According to Reuters, Wall Street analysts note that DIRECTV and EchoStar traditionally generate a large share of new subscribers from rural and suburban markets where cable is not available.
However, those areas are expected to be hardest hit by the cooling housing market, particularly homeowners who have sub-prime loans. Consequently, analysts say the satcasters could see a sharp decline in growth this year and next.
"I do think that home growth has been a factor in the growth of the satellite subscribers in particular," UBS analyst Aryeh Bourkoff told the news service. "Satellite subscriber growth in our view will slow into 2008 and potentially be negative in some markets where they face more competition from cable."
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DIRECTV hopes that any housing slowdown will be cushioned by an increase in High-Definition TV subscribers. The company plans to expand its national high-def lineup to 100 channels by year's end.
EchoStar, which has historically performed well in rural areas, now has 31 national HDTV channels but has not announced plans to dramatically increase that number.
Despite the analyst worries, both DIRECTV and EchoStar have reported strong subscriber gains over the last year, although growth has trailed previous years. A recent Television Bureau of Advertising report said satellite's pay TV share has increase 200 percent since 2000.
DIRECTV and EchoStar now collectively have roughly 29 million subscribers. (DIRECTV has 16 million and EchoStar has 13 million.)
One analyst said that the satellite industry will remain healthy but will simply experience less growth.
"Satellite will still
get the majority of the growth in 2007, but we think
it will be less than 2006," Oppenheimer analyst
Thomas Eagan told Reuters.
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