETWORK as a guest in order to clarify the new hd turbo packs because NO ONE Can figure out what the hell they are trying to do. THat is a bad sign when they have to come on a web board to explain to their subs what they are trying to convey . Imagine the csrs trying to explain to their subs questions . This is where we came up with the term "csr roulete". Keep calling and asking till you get the answer you want to here.

THe programming packs should be simple and the lowest programming pack should be the essentials pack for 9.99 /14.99 with locals- INstead of charging 7.00 to NOT have any top programming at all so you can just get locals or premiums by themselves. Just like if you don't want any HD at all they charge you 7.00.

THen there is the different variety of receivers they keep supporting as well as creating every damn year. INstead of 20 different kinds there should only be one or two versions and any improvements made should be addons that you could buy and add to the existing receivers. SImplification is the key. STreamline the various bean counter strategies in billing , manufacturing and programming. THis has worked for DIRECTV . Their subs know how to add programming and they can do it right on their website. THey don't even need to talk to a csr at all.

THat is the other thing they need to do . THEy need to stop all FOREIGN csrs from answering their phone calls. There is nothing more frustrating that trying to talk to someone known as "BOB" and their accent is so thick that you can't understand a damn thing they say. I want an American voice talking to me or at least make the website more customer friendly so you can help yourself . When you try to do anything over the website it says it can't be done at this time call 1-800 -DISH.

DISH charges more for pay per view than the competition- 4.99 for sd 6.99 for hd . The competition in cable and satellite doesn't charge this much . THEir DISHonline is a joke charging as much as 4.99 for 25 year old movies you can see in your regular programming packs anyway. WHy so high on something the competition doesn't charge?

So Charlie you want to regain your subs and attract new ones?

1. SIMPLIFY EVERYTHING from programming choices , dvr advantage , hd turbo packs .
2. ELIMINATE nonsensical extra fees like PER Receiver , no phone line connected, 7.00 per hd receiver and 6.00 for sd receiver. Your competition doesn't charge this only 4.99 per receiver.
3. ELIMINATE the extra satellite receivers and the older versions too and only offer one or two varieties , upgrade the rest of your subs .
4. Any new advances to your receivers make in easy to upgrade modules for existing receivers or upgrade by software updates. Do we really need another new sat receiver every year ?
5. ELIMINATE the foreign csr call centers. NOthing like bad customer service to send your subs to the competition.
6. PUT YOUR Subs first, rather than try to make more profit off of your existing subs the end all be all of your existence.

K - KEEP
I - IT
S - SIMPLE
S - STUPID!

 

[jayn_j]

Saying Dish "missed the high definition revolution" is way off base. Dish was ahead of the curve in HD programming for years, has the best HD DVR available, and still has an advantage over almost all cable systems.

Some advantage, but it is closing fast. My Comcast has the following HD

Locals: 6
National: 27
Premium: 4
RSN: 1 full time

No HD PPV, but there is starting to be on demand HD trickling out. They are promising to double the national channels this year.