Dish Network 2014 Annual Report Download - page 75

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - Continued
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Pay-TV subscribers. DISH lost approximately 79,000 net Pay-TV subscribers during the year ended December 31,
2014, compared to the addition of approximately 1,000 net Pay-TV subscribers during the same period in 2013. The
decrease in net Pay-TV subscriber additions versus the same period in 2013 primarily resulted from lower gross new
Pay-TV subscriber activations and programming interruptions in connection with the scheduled expiration of certain
programming carriage contracts with several content providers.
During the year ended December 31, 2014, DISH activated approximately 2.601 million gross new Pay-TV
subscribers compared to approximately 2.666 million gross new Pay-TV subscribers during the same period in 2013,
a decrease of 2.4%. Our gross new Pay-TV subscriber activations during 2014 were negatively impacted by
programming interruptions in connection with the scheduled expiration of certain programming carriage contracts
with several content providers. In addition, 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.
Our Pay-TV churn rate for the year ended December 31, 2014 was 1.59% compared to 1.58% for the same period in
2013. Our Pay-TV churn rate 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, programming interruptions in connection with the scheduled expiration of certain
programming carriage contracts with several content providers, our ability to control piracy and other forms of
fraud, and the level of our retention efforts.
Our gross new Pay-TV subscriber activations, net Pay-TV subscriber additions and Pay-TV churn rate have been
negatively impacted as a result of multiple programming interruptions and threatened programming interruptions in
connection with the scheduled expiration of programming carriage contracts with several content providers,
including, among others, Turner Networks, 21st Century Fox and certain local network affiliates. In particular, we
suffered from lower gross new Pay-TV subscriber activations, lower net Pay-TV subscriber additions and higher
Pay-TV churn rate beginning in the fourth quarter 2014 and continuing in the first quarter 2015, when, among
others, certain programming from 21st Century Fox, including Fox entertainment and news channels, was not
available on our service. Although we believe that the impact of the programming interruptions that occurred
beginning in the fourth quarter 2014 and continued in the first quarter 2015 has now subsided, we cannot predict
with any certainty the impact to our gross new Pay-TV subscriber activations, net Pay-TV subscriber additions and
Pay-TV churn rate resulting from similar programming interruptions that may occur in the future. As a result, we
may at times suffer from periods of lower gross new Pay-TV subscriber activations, lower net Pay-TV subscriber
additions and higher Pay-TV churn rates as we did beginning in the fourth quarter 2014 and continuing in the first
quarter 2015.
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
Pay-TV churn rate. Our future gross new Pay-TV subscriber activations and our Pay-TV churn rate may be
negatively impacted by these factors, which could in turn adversely affect our revenue growth.
Broadband subscribers. DISH gained approximately 141,000 net Broadband subscribers during the year ended
December 31, 2014 compared to the addition of approximately 253,000 net Broadband subscribers during the same
period in 2013. This decrease in net Broadband subscriber additions versus the same period in 2013 resulted from
lower gross new Broadband subscriber activations and a higher number of customer disconnects. During the years
ended December 31, 2014 and 2013, DISH activated approximately 295,000 and 343,000 gross new Broadband
subscribers, respectively. Gross new Broadband subscriber activations declined primarily due to stricter credit
policies and satellite capacity constraints in certain geographic areas. Customer disconnects were higher due to a
larger Broadband subscriber base during the year ended December 31, 2014 compared to the same period in 2013.