Streaming services expedite demise of satellite TV giants

Satellite TV is dying more quickly than Wall Street thought.

Cheap streaming services from Netflix, Amazon, Hulu and YouTube are spurring surprisingly steep customer losses at Dish Network and DirecTV, the nation’s dominant satellite broadcasters.

Last week, shares of Dish, run by Charlie Ergen, tumbled 7.7 percent after the company revealed it lost 334,000 customers in the most recent quarter — a frightening figure that left the ranks of its satellite TV subscribers below the 10 million mark for the first time in 15 years.

Two weeks earlier, DirecTV revealed its subscriber ranks plunged by 658,000 — nearly twice the 346,000 it bled a quarter earlier, sending shares of its owner, AT&T, plunging 4.3 percent.

By contrast, cable providers like Charter’s Spectrum lost 36,000 subscribers, Comcast dropped 19,000 and Verizon’s Fios shed 46,000.

The carnage renewed questions about AT&T boss Randall Stephenson’s 2015 decision to shell out $67 billion to buy DirecTV. While defenders say AT&T was buying a subscriber base and content deals, both arguments are looking increasingly thin — and analysts are getting more blunt about it.

DirecTV “found a greater fool to sell the asset to quickly — before its impending death was broadly known,” said Jonathan Chaplin, an analyst at New Street Research.

Indeed, at a November presentation to analysts, Stephenson admitted AT&T was “scrambling” to amp up its streaming video business because it was “seeing shifts in viewing from traditional TV viewing — cable,  satellite — to on-demand viewing.”

“For satellite operators, losing subscriptions is catastrophic,” said Craig Moffett, analyst at MoffettNathanson. “These businesses have high fixed costs and their margins will spiral down as they lose subscribers.”

AT&T will likely take an “enormous write-down” on DirecTV, whereas the debt-laden Dish will likely file for bankruptcy in the coming years, he said.

Neither has been helping the situation by jacking up prices. Last month, Dish hiked its basic package by more than 10 percent, to $52.99 a month. Also in January, the price of the standard DirecTV Choice increased more than 12 percent, to $45 a month.

Netflix, by comparison, recently hiked its monthly price to $12.99 a month.

Dish has been getting hit especially hard given that, on Nov. 1 AT&T pulled its HBO premium channel from Dish customers in a dispute over programming fees.