Dish, DirecTV Merger 'Probably Inevitable'; Sling Now Behind Hulu, After Q4 Sub Declines

A merger of satellite pay-TV services Dish and AT&T’s DirecTV is “probably inevitable,” Dish Network Corp. chairman Charlie Ergen said yesterday in a Q&A during the company’s fourth-quarter earnings call.

Ergen said that such a merger seems to make increasing sense. “The growth in TV is not coming from linear satellite TV providers — it’s coming from huge programmers, and trillion-dollar companies,” he said, according to Motley Fool’s transcript of the call. “You can't swim upstream against a real tide of the over-the-top, big players,” he added.

Dish, which tried to merge Dish TV with DirecTV back in 2002, would likely try again if AT&T were to explore selling  DirecTV.

Dish TV has actually been slowing its losses through a strategy of “pursuing the right customer in the right geography, and delivering on the service, technology, and value,” W. Erik Carlson, president and CEO of Dish Network Corp., said during the call.

Although Dish lost 100,000 net subscribers in Q4, that was a distinct improvement over Q4 2019, when it lost 334,000, he said — although he also acknowledged that “it’s not quite an apples-to-apples comparison,” because Dish was “facing a different set of programming challenges last year.”

Carlson also credited “operational discipline with regard to acquisition and retention” and the company’s continued investment in the Hopper platform—Dish’s whole-home DVR system that allows recorded and live streaming or playback on up to seven TVs—with “the relative stability” of the Dish user base.

In total, Dish TV lost about 511,000 net Dish TV subscribers in 2019, leaving it with about 9.4 million subscribers. In 2018, it lost about 1.13 million subscribers.

Meanwhile, rival DirecTV lost nearly 1.1 million subscribers in Q3 2019, bringing its total down to about 16.8 million, according to estimates by Leichtman Research Group.

AT&T, which combines its subscriber numbers for DirecTV and U-verse into “premium TV” totals, lost nearly 5 million satellite and wireline subscribers between the end of 2016 and Q3 2019.

Sling TV Surpassed By Hulu

The earnings call also brought news that Dish’s Sling TV saw its first quarterly subscriber loss in last year’s final quarter: down 94,000, to 2.59 million.

That means Sling has lost its position as the #1 live TV streaming service to rapidly-growing Hulu + Live TV, which finished Q4 with a record 3.4 million subscribers. YouTube TV is in third place, with 2 million subscribers.

In last year’s fourth quarter, Sling gained 47,000 subscribers.

For the full year, Dish added about 175,000 net Sling TV subscribers, down from 205,000 last year.

The company attributed the decline in growth to increased competition from OTT and other service providers, and to “a higher number of customer disconnects on a larger Sling TV subscriber base, including the impact from Univision, AT&T and Fox regional sports networks’ removal of certain of their channels from our programming lineup," in a recent regulatory filing.

Both the Sling and Hulu services raised their prices in late December, so the full impact of those won’t be clear until this year’s first quarter, noted Fast Company.  

“Obviously, this ecosystem is changing quite a bit,” Carlson said in the earnings call. “There is the dynamic of the broader OTT market change late last year with the wind down of Sony View and the introduction of additional streaming providers that launched with aggressive commercial offers.”

Dish’s “tight focus on user experience” makes it a value, “an excellent stand-alone solution for many,” and a “perfect complement for the growing crowd of SVOD players,” Carlson said. “We're dedicated to offering flexibility at the best price point,” he added, noting the expansion of live news via adding Fox News and Sling Blue, updated channel lineups and free cloud DVR in Q4.

“We see Sling well positioned in the dynamic marketplace, but we also need to execute,” Carlson summed up.

Combining pay-TV and Sling streaming customers, Dish Network Corp. lost about 336,000 total paid subscribers during  2019, to end the year with 11.99 million. In 2018, its losses totaled about 920,000, for a total of 12.32 million paid subscribers at year-end.

In other words, smaller Dish TV subscriber losses were partially offset by fewer Sling TV subscriber adds in 2019.

The company’s revenue declined by 2% in the fourth quarter, but its earnings rose to $389 million, up from $337 million in the year-ago period.

1 comment about "Dish, DirecTV Merger 'Probably Inevitable'; Sling Now Behind Hulu, After Q4 Sub Declines".
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  1. Henry Blaufox from Dragon360, February 20, 2020 at 10:34 a.m.

    Notable that Ergen is acknowledging a likely merger with an AT&T unit, while there is no mention in this story about the spectrum DISH has been sitting on that has value for mobile, and the mobile users and assets it will be given as a walkaway prize of the Sprint- TMobile merger. Wouldn't AT&T just swallow those up?

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