Sling TV's Subscriber Boost: What It Means
Okay, so Echostar released their Q3 numbers. Let's dive in, shall we?
The Sling TV Story: Growth or a Mirage?
Sling TV added 159,000 subscribers in Q3, ending with just under 2 million (1.995 million to be exact). That's an 11% jump sequentially. On the surface, it looks pretty good. The Day Pass feature, letting people grab ESPN-inclusive Sling Orange for five bucks, seems to be a hit. And the start of the NFL and NBA seasons probably helped juice those numbers; no surprise there. People want their sports.
But let's not get carried away. While Sling is adding subs, Dish Network is bleeding them. Dish lost 152,000 subscribers in the same quarter, ending with 5.171 million. So, the "total" pay TV number (Dish plus Sling) is 7.17 million, a measly 1.3% increase compared to Q2. Is Sling offsetting the Dish losses, or just slowing the bleeding? It's hard to say for sure without knowing the exact acquisition costs for those new Sling subscribers.
Echostar’s total revenue took a 7.1% year-over-year hit, landing at $3.61 billion. Digging deeper, pay TV revenue (which is still the big chunk of their business) dropped 10.6% to $2.34 billion. Broadband revenue also took a 10.6% tumble, settling at $346 million. The only bright spot seems to be wireless, which saw a 4.5% increase to $939 million. (I’ve looked at hundreds of these filings, and this particular footnote is unusual. Why isn't wireless offsetting the losses from the other segments?)
Echostar is selling AWS-3 licenses to SpaceX for about $2.6 billion in stock, and they're launching Echostar Capital to invest in "new areas." Sounds like they know the writing is on the wall for the old model.
The Flexible Package Gamble
Sling is pushing these "flexible" packages, like Sling Select (Fox News and NFL Network for $20 a month). Flexible Sling TV packages boost subscriber count during Q3 - TheDesk.net We know that 51,000 customers are paying for access to Sling Orange or Sling Blue "base programming tiers." So, that's what, 2.5% of their subscriber base? (My back-of-the-envelope math says yes.)
And here's the part that I find genuinely puzzling. ARPU (average revenue per user) increased 1% to "just under $104." (They couldn't give us the exact number?) If they’re offering these super-cheap, flexible packages, how is ARPU increasing? Are they really good at upselling, or are the full-price subscribers just worth that much more? Also, what's the churn rate for these Day Pass customers? Are they sticking around, or is it just a revolving door of sports fans? These are the crucial data points that would show if this strategy is sustainable.
Echostar also boasts about having 783,000 broadband subscribers and 7.52 million wireless lines. But the real question is: how much of that wireless revenue is actually profitable? Wireless churn was "just under 2.9%." Again, with the vague numbers! Give me the decimal point!
So, What's the Real Story?
Sling's subscriber "boost" looks more like a desperate attempt to tread water in a rapidly changing landscape. The small gains are overshadowed by the ongoing decline of the legacy Dish business and the lack of concrete data on the profitability of these new flexible packages. Until Echostar can demonstrate sustained, profitable growth, this is just rearranging deck chairs on the Titanic.