DirecTV Blames Deadbeats for Churn

Cable World, Sept 12, 2005

After several stellar quarters, DirecTV and EchoStar disappointed the Street in the second quarter by adding fewer customers than expected. The culprit? Higher churn levels. DirecTV, for example, said its heavy subscriber additions recently were in part due to less-than-stringent credit qualifications. That led to large numbers of nonpaying customers and, therefore, many disconnects. Charter faced a similar problem recently, but saw churn drop fractionally in the second quarter after an increased focus on customer care. For other cable operators, VOD and voice products are proving to be the churn- busters the industry said they would be. In areas where Comcast offers a voice, video and data bundle, for example, 75% to 80% of customers take all three products, and 90% of customers are "very satisfied," according to the company. And very satisfied customers are less likely to turn to the competition. --Mavis Scanlon

Churn and Burn: Satellite's Quarterly Churn
Quarterly churn levels for satellite ticked up in the second quarter.
          2Q '04  1Q '05  2Q '05
DirecTV   1.43%   1.49%   1.69%
EchoStar  1.71%   1.44%   1.69%
Sources: DirecTV and EchoStar

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