Digital+ Keeps Above the 1.8 Million Subscriber Mark

Despite a huge marketing campaign, the newly formed Spanish satellite pay-TV operator Digital+ has gotten off to a relatively slow start. Sogecable, the owners of the new platform, announced that the operator now had 1,815,000 subscribers at the end of Sept. 30 this year. This indicates little change in the situation over the last three months.

This was the first set of results charting the performance of Digital+ since it began in July after the merger of Canal Satelite Digital (CSD) and Via Digital (VD). Both had been struggling to increase subscriber numbers. At the end of June, VD and CSD combined had 1.8 million subscribers. In fact, over the last three months there had been a drop of around 35,000 subscribers, but a lot of this can be put down to the transition from two separate platforms to one merged one.

From July to Sept. 30, both VD and CSD subscribers were able to access all the content of Digital+ without any price increase. Now, consumers have to decide whether to remain on their current contracts or join the Digital+ offering. According to Sogecable, it has already seen more than 530,000 subscribers switch their programming offer, with 90 percent increasing the content they have access to and consequently the monthly charge they are paying.

The new platform hopes to give pay-TV a much-needed kickstart in Spain. While it may still be a little early to judge, opinions seem to be mixed on the numbers. One analyst who requested anonymity told SATELLITE NEWS: “I don’t think the numbers are very encouraging. I would have expected more growth. You turn on the TV and you see an advert by Sogecable so they have been very aggressive. I would have expected more growth. But, in mitigation the growth of subscribers usually comes at the end of the year. So, we might see stronger growth in the final quarter of 2003.”

Javier Marin, a media equity analyst at Morgan Stanley, was more positive about the results. He said in a research note: “We think subscriber numbers are better than indicated by a first reading. The fact that subscribers have been flat at the end of the quarter versus the pro forma figure at the end of June does not mean that the company is not attracting new clients. Not only were 30,000 of duplicate accounts cleaned, we also think there were a significant number of low ARPU [average revenue per unit] Via Digital subscribers that have churned.”

He continued: “Contrary to the case for the rest of the subscriber base, where Sogecable’s promotional campaign implied that they could see all the programming at no additional cost, the lowest ARPU Via Digital subscribers, which were paying just for a decoder to see the basic offer, were not granted the whole premium channels. According to the company, there could be some 80,000 to 90,000 of such subscribers. Therefore, if we assume that half of these low ARPU Via subscribers have churned out, the additions for Digital+ in the quarter could be in the 80,000 range, which we consider as a very positive number.”

The key now will be the fourth quarter. With Christmas nearing, the fourth quarter is traditionally strong for pay-TV operators to sell subscriptions. Now that Digital+ has tidied up the subscriber base in terms of overlapping subscriptions and low paying subscribers, the fourth quarter is likely to offer a better indicator on how it is doing.

–Mark Holmes

(Carlos Cerqueiro, Sogecable, e-mail: [email protected])