Is Sling TV Catching On? Your Guess Is as Good as Anyone's

Dish Net Obscures Its OTT Subscriber Numbers

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Dish ads for Sling TV encourage viewers to
Dish ads for Sling TV encourage viewers to Credit: Sling TV

Anyone looking to gauge the impact of Dish Network's millennial-targeting Sling TV service will have to make do with the odd educated guess, as the satellite operator refused to break out the numbers when it reported its quarterly results today.

Back in May, Dish reported that Sling had scared up 169,000 subscribers in the first quarter of 2015, after having launched in early February. But that's apparently the last time you'll see a discrete head count for the $20 internet TV product, which was designed to appeal to young "cord nevers" -- industry argot for the growing segment of the population who have never shelled out for a monthly pay-TV subscription.

In refusing to disclose the number of active Sling customers, Dish effectively is obscuring the subscriber losses at its more expensive core satellite business. MoffettNathanson research analyst Craig Moffett estimates that Dish "could have averaged 275,000 Sling TV subscribers" during the second quarter, although that guesstimate is built on the back of a string of unproven assumptions.

Analysts who asked Dish founder and CEO Charlie Ergen to share updated Sling stats during the company's Q2 earnings call were rebuffed at every turn. "We haven't broken that out because that's not how we look at it," Mr. Ergen said, before adding that those trying to draw a bead on the over-the-top service could try taking a closer look at the second-quarter subscriber-acquisition costs. The so-called S.A.C. was $767 during the April-through-June period, down $79, or 9%, from $846 a year earlier. The decline reflects an increase in Sling activations and a decrease in associated hardware costs, because Sling subscribers just need the internet and maybe a Roku-type device to put the signal on their TV screens, no satellite dish installation required.

Dish lost 81,000 overall subs in the quarter, compared to a loss of 44,000 subs in the year-ago period. The company closed out the quarter with 13.9 million paying customers, down 1% from 14.1 million.

In a note to investors released before Dish's earnings call, Mr. Moffett lamented that it is now all but impossible to get a read on the company's overall performance, given how the addition of Sling's over-the-top susbcribers have muddied the waters. "Churn rate, gross additions and SAC are all distorted by the inclusion of a non-contract OTT service that includes no installation costs," he wrote. "What a mess."

Sling's skinny bundle includes 23 ad-supported cable channels, such as ESPN, AMC, ABC Family, TNT, Food Network and History. (Toss in another $15 per month and you can have HBO.) The OTT service was cooked up as a means to attract people who either have successfully avoided paying for TV altogether or recently discontinued their traditional cable/satellite subscription.

Over-the-air broadcast nets are not included in the Sling bundle, and at least one network's owned-and-operated local stations have refused to air promotional ads for the service: NBC O-&-Os in San Francisco, Washington D.C. and San Diego have blocked Sling's new "Take Back TV" spots, as has the Peacock's flagship channel in New York, WNBC-4.

NBC is owned by Comcast Corp., whose cable service is a direct competitor of Dish Network.

CORRECTION: An earlier version of this story stated that NBC O-&-Os in Chicago and Los Angeles have blocked Sling's new 'Take Back TV' spots.

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