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Cable Technology Feature Article

August 09, 2010

Dish Network Losing Subscribers; Feeling the Competitive Crunch

By Susan J. Campbell, TMCnet Contributing Editor

Dish Network is feeling the pressures of competition and the economic downturn in this second quarter and is losing satellite television customers as a result. The company’s shares fell 10 percent to $18.75, according to a recent Reuters (News - Alert) report. This significant drop overshadowed the better than expected quarterly earnings the company experienced. Known as the No. 2 U.S. satellite operators, Dish lost 19,000 subscribers in the second quarter, ending the period at roughly 14.3 million subscribers. In the previous year’s time frame, the company had a net gain of 26,000 subscribers. 

Competitive pressures have been blamed for hurting gross activations, as well as increased customer cancellations. Dish tends to attract price-conscious customers, who are feeling the strain of the tough economy. The company just ended an aggressive comparison promotion for its services. During this time, a lot of low-end subs were let go. 

Overall, the company has beat industry estimates, yet lost subscribers in the process. Dish had expected to add 150,000 customers in the second quarter.Some are questioning whether or not this loss is simply a single blip in a tough market or is there is something in the company’s market positioning that will lead to further problems. 

It is important to note that Comcast (News - Alert) and Time Warner Cable – Dish’s cable rivals – also had a tough quarter. For main competitor, DirecTV, Latin American subscribers tripled in the second quarter, especially as World Cup fans kicked in for satellite service during the games. According to Dish, second-quarter net income is attributable to common shareholders, pushing the fourfold jump to $257 million.In other Dish Network news, the company took another market hit when CenturyLink, a rural telephone company, announced its plans to resell DirecTV (News - Alert) instead of rival Dish Network. This announcement was featured in a Reuters report.

CenturyLink, once known as CenturyTel (News - Alert) (News - Alert), has had a marketing relationship with Dish since 2005. Representatives from both companies have been unavailable for comment on the transaction or why their relationship fell apart.In July, Dish Network announced that Space Systems/Loral, a provider of reliable satellites and spacecraft systems, has noted the EchoStar XV satellite, built for Dish Network, is performing post-launch maneuvers according to its plan.The satellite deployed its solar arrays following its successful launch on Saturday, July 10, from the Baikonur Space Center in Kazakhstan aboard an ILS Proton Breeze M launch vehicle provided by International Launch Services (News - Alert), company officials said.

Susan J. Campbell is a contributing editor for TMCnet and has also written for eastbiz.com. To read more of Susan’s articles, please visit her columnist page.

Edited by Erin Harrison