Dish Network 2013 Annual Report Download - page 79

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - Continued
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Pay-TV subscribers. DISH added approximately 1,000 net Pay-TV subscribers during the year ended December 31,
2013, compared to the addition of approximately 89,000 net Pay-TV subscribers during the same period in 2012.
The decrease versus the same period in 2012 primarily resulted from lower gross new Pay-TV subscriber
activations. During the year ended December 31, 2013, DISH activated approximately 2.666 million gross new
Pay-TV subscribers compared to approximately 2.739 million gross new Pay-TV subscribers during the same period
in 2012, a decrease of 2.7%. Our gross new Pay-TV subscriber activations continue to be negatively impacted by
increased competitive pressures, including aggressive marketing, discounted promotional offers, and more
aggressive retention efforts in a mature market. In addition, our gross new Pay-TV subscriber activations continue
to be adversely affected by sustained economic weakness and uncertainty.
Our Pay-TV churn rate for the year ended December 31, 2013 was 1.58% compared to 1.57% for the same period in
2012. Our Pay-TV churn rate was negatively impacted in part because we increased our programming package
price in the first quarter 2013 and did not during the same period in 2012. Churn continues to be adversely affected
by increased competitive pressures, including aggressive marketing and discounted promotional offers. Our Pay-TV
churn rate is also impacted by, among other things, the credit quality of previously acquired subscribers, our ability
to consistently provide outstanding customer service, price increases, service interruptions driven by programming
disputes, and our ability to control piracy and other forms of fraud.
We have not always met our own standards for performing high-quality installations, effectively resolving
subscriber issues when they arise, answering subscriber calls in an acceptable timeframe, effectively communicating
with our subscriber base, reducing calls driven by the complexity of our business, improving the reliability of certain
systems and subscriber equipment, and aligning the interests of certain third party retailers and installers to provide
high-quality service. Most of these factors have affected both gross new Pay-TV subscriber activations as well as
existing Pay-TV churn rate. Our future gross new Pay-TV subscriber activations and Pay-TV churn rate may be
negatively impacted by these factors, which could in turn adversely affect our revenue growth.
Broadband subscribers. DISH added approximately 253,000 net Broadband subscribers during the year ended
December 31, 2013 compared to the addition of approximately 78,000 net Broadband subscribers during the same
period in 2012. This increase versus the same period in 2012 primarily resulted from higher gross new Broadband
subscriber activations driven by increased advertising associated with the launch of dishNET branded broadband
services on September 27, 2012. During the year ended December 31, 2013, DISH activated approximately 343,000
gross new Broadband subscribers compared to the activation of approximately 121,000 gross new Broadband
subscribers during the same period in 2012. This increase was driven by increased advertising associated with the
launch of dishNET branded broadband services on September 27, 2012. Broadband services revenue was $221
million and $95 million for the years ended December 31, 2013 and 2012, respectively, representing 1.6% and 0.7%
of our total “Subscriber-related revenue,” respectively.
Subscriber-related revenue. “Subscriber-related revenue” totaled $13.765 billion for the year ended December 31,
2013, an increase of $700 million or 5.4% compared to the same period in 2012. The change in “Subscriber-related
revenue” from the same period in 2012 was primarily related to the increase in Pay-TV ARPU discussed below and
revenue from broadband services. Included in “Subscriber-related revenue” was $221 million and $95 million of
revenue related to our broadband services for the years ended December 31, 2013 and 2012, respectively.
Pay-TV ARPU. Pay-TV ARPU was $80.37 during the year ended December 31, 2013 versus $76.98 during the same
period in 2012. The $3.39 or 4.4% increase in Pay-TV ARPU was primarily attributable to the programming package
price increase in February 2013 and higher hardware related revenue.