Dish reports 81K sub losses in Q2, but analyst says Sling TV gains are hiding much bigger attrition

Dish Network (NASDAQ: DISH) reported a 3.7 percent rise in second quarter earnings to $3.83 billion, but the company lost a whopping 81,000 subscribers during the three-month period.

That loss of customers likely would have been even greater if Dish had not decided to include metrics for its new over-the-top service, Sling TV, into its subscriber tally, according to MoffettNathanson analyst Craig Moffett.

"The inclusion of Sling TV leaves results as clear as mud," he said in a note to investors today. "Through some very, very rough estimates (with admittedly high margin of error) we estimate Dish may have lost as many as 187,000 video subscribers in Q2. Yikes."

Dish's second-quarter customer loss compared to a decline of 44,000 subs in the same period last year. Dish's losses were in line with analysts' consensus projections of around 83,000.

"The Sling distortion is potentially a very large one," Moffett said, noting that the service touted the addition of 167,000 users in one month back in the first quarter. Dish started actively marketing Sling in the second quarter.

Last week, MoffettNathanson released an estimate indicating that Sling TV has acquired between 200,000 to 300,000 customers since launching in early February.

For the quarter, Dish did see average revenue per user (ARPU) increase by 4.4 percent to $87.91. Churn was 1.71 percent versus 1.66 percent in the second quarter of 2014. Dish also added 4,000 broadband subscribers in the second quarter, bringing its total broadband customer base to around 595,000. 

Dish executives will conduct their second quarter earnings call with analysts and reporters at 12 p.m. ET today.

For his part, Moffett added that Dish's "willful obfuscation" of its "struggling core business" is also masking its "struggling wireless ambitions."

The FCC will likely disallow the $3.3 billion worth of discounts Dish asked for during the AWS-3 spectrum auction. If Dish follows through with its spectrum purchases, Moffett said, "It will have levered at north of five times EBITDA, limiting its access to additional debt. Its current has been devalued and it now has much less ready access to cash. Getting a deal will be harder now."

For more:
- read this Dish Network earnings release

Special Report: Pay-TV earnings reports in Q2 2015

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