DIRECTV, EchoStar May See Declining Subscriber Growth in Next Five Years, Pike & Fischer Study Predicts

Tuesday, October 2nd, 2007

SILVER SPRING, MD — Satellite TV providers DIRECTV and EchoStar have been building customer loyalty with services such as high-definition channels and upgraded digital video recorders. But they are likely to see their customer growth fall significantly over the next five years, a new report from Pike & Fischer suggests.

The direct broadcast satellite providers, which together have more than 30 million subscribers, may be relying too heavily on their partnerships with telephone companies to gain new customers, P&F says in a new report, “DBS-Telco Partnerships: Strategic Forecast.” The phone companies and the DBS companies sell a co-branded bundle of phone, high-speed Internet and satellite TV service.

Over the last year, telephone company partners have been responsible for about 25 percent of the new subscribers that the satellite TV companies have secured, P&F says. In fact, as much as half of the new subscribers to DIRECTV and EchoStar’s DISH Network came from telephone companies in the second quarter.

But these partnerships are likely to scale back over time, which will suppress the ability of DIRECTV and EchoStar to capture new customers. That’s because their telephone company partners — primarily AT&T and Verizon — are developing their own video services over fiber-optic lines, according to Tim McElgunn, Pike & Fischer’s chief analyst and author of the report.

“The satellite TV vendors will see customer growth rates decline by an average of 13.5 percent per year as digital cable and telco on-net TV services, both typically delivered as part of a ‘multiplay’ service, expand,” McElgunn says. “By 2012, telcos will account for no more than about 100,000 annual additions to the DBS subscriber rolls.”

Pike & Fischer, a BNA company, offers a host of legal and business products covering the telecommunications industry. This new report, “DBS-Telco Partnerships: Strategic Forecast,” is priced at $499 and can be purchased at For analyst commentary or to request a briefing, contact 856-751-6723 /