Dish blames HBO black­out for sud­den loss in sub­scribers

The Mercury News - - Data - By Scott Moritz Bloomberg News

If you thought Dish Net­work Corp.’s last quar­ter was bad, just wait.

The satel­lite-TV provider, which lost 341,000 sub­scribers in the third quar­ter, ex­pects an even worse cus­tomer ex­o­dus in the cur­rent pe­riod. The black­out of HBO and Cine­max, which be­gan a week ago after a fee dis­pute with AT&T Inc.’s Warn­erMe­dia, is go­ing to take a toll, said Dish Chair­man Char­lie Er­gen. About 2.5 mil­lion of Dish’s 13 mil­lion cus­tomers sub­scribe to HBO.

“It’s es­sen­tial pro­gram­ming — and we will lose cus­tomers,” he said on a con­fer­ence call Wed­nes­day. “It will be a neg­a­tive im­pact, for sure.”

For its part, HBO doesn’t want to be blamed for Dish’s woes. Richard Ple­pler, chair­man and chief ex­ec­u­tive of­fi­cer of the net­work, came out swing­ing in a blog post on Wed­nes­day af­ter­noon.

“It was Dish who dropped the HBO and Cine­max sig­nals at mid­night on Oct. 31, not the other way around,” Ple­pler said. “In fact, we of­fered to ex­tend our cur­rent con­tract

while we con­tin­ued ne­go­ti­at­ing. An idea that Dish ini­tially agreed to and then oddly changed their mind about at the 11th hour.”

The HBO dis­rup­tion — the first ever for the “Game of Thrones” net­work — com­pounds an al­ready-alarm­ing ero­sion of Dish’s cus­tomer base. Dish had been watch­ing Univi­sion cus­tomers flee after the loss of that pop­u­lar Span­ish-lan­guage pro­gram­ming.

In fact, Dish said un­happy Univi­sion cus­tomers made up half of the sub­scribers lost in the last quar­ter. The to­tal outflow was 59 times big­ger than the 5,800 de­cline that an­a­lysts pre­dicted.

Con­tract dis­putes with me­dia own­ers are rou­tine with Dish, which is known to be one of the more ag­gres­sive ne­go­tia­tors in the in­dus­try. But the sub­scriber fall­out puts even more pres­sure on Dish’s

pay-TV busi­ness and adds to a chal­leng­ing sce­nario for Er­gen, who bet bil­lions ac­quir­ing air­waves for a next-gen­er­a­tion wire­less net­work that won’t be ready for more than a year.

For now, in­vestors are mostly tak­ing the cus­tomer losses in stride. Though Dish shares tum­bled in the wake of the earn­ings re­port, they soon re­cov­ered. The stock rose 2 per­cent to $32.12 by the close in New York.


Con­tract dis­putes with me­dia own­ers are rou­tine with Dish, but the sub­scriber fall­out puts even more pres­sure on Dish’s pay-TV busi­ness.

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