DISH: Where have all the subscribers gone?

Mastrangelo is not convinced that telcos’ success is anything other than marketing at this point. While both AT&T and Verizon reported customer adds for TV subscriber growth, they also heavily promoted their TV services, U-Verse and FiOS, respectively. These promos included six months of free HD service in a lot of areas. With the economy as it is today, when operators start issuing the bills, the landscape could change dramatically.

“The third quarter may prove to look very different for them simply because now we may see effects of the economy affecting [AT&T and Verizon],” Mastrangelo said. “We certainly saw it on the broadband side, but maybe not so much on the TV because of the promotion they were doing. So it is a little early to say. On the flipside of that, Embarq has just initiated an offer with a full year of free DirecTV TV service if you buy their product bundle and commit to two years service with them, so we might see a flip in the subscriber loss to subscriber gain on the satellite side, simply because of that promotional activity.”

Embarq is one of Dish’s partners that posted strong earnings, especially on the TV front. “They had the biggest quarter of net addition in satellite subscribers that they’ve ever had, so that goes against all the other things,” Mastrangelo said. “It is all in the marketing at this stage.” She doesn’t expect other Dish partners to be affected by the satellite company’s subscriber loss either, a sentiment that CEO of Frontier Communications Maggie Wilderotter echoed in the company’s second-quarter earnings today. The RLEC, which resells Dish as part of its bundle, acknowledged that Dish has been struggling – but said its subscriber loss wasn’t shared by the independent telco.

“We didn’t see any issues [with satellite TV sales] though dish is struggling with their other initiatives,” Wilderotter said on today’s conference call. “They just launched another satellite that will enable them to continue to be a leader in HD. We also think because their results were soft, they’re going to be aggressive on the promotions side. We’ll take maximum advantage of that. We get to launch those promotions at no cost to us in all our markets.”

On Dish’s conference call, Ergen discussed its planned additions as a way it will continue to be more aggressive going forward. Dish will have leased capacity on a satellite being launched by a Canadian company in the fourth quarter and plans to launch one additional satellite per year. In addition, both DirecTV and Dish recently announced they would up the number of HD channels they offered to 150 by the year’s end. This will help the satellite companies compete against telco’s bundles, something they lack without partnerships.