Dish's growth game shattered
EchoStar's Dish network hit by HDTV delays and soft consumer spending.
 |
| The Dish network added just 35,000 new net subscribers in the first quarter, compared to 310,000 new net customers the same time last year. |
(Fortune) -- EchoStar, operator of the Dish satellite television network, is looking a little fragile at the moment.
Despite a solid first quarter financial performance, the Englewood, Colo., broadcaster posted disappointing subscriber growth with 35,000 net new customers. That number compares with 310,000 in net customer gains at the same time last year.
So what went so terribly wrong?
Well it turns out people want to fill their big new flat-panel TVs with vibrant high-definition video. And in a hotly competitive market with cable companies like Comcast (CMCSA, Fortune 500) and Time Warner Cable (TWC) bumping up their HD programming to match rival offerings from phone shops like AT&T (T, Fortune 500) and Verizon (VZ, Fortune 500), eye-candy like high def is a crucial component.
EchoStar (DISH, Fortune 500) says "worsening economic conditions" helped dampen sales and getting caught running behind in the HD race made matters worse. "Satellite launch delays have slowed the growth of our local HD markets which in turn has delayed our own aggressive local HD marketing efforts," the company said in its quarterly filing Tuesday.
To give this point a sharper picture look at DirecTV (DTV, Fortune 500), the perceived leader in HD with 95 channels. In the first quarter the No.1 satellite outfit added 275,000 net new subscribers, a growth rate of 17% over the 235,000 net adds a year ago.
"You're seeing a tale of two markets," Bernstein analyst Craig Moffett wrote in an e-mail Tuesday. "At the high end of the market, it's all about HDTV, and DirecTV has the upper hand right now. At the low end, it's all about value."
"With high gas prices and a weak economy, the low end consumer is getting squeezed," added Moffett, who likes the cable companies in this scenario.
For EchoStar, which spurned a takeover offer from AT&T last year, the subscriber stumble could signal the end of big growth for a while.
Dish, says Moffett, is "stuck in no man's land." 
-
Airbus executives who sold ahead of bad news about the A380 may become the test cast. more -
Barack Obama and John McCain on fixing the economy, Microsoft without Bill Gates, and two Dow execs' secret attempt at a LBO. more
-
Can a budding conglomerate thrive in 2008? The CEO of Jarden Corp. is busy reviving old brands, but Wall Street has its doubts. more -
Deejays and Kate Moss frocks have helped make Topshop a British hit. Now Sir Philip Green, the billionaire behind the fashion brand, has his sights set on America. more -
The extraordinary story of two Dow Chemical officials who plotted an LBO of their company - and forgot to tell the CEO or board. more -
The challenge isn't replacing Bill. That's already happened. Ballmer's big issues now: growth, Google, and those pesky Apple ads. more
