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." 
-
The retail giant tops the Fortune 500 for the second year in a row. Who else made the list? More -
This group of companies is all about social networking to connect with their customers. More -
The fight over the cholesterol medication is keeping a generic version from hitting the market. More -
Bin Laden may be dead, but the terrorist group he led doesn't need his money. More -
U.S. real estate might be a mess, but in other parts of the world, home prices are jumping. More -
Libya's output is a fraction of global production, but it's crucial to the nation's economy. More -
Once rates start to rise, things could get ugly fast for our neighbors to the north. More
