SEC Seeks Data on Pay-TV Subscribers

DirecTV Group Inc. and EchoStar Communications Corp., the nation’s two biggest satellite-television services, said Tuesday that they received letters from the Securities and Exchange Commission asking for information on how they count subscribers.

The letters to DirecTV and EchoStar are part of the commission’s investigation into how companies count subscribers. The agency also contacted cable TV providers such as Comcast Corp. and phone companies including Verizon Communications Inc. The commission has sent similar requests to about 20 companies, a person familiar with the matter said last week.

El Segundo-based DirecTV received its letter Tuesday, spokesman Bob Marsocci said. EchoStar, based in Englewood, Colo., got one last week, spokesman Steve Caulk said.

Both called the requests routine and pledged to respond to the commission.

One pay-TV executive who has seen the letter speculated that “the SEC is fishing around to preemptively get rid of problems like the ones they had” with scandal-ridden Adelphia Communications Corp.

He said the form letter asked companies how they counted customers as well as phone access lines into the home.

Industry executives expect the SEC to develop a standard that should help investors decipher numbers each company reports to Wall Street. Subscriber numbers are used by Wall Street in valuing these companies but aren’t necessarily uniform.

“It’s going to get very messy,” the source said. “In some cases, cable companies double-count subscribers if they take a bundle.”

For instance, a household that buys high-speed Internet access and cable TV service is counted as two customers. Similarly, households that have more than one phone line are counted by phone carriers multiple times.

The counting of subscribers can be complicated by industry joint ventures. For instance, SBC Communications Inc. has an alliance with EchoStar that allows the phone giant to sell EchoStar’s pay TV service to its customers.

“Are they only counted by SBC,” asked the industry executive, “or does EchoStar count them too?”

EchoStar said last week that it had more than 10 million subscribers. DirecTV, the biggest U.S. satellite-TV service, said last month that it had about 12.6 million.

An SEC spokesman declined to comment.

Shares of DirecTV fell 6 cents to $17.23 on the New York Stock Exchange. EchoStar fell 67 cents to $29.62 on Nasdaq.

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Bloomberg News was used in compiling this report.