DISH Network added 40,000 television subscribers in the first quarter of 2014, up from 36,000 in the same period in the 2013. DIRECTV meanwhile reported just 12,000 net subscriber additions in the United States in the first quarter, compared to 21,000 in the same period the previous year. With substantial rises in Latin America, DIRECTV now has over 38 million subscribers in total.

The more subscribers a pay-television service has, the more it has to acquire just to replace those it is likely to lose through customer churn. This is particularly evident in a mature market where service providers have to compete for share. Retaining customers is as important as gaining new ones, given the cost of acquiring a subscriber.

DISH Network signed up 639,000 subscribers in the United States in the first quarter of 2014, compared to 654,000 in the same period in 2013. Its churn rate was 1.42%, down slightly on previous quarters. The average cost of acquiring a subscriber was $862, including advertising and hardware.

After reporting a net loss of 78,000 television subscribers in the second quarter of 2013, regaining ground in subsequent quarters, DISH ended up with 14.10 million, which is only slightly more than it had a year previously.

Average revenue per subscriber for television was $82, compared to $78 the previous year. Net income was $176 million for the quarter, compared to $216 for the same period in 2013.

DISH also added around 53,000 broadband subscribers in the first quarter, bringing its broadband subscriber base to approximately 489,000.

DISH said its subscriber numbers continue to be affected by increased competitive pressures, including marketing, promotional offers and retention efforts by other providers in a mature market, as well as economic conditions.

DIRECTV US and DISH Network quarterly customer change. Source: Multiscreen Index.

Direct satellite competitor DIRECTV reported lower gains in the United States but significant growth in Latin America.

DIRECTV now has 20.26 million subscribers in the United States, 160,000 more than a year previously. With an average monthly subscriber churn of 1.45%, unchanged from the previous year, DIRECTV had to sign up 891,000 subscribers in the quarter to achieve 12,000 net additions.

Average revenue per subscriber rose to over $100 a month, up from $96 the previous year. Operating profit was up to $1.24 billion.

Beyond the United States, DIRECTV added 109,000 subscribers in Brazil, taking its total to 5.48 million. Its PanAmericana service added 252,000 subscribers, to a total of 6.45 million. Sky Mexico, in which it has a 41% stake, rose by 139,000 subscribers to 6.15 million. That takes the Latin America total up by 500,000 to 18.08 million.

Average revenue per subscriber is lower in Latin America, at $48 a month, which is actually lower than a year previously due to exchange rates. However, the opportunity for growth is significant.

The informitv Multiscreen Index shows that while satellite subscriptions in the United States have largely levelled off at 34.36 million subscribers between the two service providers, DIRECTV has added over a 1.75 million subscribers in Latin America over a year.

Michael White, the chairman, chief executive and president of DIRECTV declined to comment on media speculation about possible mergers, a reference to reports that AT&T might be interested in acquiring the company.

He also said company would continue to add to its TV Everywhere capability, suggesting that it was not at a structural disadvantage as a satellite service provider. He said it was more a matter of media rights than infrastructure: “The technology is kind of a commodity, to be honest with you, on this stuff.”

“So I think we’re all concerned about the millenials, and we’re all concerned about folks that can’t afford pay-TV, the cord-cutters, if you will, and finding creative ways to service them,” he said. “If we think it’s a good enough opportunity, it won’t be that difficult to take the infrastructure that we’re already building for Hispanic or other products and extend it over.”

That said, the industrial logic in combining satellite broadcast with broadband is difficult to deny, particularly where penetration of satellite services begins to plateau in a saturated market.

The informitv Multiscreen Index measures the performance of 100 satellite, cable and telco television and video services worldwide by their current digital subscription numbers. The latest report is available from multiscreenindex.com.

www.dish.com
www.directv.com
multiscreenindex.com