Leading satellite TV operator – DISH Network Corp. (DISH) – has reached an agreement with Netflix, Inc. (NFLX) to integrate the latter’s app into its set-top box. This will allow DISH’s customers to watch Netflix movies and TV shows directly on their television sets. However, financial details of the deal were not disclosed.
Incidentally, the Netflix app will be available only on DISH’s second-generation Hopper digital video recorders. In June, DISH Network achieved a significant milestone by commercially launching the first wireless set-top box in the pay-TV industry. Through this, subscribers can connect to DISH’s flagship Hopper Whole-Home HD DVR through a dedicated 802.11ac access point and watch TV shows on any device in and around the home using a wireless Joey device. A WiFi enabled set-top box is a significant innovation in the pay-TV industry as it eliminates the need for either coaxial or ethernet wiring within a customer’s home premises.
We believe the addition of the Netflix app to DISH’s Hopper Whole-Home HD DVR set-top box will open up newer avenues for entertainment. This, in turn, will help DISH check its subscriber churn rate in the coming quarter. Average monthly pay-TV subscriber churn rate in the third quarter of 2014 stood at 1.67% compared with 1.66% in the prior-year period. At the end of the quarter, DISH had approximately 14.041 million pay-TV subscribers, down 0.1% year over year. Meanwhile, the company lost 12,000 pay-TV subscribers in the third quarter.
We believe an extensive wireless spectrum portfolio, innovative product launches, higher ARPU, the renewal of a multi-year contract with Scripps Networks Interactive and a video streaming deal with Disney are likely to spur growth for the company, going forward.
DISH currently has a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks worth considering in this sector are Comcast Corporation (CMCSA) and Liberty Global plc (LBTYA). Both these stocks hold a Zacks Rank #2 (Buy).
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