Dish Network Continues To Fight Programming Blackouts
Given all the recent news about the customer satisfaction survey concerning internet retailers, it is worthwhile to examine where Dish Network (NASDAQ:DISH) stands in this respect compared to peers such as DirecTV (NASDAQ:DTV), Comcast (NASDAQ:CMCSA) and AT&T (NYSE:T). Dish has dealt with certain issues related to network carriage agreements, some of which have resulted in programming blackouts, in the past that have directly impacted its customer satisfaction, and it seems as though these issues haven’t gone away.
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Disputes Continue
Dish was previously involved in a dispute with Fox, and as a result Fox Sports, the FX Network and the National Geographic Channel became unavailable to Dish Network’s subscribers for a while. Dish also dropped Disney’s (NYSE:DIS) HD channels as a result of Disney’s HD price hikes.
The aforementioned disputes occurred in the past, but the disturbing trend has lingered a bit for Dish. The company recently restored NBC programming for some of its customers, [1] and also recently restored Fox and CBS affiliates in Michigan by entering into a retransmission agreement with Heritage Broadcasting. [2]
Customer Service Has Fallen In 2011
These disputes between Dish and content owners arise as Dish tries to protect its customers from price increases. The company’s customer base has traditionally been somewhat more budget conscious compared to that of its rival DirecTV. However, despite its intentions, in so doing the company risks alienating its customers. In the most recent American Customer Service Index report, Dish’s customer satisfaction score fell by 6% and was substantially below the scores of pay-TV providers such as DirecTV, AT&T and Verizon (NYSE:VZ). [3] This could very well have been influenced by the frequent disputes that the company engages in. As the report was from May, we expect the more recent programming disputes to be reflected in its 2012 score which could be even lower.
There is a trade-off here, and Dish will need to tread carefully by balancing its quest of keeping the budget low for its subscribers with its overall customer experience, which is undoubtedly hurt by programming blackouts. In any event the company will need to improve its customer satisfaction levels in order to reverse the recent disappointing subscriber trends.
Our price estimate of $31 for Dish Network is about 10% ahead of the current market price.
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Notes:- Local Dish Network customers get NBC programming back, nooga.com, Dec 24 2011 [↩]
- Dish Network restores Fox, CBS affiliates in Michigan, FierceCable, Dec 21 2011 [↩]
- ACSI: Customer Satisfaction Turns Positive Despite Drop for Information Services, ACSI Press Release, May 17 2011 [↩]