Has DISH lost its mojo?
Posted
May 13 2008, 01:14 PM
by
Kim Peterson
DISH Network has lost its mojo, said Bernstein Research analyst Craig Moffett today. And he went as far as to wonder if the satellite provider is "the next Sprint." You know things are bad when people start calling you the next Sprint.
Moffett's in a lather because of the company's Q1 performance. (10-Q is here). Revenue and profit were fine, matching or beating what analysts were looking for. But the subscriber numbers tell a different story. DISH added only 35,000 net new subscribers, compared with 310,000 a year earlier. Customer turnover grew to 1.68% from 1.46%. DISH blamed "worsening economic conditions," including a slowdown in new housing and an increase in customers who can't pay their bills. The company also said the competition is getting pretty intense.
DISH also sounded the alarm about a contract ending with AT&T, which has been bundling DISH programming with Internet and phone service. AT&T hands DISH a significant number of customers that way, but the contract between the two expires this year and may not be renewed.
All of which makes Moffett think that "DISH would appear to be between a rock and a hard place." Cable is making a run at the company with "triple play" packages of cable, Internet and voice. At the same time, DirecTV is a strong competitor with its HD offerings. "Like Sprint, DISH appears to have lost its mojo -- that fundamental reason why a consumer might choose it above all other choices," Moffett wrote.
DISH had some positives in the quarter. It raised prices, which boosted the average revenue per customer by 6% to nearly $68 a month. And the number of subscribers hit an all-time high of 13.8 million. The good news is lifting DISH shares 3% today to $31.34.
Moffett is overly pessimistic about DISH, but he raises a key point. How can DISH Network stand out among the programming options out there? What makes DISH a must-have? DISH needs good answers to those questions this year as the market gets tougher.
