Cord-cutting reached 357K in Q3 based on huge, masked Dish losses, analyst said

MoffettNathanson analyst Craig Moffett has upwardly revised his estimate of third quarter pay-TV customer losses from 226,000 to 357,000, based on what he said were satellite TV subscriber losses by Dish Network (NASDAQ: DISH) that were masked by its IP-video service, Sling TV.

On Monday, Dish reported pay-TV customer declines of 23,000 for the third quarter. For the second consecutive quarter, Dish included subscribers added by Sling TV, but didn't disclose how many customers the IP-video service brought in, or now has in total. 

Moffett originally estimated that Sling TV added around 24,000 customers in the third quarter, offsetting a loss of just under 50,000 Dish traditional satellite customers. However, the analyst said he failed to factor in a Dish 10-Q filing indicating that the "company's reported gross additions are actually the sum of gross additions for satellite plus net additions for Sling."

"Using these revised inputs," Moffett added, "we now estimate that Sling probably added 155K subscribers, a much more respectable result than the paltry 24K we had estimated this morning. That would put Sling TV's end of quarter subscriber base at 394K subscribers."

The implication is that Dish lost nearly 180,000 satellite TV customers during the period. Perhaps more happily for Dish, Sling is poised to eclipse half a million subscribers by the time it hits its first birthday in early February. 

According to a Seeking Alpha transcript, Dish Chairman and CEO Charlie Ergen said during Monday's earnings call with investors: "We're far enough along to know that for certain customers, particularly millennials and particularly to people who are not in the pay-TV universe today or not in the pay-TV universe in a big way, we know that it's a pretty attractive product for them and we know that we're bringing our content partners new incremental subs that they're not able to get at any other way. So I think the future is probably pretty bright for OTT in general and hopefully for Sling."

If Moffett's estimates on Dish are correct, that means the satellite operator accounted for nearly half of pay-TV losses in the third quarter. A tally of the top 10 publicly traded pay-TV operators revealed total video sub losses of just 144,300. 

For more:
- read this MoffettNathanson report (sub. req.)

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