Dish loses 281K subs in Q2 as Sling TV growth 'hits a wall'

Dish Network's (NASDAQ: DISH) customer losses exceeded even robust analysts forecast for the second quarter, with the DBS provider dropping a whopping 281,000 net pay-TV subscribers, the company reported today.

The losses compared to 81,000 dropped in the second quarter of 2015. The numbers are offset by growth of Dish's virtual pay-TV service, Sling TV, meaning the losses to Dish's core satellite business were even steeper. Investment firm Evercore had predicted that Dish's core satellite business would lose around 200,000 customers in the second quarter.

"By now, it is widely understood that the sand is running out of Dish's satellite TV hourglass," MoffettNathanson analyst Craig Moffett said in a note to investors. "Once considered a 'better mousetrap' for video delivery, satellite TV technology is now increasingly seen as an anachronism; a one-way broadcast-only platform in a world that increasingly demands two-way interactivity. Dish's dismal second quarter results in their core business, with what was by far their worst-ever subscriber loss, suggest that there is less sand in the hourglass faster than we thought."

Also troubling, Moffett estimates Sling's growth slowed to only around 49,000 subs in the second quarter.

"For a one-year-old OTT service, that may be an even more alarming result than the huge 330K subscriber loss that same Sling TV result implies for the core satellite TV business," Moffett added. 

Speaking to investors, Dish Chairman and CEO Charlie Ergen blamed the sub losses on a second quarter that was a "bit more abnormal."

For one, Dish is enduring two signficant blackouts. It's off Tribune Media stations in 33 markets, and the NFL Network, as well. Dish also issued a price increase during the quarter. "And AT&T has certainly been very aggressive with customers who don't have DirecTV," Ergen added.

Dish reported revenue of $3.84 billion for the quarter, roughly flat with the year-ago time period. totaled $410 million, compared with $324 million for the second quarter of 2015.

For more:
- read this Dish earnings release

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