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Pay-TV Net Additions Fall for Dish Network

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Dish Network loses 81,000 subscribers

In 2Q15, Dish Network (DISH) lost ~81,000 net pay-TV subscribers—compared to a loss of 44,000 subscribers in 2Q14. The firm attributed this loss to a higher pay-TV churn rate and lower gross new pay-TV subscriber activations.

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Pay-TV gross activations

In 2Q15, Dish activated around 638,000 gross new pay-TV subscribers—a 2.70% fall compared to 656,000 gross new pay-TV subscribers in 2Q14. This fall in subscriber activations was primarily due to strict customer acquisition policies and increased competitive pressures including discounted promotional offers, aggressive retention efforts, and aggressive marketing.

Pay-TV churn rate

The “churn rate” is defined as the annual percentage rate at which customers stop subscribing to a service. The lower the churn rate, the better it is for a company. In 2Q15, the pay-TV churn rate for Dish Networks was 1.71%—compared to a churn rate of 1.66% during 2Q14.

As stated by Dish in its company presentations, “Our Pay-TV churn rate continues to be adversely affected by increased competitive pressures, including aggressive marketing and discounted promotional offers. Our Pay-TV churn rate is also impacted by, among other things, the credit quality of previously acquired subscribers, our ability to consistently provide outstanding customer service, price increases, programming interruptions in connection with the scheduled expiration of certain programming carriage contracts, our ability to control piracy and other forms of fraud, and the level of our retention efforts.”

The churn rate for peer companies like DIRECTV (DTV) and Comcast (CMCSA) stands at 1.37% and 1.66%, respectively.

You can get diversified exposure to Dish by investing in the PowerShares QQQ Trust, Series 1 (QQQ) and the Vanguard Consumer Discretionary ETF (VCR). QQQ and VCR have 0.28% and 0.48% exposure to the company, respectively, as of August 7, 2015.

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