DISH: Where have all the subscribers gone?

Dish Network’s second-quarter earnings, announced yesterday, were marred by a loss of 25,000 television customers – not only the satellite provider’s first quarterly loss ever, but the first time any US satellite TV operator has posted a quarterly subscriber loss. Considering that at this time last year, Dish added 170,000 new satellite subscribers, the loss begs the question: Where have all the subscribers gone?

Dish CEO Charles Ergen was quick to blame weak economic conditions and aggressive promotional offerings from the competition, as well as competitive high-definition offerings from rival satellite provider DirecTV. In addition, signal theft from illegal set-top boxes bought over the Internet or elsewhere caused customer churn, which Ergen said the company is addressing through new security measures. He also cited the growth of fiber-based pay-TV service from telcos like Verizon.

"Third thing then is…really competitive offerings in the marketplace,” Ergen said on Dish’s earnings call. “The biggest being probably the phone companies and FiOS and U-Verse, where there are a lot of introductory offers…and I think they had close to 303,000 net additions in the second quarter. So they have taken those -- some from us and some customers from others.”

Just last month, AT&T cut ties with the satellite provider when it was already suffering from significant declines in net additions. AT&T accounted for about 15% of Dish’s total subscribers, which it stands to lose when the telco chooses between Dish and DirecTV for a new partnership before the start of the year. The severed ties and Dish’s rise in customer churn from 1.68% in the first quarter to 1.87% in the second have many analysts questioning the viability of the satellite platform.