Satellite Broadcaster Buys Subscribers Dearly

15 November 2000

Colorado-headquartered EchoStar, the lesser of America’s two satellite TV broadcasters, announced third quarter results battered by the high cost of gaining new subscribers.

Although boosting its market share by 455,000 new households to an all-time high of 5m-plus, EchoStar still lags its larger rival DirecTV by around 4m homes.

The Colorado company’s gains have been dearly bought via a promotional package inclusive of free installations including dish and set-top box, at an average cost of over $400 per new customer. Total marketing spend during Q3 soared by more than 40%, and although revenues increased by 63% to $698m, losses are still running at last year’s level of 28 cents a share.

Despite the massive subscriber acquisition costs typical of the American satellite TV sector, the investment is usually recovered within a year or less thanks to customers’ purchases of pay-per-view movies, sports and other events.

News Source: Financial Times