Company Trend Analysis - DISH: Between A Rock And A Hard Place - JUNE 2017

BMI View: The latest quarterly results are further indication that DISH's legacy business is under pressure. The company has failed to diversify, and its wireless ambitions seem limited to selling on its spectrum assets at a profit. However, prospective buyers are aware of the operator's situation, and hold the upper hand in biding their time for a cheaper price.

Q117 results from DISH Network highlight that its legacy and core satellite pay-TV business is under pressure in a market where cord-cutting and the need to bundle are becoming clear trends. The launch of Sling TV, an over-the-top (OTT) service launched in February 2015, has mitigated some of these trends but has not fully offsetting them. The company has looked at wireless services to diversify its assets and has acquired a large amount of spectrum, including a substantial haul in the last auction, but we believe it would rather sell these frequencies at a profit rather than roll out a full service (see ' Spectrum Auction: T-Mobile Looks At Now, AT&T And Verizon Look At Next ' , April 19 2017). However, that strategy will not pay off: with the poor situation of its core business, prospective sellers will be happy to wait for the company to become more desperate and sell at a lower price.

New trends in the US pay-TV market have hit DISH hard. The popularity of cheaper OTT options, such as Netflix, has led to many consumers cutting the cord, which is why DISH introduced its own OTT service, Sling TV. This has mitigated some of the effects in the customer base, as the addition of Sling TV somewhat offset the loss of more premium customers, but not enough for the overall base to keep growing. It has had a more direct impact on ARPU, as the dilutive impact of the cheaper service has driven the overall figure downwards. DISH has also struggled being a stand-alone player, as bundling becomes a core component. The cable operators have managed to slow the pace of cord-cutting because of their domination of broadband services, while its main satellite pay-TV competitor, DirecTV was acquired by AT&T. It is under these circumstances that DISH's multiple wireless moves must be considered.

A Business Under Pressure
Financial Data, 2015-2017
Source: DISH Network

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