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Subscribers jump ship on service providers due to retransmission battles

Echostar’s Dish Network (opens in new tab) said it lost 156,000 subscribers in Q4 2010, blaming much of that drop on a retransmission battle it had with the Fox network last October. Earlier, Cablevision reported that it, too, lost 35,000 subscribers in the same quarter due to its own retransmission fight with Fox that resulted in the network being dropped for two weeks during the same month.

National Geographic Channel, FX and 19 regional Fox Sports networks were blacked out on the Dish Network Oct. 1 and did not return until Oct. 29. This resulted in the worst quarterly subscriber performance in Dish’s history. Dish finished last year with a profit, however, adding a total of 33,000 customers for the full year. Revenues were up 8 percent to $12.6 billion for the year, and profits increased 55 percent to $985 million. The company ended the year with 14.1 million subscribers. Its main competitor, DirecTV, added 289,000 customers in Q4 and 663,000 for the full year.

The FCC is looking into the impact retransmission negotiations are having on companies and their customers. Retransmission will be on the agenda at the March FCC open meeting.

During a question in a recent conference call, DirecTV CEO Mike White was asked to comment on the retransmission issue. According to the Associated Press, he said broadcasters are looking to retransmission income to fix what he thinks they think is a broken business model, and that they are doing it with the aid of “anomalies” that were built into the regulatory system 20 years in the past. White is hoping for change, but not expecting it quickly.

“So we are part of the coalition that believes we need to change the system,” he said. “Now realistically, change comes slowly in this area in Washington, so while there is a hearing in March, or they may talk about some things, I think you are a year away before you would see those things change.”