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2Q11 Connections: DBS Subscribers

Satellite Providers Lose 109k Video Subs in 2Q11  

The second quarter was the first quarter on record that the two dominant satellite providers had a net loss of video subs in the U.S.—the base fell by 109k customers overall. Leading the downward tumble, DISH Networks (Nasdaq:DISH) lost 135k subs in 2Q11, its second-worst quarterly loss on record (156k in 4Q10). DirecTV (Nasdaq:DTV) didn’t fare well either, adding only 26k subs domestically—a 75% drop from its 2Q10 adds. As gross customer adds lagged for DirecTV in 2Q11, its churn rate also ticked up 5.3% as customers jumped ship to other providers.

Both satellite providers blamed the flight of subscribers in 2Q11 to aggressive marketing from competitors and attributed the lack of new customer gains to the lagging economy. Both trends however are deeply intertwined. DISH and DirecTV lack their own Internet and phone services, preventing them from independently offering the deeply-discounted promotional offerings for multiple services that cablecos and telcos can. As consumers have become more cost conscious with the lagging economy, these bundled packages can logically lure customers away from DISH and DirecTV. The cheaper OTT video substitutes such as Hulu and other streaming options have no doubt impacted DISH and DirecTV’s video market share as well. 

The publicly-traded ILECs that offer DISH or DirecTV to their customers, added approximately 15k satellite video subs in 2Q11. CenturyLink inherited Qwest’s 1m DirecTV subscribers in the quarter, while Frontier Communications (NYSE:FTR) renewed its partnership with DISH and will expand of its DISH offering to all Frontier markets. AT&T (NYSE:T) shed 44k satellite subs in 2Q11, while Verizon (NYSE:NZ) once again did not disclose its DirecTV subs.

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