Dish Network (NASDAQ:DISH), the last of the major cable television names to post its most recent quarterly results, fared as poorly as its peers. With millions of TV watchers effectively trapped at home with plenty of time to rethink how and what they watch, the satellite television company shed another 413,000 video customers.
The company explained in its official release around 250,000 of those cable subscribers were commercial accounts, like hotels and bars, that are shuttered in response to the COVID-19 contagion. In some cases the satellite TV name lowered prices or suspended service, to be fair to those customers not currently using the service. Others likely canceled on their own. Either way, Dish isn't sure how many of those customers will renew their service once they're able to utilize them again.
Given the trend though, somehow it seems unlikely those subscribers will come flocking back to Dish Network.
Back in 2016, Dish Network turned some heads when it started buying spectrum -- radio frequencies -- used by more traditional wireless service providers like Verizon (NYSE:VZ) and AT&T (NYSE:T). Dish Network isn't a mobile phone company but has been moving in that direction ever since. CEO Charlie Ergen accelerated that effort in earnest late last year, though, announcing his company would be the first name to launch a stand-alone 5G broadband network in the United States.
In the meantime, February's merger of T-Mobile (NASDAQ:TMUS) and Sprint required the sale of some of Sprint's wireless business, including its prepaid service Boost. Dish picked that unit up, effectively giving the satellite name its first wireless customers.
It's going to need a lot more, though, and fast.
The graphic below tells the tale. Last quarter's attrition of 413,000 was (another) big dip. But even reducing the number by the 250,000 commercial accounts that may or may not be coming back still results in a loss of 163,000 video subscribers. This marks the eighth out of the past nine quarters Dish has seen its TV customer base shrink.
And the 2015 launch of its streaming skinny bundle, Sling TV, hasn't helped. For the company's quarter ending in March, Dish reported just a little more than 2.3 million Sling customers, down from a little more than 2.4 million streaming subscribers as of a year earlier. Dish ended 2019 with just under 2.6 million Sling TV customers -- the second straight quarter the company lost streaming subscribers, and one of several quarters since 2016 when that's happened.
Perhaps most alarmingly, Sling TV's customer losses are picking up at a time when bored consumers have little else to do but watch television media. For perspective, cable giant Comcast said coronavirus lockdowns were driving people to watch an addition eight more hours of television per week. They're just using Dish less and less to watch it. Ditto for Sling TV.
Speed is of the essence
So far, Dish has been able to blunt the impact of customer losses with higher prices. Last quarter's average revenue per user of $88.76 was notably more than the figure of $85.03 reported for the first quarter of 2019. That pricing power isn't going to last forever, though. The cord-cutting movement has already done damage to the entire cable industry, and as more and more alternatives to cable take shape, consumers will only be willing to pay less -- not more -- for cable service. Success on the wireless front is something of a must-do for Dish Network.
Then there's the not-so-small matter of timing.
Dish will scoop up Boost and Virgin Mobile customers it secured with the merger of Sprint and T-Mobile. It's also got a respectable trove of licensed spectrum it can use to expand right away. Ergen further believes he can keep the cost of building a nationwide wireless 5G network to only about $10 billion by virtualizing it with software, as opposed to the use of conventional hardware.
The price tag is questionable, given AT&T's struggle to realize meaningful savings through its virtualization efforts. And even if the cost estimates are on target, Dish is largely starting from scratch. After T-Mobile and Sprint got the legal green light to merge earlier this year, Dish affirmed that by June of 2023, it would still only be able to offer 5G service to about 70% of the country's consumers. Considering all the other major mobile names are ready to bring 5G to a lot more people, a lot sooner, Dish's outlook isn't exactly thrilling. Rivals will have three years to get entrenched.
In light of the company's current trajectory, it could be a long three years.