Dish Widens Q1 Pay-TV Sub Loss as Sling TV Growth Cools

Dish Network May 3 reported it lost 266,000 pay-TV subscribers in the first quarter, ended March 31. That compared to a loss of 185,000 subs in the previous-year period.

The nation’s fourth-largest pay-TV operator ended the period with 12 million subscribers — down almost 1.1 million subs from 13.1 millions subs last year.

The loss reflects ongoing secular changes in the pay-TV market as increasing numbers of consumers opt away from linear television toward over-the-top video products such as Netflix, Amazon Prime Video, Hulu, HBO Now and Showtime OTT, among others.

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Separately, Dish’s pioneering online TV service, Sling TV, added just 7,000 subs in the period, compared to a gain of 91,000 subs last year. The standalone live streaming service ended the period with 2.41 million subs compared to 2.3 million subs last year.

Sling TV helped create an online TV market targeting cord-cutters and millennials that now includes PlayStation Vue, Spectrum TV Plus, DirecTV Now, YouTube TV, Fubo TV and Hulu with Live TV, among others.

While subscriber growth declined, revenue per Sling customer increased. The increase was mainly driven by three factors: Customers taking higher priced packages, increased add-on revenue from extras, ad sales and cloud DVRs, and the $5 increase on the orange package implemented in the third quarter of 2018.

“Sling’s promotions have done well for us but we are focused on attracting profitable customers,” Warren Schlichting, EVP and group president, Sling TV, said on the fiscal call. “It’s a marathon not a sprint. We like where we are, we like our position in the market with our competitors taking their prices out that’s only improved ROI, and you’ll see more of the same, in the second quarter from us.”

Without Sling, Dish’s legacy satellite TV subscriber base would be about 9.6 million – down almost 4 million subs (30%) in the past five years.

Dish Network Lost 1.1M Satellite Subs in 2018; Sling TV Growth Cools

Dish Network, the fourth largest pay-TV operator in the country, Feb. 13 said it lost 1.1 million legacy satellite TV subscribers in the fiscal year ended Dec. 31, 2018. The company lost 995,000 satellite subs in 2017.

Dish ended 2018 with 9.9 million satellite subs, compared to 11 million at year-end 2017.

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The company said its pioneering online TV service Sling TV added 205,000 subscribers last year – down 72% from 711,000 subscriber additions in 2017. Sling added 878,000 subs in 2016. The standalone streaming service finished 2018 with 2.41 million subs compared to 2.21 million in 2017.

 

 

Dish Network Expands On-Demand Content Offerings

Dish Network has expanded its on-demand offerings by more than 7,000 titles, including adding 11 à la carte on-demand packages users can subscribe to on a monthly basis, priced from $2.99.

The on-demand packages include original series and documentaries from Up Faith & Family, Cinedigm’s Dove Channel and Curiosity Stream, among others.

On-demand subscriptions are available to Dish customers with a qualifying programming package and an internet-connected Hopper DVR (all generations), Hopper Duo, Joey (all models) or Wally.

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“Dish’s on-demand universe is all-encompassing,” Andy LeCuyer, SVP of programming,” said in a statement. “Whether bingeing seasons of your favorite TV series on-demand or purchasing a digital copy of a new release movie, there are many avenues for customers to access the content they want, when they want it.”

Indeed, more than 70,000 of on-demand titles are available at home on a Hopper family set-top box, and while on-the-go with the DISH Anywhere app.

The DISH Anywhere app gives all customers the ability to watch the on-demand titles associated with their programming package from virtually any location. The app is available on Internet-connected mobile devices, including smartphones, tablets and computers, as well as televisions via Amazon Fire TV and Android TV.

The following on-demand subscriptions are now available to Dish subscribers, with a free preview available through Feb. 10.

Parks: Confidence in Online TV Increasing Among Younger Consumers

Following a fiscal quarter that saw pay-TV operators lose about 1 million combined subscribers, new data from Parks Associates finds consumers’ willingness to recommend their service (net promoter score, or NPS) is waning.

The average NPS for traditional pay-TV providers in the third quarter was minus 19, down from minus 15 in Q1, although some providers such as Optimum and Dish Network improved their individual scores.

By comparison, the average NPS for the major online pay-TV and over-the-top video services was positive, although their overall scores declined from 2017 to 2018.

“The percentage of U.S. broadband households that do not subscribe to traditional pay TV increased from 16% in 2011 to 22% in 2017,” Brett Sappington, senior director of research, said in a statement. “With each quarterly earnings report, pay-TV providers and their stakeholders are hyperaware of variances in subscriber figures, and they are trying to reverse this trend with their own brands of OTT services as well as other value-added services. A positive NPS score for these services suggests a positive perception and strong word-of-mouth activity.”

Parks said 79% of U.S. broadband households reported had traditional pay-TV subscriptions in early 2018. About 33% of pay-TV subs made a change to their service between Q1 2017 and Q1 2018.

 

 

 

 

 

 

 

 

 

“A key challenge for pay-TV providers is to design and launch services that will inspire loyalty among younger households,” said Sappington. “Older consumers profess higher loyalty to pay-TV providers, whereas younger households are more likely to have an OTT service.”

 

DirecTV Launching Proprietary Streaming Media Device in 2019

As expected, DirecTV plans to roll out a proprietary streaming media device in 2019 that would enable consumers to access online TV service DirecTV Now using their own broadband or high-speed Internet connectivity.

The device, which would be similar to a Roku or Apple TV device, would help DirecTV reduce subscriber acquisition costs typically associated with the installation of pay TV service, including truck rolls and employees climbing the roof installing satellite receivers.

Speaking Nov. 14 at the Morgan Stanley European Technology, Media & Telecom confab in Barcelona, AT&T CFO John Stephens said the streaming device would afford DirecTV with the same data insights and targeted advertising (driven by data analytics subsidiary Xandr) as linear pay-TV.

“It’s a device that allows us to instead of rolling a [service] truck to the home, we roll a UPS or FedEx truck to the home,” he said.

The executive said the box would help AT&T boost broadband subscriptions, which currently total about 15 million households.

“We certainly hope it’s our own fiber, but it can be on anybody’s broadband,” Stephens said.” “We are testing it with employees today.”

Charter Communications followed a similar strategy in 2015 when it launched standalone online TV service Spectrum TV Plus to broadband customers. New subs were given a free Roku 3 streaming media device to facilitate the $20 monthly service.

Separately, Stephens said oral arguments in the Justice Department’s appeal of the $85 billion AT&T/Time Warner merger are due Dec. 6 – with a decision by the three-judge panel expected next year.

“Quite frankly, we’re confident the decision will be upheld,” he said. “It’s a process we have get through. But we’re not spending a lot of time thinking about it.”

 

Online TV Growth Slows Despite Record Q3 Pay-TV Subscriber Exodus

The most-recent fiscal quarter (ended Sept. 30) was not a good one for pay-TV operators, which continue to see increasing numbers of subscribers exit for video alternatives online.

Or not.

It was also a wake-up call to multi-video program distributors who think online TV is the answer to fickle pay-TV consumers.

 The cable, satellite and telecom operators lost a combined 1.2 million video subs, ending the quarter at 91 million, including 88.2 million residential customers, according to new data from Kagan, a media research group within S&P Global Market Intelligence.

Meanwhile, while many pay-TV subs are becoming cord-cutters, they’re not all migrating to online TV platforms such as Sling TV, DirecTV Now, Hulu with Live TV, YouTube TV and PlayStation Vue.

Kagan found that online TV services gained an estimated 2.1 million subs in the past nine months – not enough to offset a decline of 2.8 million pay-TV subs.

Indeed,Dish Network-owned Sling TV and DirecTV Now added just 75,000 subs in 3Q, compared to about 530,000 additions in the previous-year period. The additions were the lowest since the market’s launch in 2015.

Satellite had its worst quarter on record with a loss of 726,000 subs, according to Leichtman Research Group. Cable lost nearly 1.1 million subs – the worst performance since 2014.Telco subs fell by 94,000, led by Verizon, which jettisoned 63,000 subs.

Telephone providers lost about 80,000 video subs compared to a loss of 180,000 subs last year. Pay-TV services (excluding online TV) lost 1.05 million subs compared to a loss of about 940,000 subs in 2017.

“This marked the most net losses ever in a quarter for the pay-TV industry,” Bruce Leichtman, president and principal analyst for Leichtman Research Group, said in a statement. “Satellite TV had more combined net losses in than in any previous quarter.  These net losses were largely driven by corporate strategies focused on acquiring and retaining more profitable subscribers.”

Leichtman attributed some of the online TV sub growth slowdown to corporate parents’ emphasis on improving the profitability of the Internet-delivered flanker brands.

“[This] reduced net quarterly adds in the segment, resulting in [online TV] not helping to mitigate overall pay-TV losses to the degree they had in recent quarters,” he said.

Pay-TV Providers Subscribers at end of 3Q 2018 Net Adds in 3Q 2018
Cable Companies
Comcast 22,015,000 (106,000)
Charter 16,628,000 (54,000)
Cox* 4,035,000 (30,000)
Altice 3,322,800 (28,100)
Mediacom 793,000 (15,000)
Cable ONE 328,921 (11,191)
Total Top Cable 47,122,721 (244,291)
Satellite Services (DBS)
DIRECTV 19,625,000 (359,000)
DISH TV 10,286,000 (367,000)
Total DBS 29,911,000 (726,000)
Phone Companies
Verizon FiOS 4,497,000 (63,000)
AT&T U-verse 3,693,000 13,000
Frontier 873,000 (29,000)
Total Top Phone 9,063,000 (79,000)
Internet-Delivered (vMVPD)
Sling TV^ 2,370,000 26,000
DIRECTV NOW 1,858,000 49,000
Total Top vMVPD^ 4,228,000 75,000
Total Top Providers 90,324,721 (974,291)

 

 

Cinedigm OTT Video Services Heading to Dish Network

Cinedigm Oct. 1 announced that faith-based Dove Channel and documentary-devoted Docurama are joining Dish Networks’ new subscription on-demand programming platform. Both Dove Channel and Docurama are available as à la carte options for $4.99 per month each.

SVOD content is available to Dish subscribers with a qualifying base programming package and Internet-connected Hopper DVR, Hopper Duo, Joey or Wally.

“Cinedigm is proud to join with Dish, as we bring Docurama and Dove Channel to the innovative new ‘Subscription On-Demand’ service,” Bill Sondheim, president of Cinedigm Entertainment Group, said in a statement. “This agreement perfectly complements our commitment to redefining the traditional viewing experience.”

 

Fox Selling Sky Stake to Comcast — With Disney’s Blessing

Rupert Murdoch is a sly fox. After his 21stCentury Fox media company lost to Comcast in a weekend auction for outstanding control of Sky Plc., the media tycoon has agreed to sell Fox’s 39% stake (worth about $15 billion) in the British satellite TV distributor to Comcast – at the new elevated share price of £17.28 ($22.60).

To do so, Fox had to get Disney’s approval after the latter acquired select Fox assets, including 20thCentury Fox Film and Fox’s stake in Sky, for $71 billion.

After Comcast emerged victorious last weekend in a special auction held by British regulators – an event that saw Comcast agree to pay nearly 70% more for Sky than Fox had original offered, fiscal common sense prevailed over ego.

In a statement, Fox said it wished its colleagues at Sky well going forward. Murdoch helped launch Sky in 1989 through the merger of Sky Television and British Satellite Broadcasting.

“In light of the premium Comcast has agreed to pay for Sky, we and Disney have decided to sell 21CF’s existing 39% holding in Sky to Comcast. We congratulate Comcast on their pending acquisition,” said Fox.“We are proud of the role our company has played in building Sky, and of the outstanding value we have delivered for shareholders of 21CF and Sky, and customers across Europe.”

For Disney, the transaction, coupled with the divestiture of the Fox Sports Regional Networks, significantly reduces the amount of debt it would incur in acquiring Fox assets.

Disney, in a statement, said it would rather focus its “considerable investment” in the branded direct-to-consumer offering launching in late 2019 and the new ESPN+ sports streaming service. It will also seek to increase investment in Hulu’s content offerings and international distribution. Disney and Fox each currently hold 30% stakes in Hulu.

“Along with the net proceeds from the divestiture of the RSNs, the sale of Fox’s Sky holdings will substantially reduce the cost of our overall acquisition and allow us to aggressively invest in building and creating high-quality content for our direct-to-consumer platforms to meet the growing demands of viewers,” said Disney CEO Bob Iger.

The acquisition has received formal approval from shareholders of both companies, and Disney and 21st Century Fox have entered into a consent decree with the U.S. Department of Justice that allows the acquisition to proceed, while requiring the sale of the Fox Sports Regional Networks. The transaction is subject to a number of non-U.S. merger and other regulatory reviews

For Murdoch and Co., selling Sky marks the end of an era.

When Murdoch-led Fox launched Sky nearly three decades ago, it nearly went broke operating four channels produced from a prefab structure in an industrial park on the fringes of west London.

“We bet — and almost lost — the farm on launching a business that many didn’t think was such a good idea,” Fox said. “Today, Sky is Europe’s leading entertainment company, a world-class example of a customer-driven enterprise … and we have created more than 31,000 jobs across the continent.”

British Satellite TV Operator Sky Posts Strong Fiscal Year

There’s a good reason why 21st Century Fox and Comcast want to acquire controlling stakes in British satellite TV operator Sky: the company is firing on all cylinders.

The company added 270,000 subscribers in the United Kingdom and Ireland in the fiscal year (ended June 30), to up its customer base to 12.9 million. Sky also has 5.1 million and 4.8 million subscribers in Germany/Austria and Italy, respectively.

The satellite TV operator is planning service launches in Switzerland and Spain. Sky Mobile, the company’s nascent telecommunications unit, ended the year with 500,000 subscribers.

Revenue in U.K./Ireland (£8.9 billion), Germany/Austria (£2.2 billion) and Italy (£2.9 billion) increased 4% (£331 million), 6% (£107 million), and 6% (£150 million), respectively. Total revenue increased by £588 million, or 5% to £13.6 billion.

Sky Germany added 1.4 million new customers, 2.7 million paid-for-products, and €626 million in revenue in the fiscal year. Sky Italia added 57,000 subscribers and 133,000 paid-for-products.

The satellite TV operators remains one of the largest distributors of U.S. studio movies and TV shows, in addition to original content. It also operates the Sky Store, which includes a DVD with every digital movie purchase.

Sky said direct-to-consumer revenue, its largest revenue category, grew 3% (£396 million) to £11.8 billion, driven by a number of factors, including: the increased size of its subscriber base; greater product penetration such as Sky Q, Sky Fibre and Sky Mobile; a higher number of pay-as-you-go transactions; the full-year benefits from price hikes in the U.K. and Italy.

Content revenue strongly increased 15% (£110 million) to £838 million as Sky monetized its growing investment in original programming. Advertising revenue grew 10% (£82 million) to £917 million, with each territory outperforming its market.

“It’s been an exceptional year,” said CEO Jeremy Darroch.

The current fiscal year could get even better as Comcast is offering £14.25 per share for all of Sky, compared to £14 per share from Fox, which already owns 39% of the company. Disney’s bid for Fox includes its Sky stake.

Disney’s apparent $71.3 billion acquisition of 20th Century Fox Film, includes Fox’s stake in Sky. It is believed Disney might swap Fox’s stake for Comcast’s 30% ownership of Hulu.

“This could [alleviate] the governance issues that could arise with split ownership of these assets,” Moody’s Investor Service wrote in a note last month.

Report: Multichannel Subscriptions Fall Slightly in Q1, But Get Virtual Lift

Combined cable, direct broadcast satellite (DBS) and telecom multichannel subscriptions fell 0.8% sequentially in the first quarter ended March 31, to 93.2 million, including 90.3 million residential customers.

That’s according to the Q1 2018 U.S. Multichannel Subscriber Report by Kagan, a media research group within S&P Global Market Intelligence.

However, noteworthy gains for virtual platforms DirecTV NOW and Sling TV cut the quarterly subscription losses in half, raising the overall residential figure to 94.1 million.

Other findings:

  • The residential multichannel penetration rate stood at 76.1% as of March 31 when including the virtual smartphone platforms owned by AT&T and DISH Network (DirecTV NOW and Sling TV).
  • Cable operators logged their largest first-quarter video subscriber decline on record, with the top two multiple system operators, Comcast and Charter, accounting for 59% of the drop.
  • Telco video appears to be regaining its footing as AT&T’s U-verse stabilizes. The platform’s video customer losses fell below 100,000 for the first time since the third quarter of 2015.
  • DBS losses ramped back up in the first quarter, bringing the sector’s total down to 31.1 million.For more information, visit www.spglobal.com/marketintelligence.