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What’s Affecting Dish Network’s Subscriber Base These Days?

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Dish’s subscriber losses continue

Dish Network’s (DISH) subscriber losses continued in fiscal 1Q16. The company announced its fiscal 1Q16 earnings on April 20. Dish recorded revenues of $3.8 billion in fiscal 1Q16, an increase of 2% over fiscal 1Q15.

Dish reported EPS (earnings per share) of $0.84 in fiscal 1Q16, up 11% over fiscal 1Q15. The company’s EPS in fiscal 1Q16 exceeded consensus Wall Street analysts’ estimates by 35.5%.

As the chart below shows, the company lost 23,000 subscribers in fiscal 1Q16 and ended the quarter with 13.8 million pay-TV subscribers. In contrast, Dish gained 35,000 subscribers in the same quarter last year.

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It remains to be seen whether Dish’s peers will face subscriber losses too. Dish’s peer Comcast (CMCSA) is expected to announce its fiscal 1Q16 results on April 27 while Charter Communications (CHTR) and Time Warner Cable (TWC) are expected to announce their fiscal 1Q16 results on April 27 and April 28, respectively.

Dish Network’s key metrics in fiscal 1Q16

Dish recorded an ARPU (average revenue per user) of $87.94 in fiscal 1Q16 versus $85.73 in fiscal 1Q15. Dish’s pay-TV subscriber churn rate was 1.6% in fiscal 1Q16.

Subscriber acquisition costs and churn

Dish referred to these subscriber losses on its fiscal 1Q16 earnings call. When asked whether the company’s subscriber losses resulted from price-sensitive customers opting away from the pay-TV company after its price increase early this year, Dish referred its subscriber acquisition costs (or SAC).

The company stated that its SAC factored in free programming, the cost of programming, and the cost of acquiring that customer. Dish had an average SAC per subscriber of $648 in fiscal 1Q16. Dish also stated that it has seen a “high correlation of churn based on credit score” and would rather pursue a customer that it had a 90% chance of retaining than just a 50% chance.

Dish makes up 0.2% of the PowerShares QQQ Trust Series 1 ETF (QQQ). QQQ also has 12% exposure to the computers sector.

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