An extensive wireless spectrum portfolio, innovative product launches like Internet TV service, higher ARPU and a video streaming deal with Disney are factors that are likely to spur growth for Dish Network Corp. (DISH), going forward.
DISH recently unveiled its Internet TV service named “Sling TV” at the International Consumer Electronics Show. We believe the growing deployment of super-fast 4G LTE wireless technology and significant adoption of portable mobile devices are primary reasons behind the growing popularity of Internet TV. The company’s Internet TV service was earlier scheduled for a mid-2014 launch. However, management now states that the service will go live from the first quarter of 2015.
Subscribers opting for Sling TV will have to pay as low as $20 a month to view 12 Nielsen-rated sports, lifestyle and family, and news networks. Notable among these channels are ESPN and Disney Channels of The Walt Disney along with HGTV, Food Network and Travel Channel of Scripps Networks Interactive. Customers will also be able to access add-on packages for an additional $5 per month.
In June 2014, DISH had achieved a significant milestone by commercially launching the first wireless set-top box in the pay-TV industry. Subscribers using this box 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 through a wireless Joey device.
On the downside, in the third quarter of 2014, substantial promotional activities drove the company’s subscriber-related expenses up by 7.9% year over year. The company lost 12,000 pay-TV subscribers in the quarter. Moreover, DISH exited the reported quarter with nearly $11.8 billion of debt. Such high debt levels may impede the company’s plan of acquiring a wireless carrier in the near future.
Moreover, rising programming costs and increasing churn rate may act as headwinds for the company. Average monthly subscriber churn rate for the pay-TV in the quarter stood at 1.66% compared with 1.67% a year ago. At the end of the third quarter, DISH Network had approximately 14.041 million pay-TV subscribers, down 0.1% year over year.
DISH currently has a Zacks Rank #4 (Sell).
Key Picks in the Sector
Better-ranked stocks in this sector include Liberty Global plc (LBTYA), Intelsat S.A. (I) and DigitalGlobe, Inc. (DGI). Liberty Global and Intelsat sport a Zacks Rank #1 (Strong Buy) whereas DigitalGlobe holds a Zacks Rank #2 (Buy).
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