'Dish's business is spiraling toward bankruptcy,' says MoffettNathanson's Craig Moffett. Dish shed 314,000 pay-TV subs and 123,000 wireless customers, and EchoStar lost 59,000 satellite broadband subs in Q4 2023.

Jeff Baumgartner, Senior Editor

March 1, 2024

5 Min Read
Dish network truck
(Source: Jonathan Weiss/Alamy Stock Photo)

The financial situation at EchoStar/Dish Network looks dim, as the newly combined entity issued an ominous warning via this SEC filing that raises "substantial doubt" that the company can continue as a going concern.

EchoStar and Dish merged last year, combining Dish's satellite, streaming, retail wireless business and emerging 5G network with EchoStar's satellite-focused business. The move was partly aimed at freeing up cash for Dish's 5G network buildout.

With debt maturing in 2024 and expectations that the company will burn a "substantial amount of cash" in the next 12 months, it "raises substantial doubt about [the company's] ability to continue as a going concern," EchoStar/Dish explained in the filing.

EchoStar/Dish ended 2023 with $2.4 billion in cash and cash equivalents and marketable investment securities, along with $951 million and $1.98 billion of debt maturing in March and November 2024, respectively. Dish said it intends to use cash on hand and cash flow from operations to pay the March 2024 debt maturity, but warned that it does not have the necessary cash on hand and/or projected future cash flows to fund the November 2024 debt maturity "and subsequent interest on our outstanding debt."

EchoStar/Dish also said it can't provide assurances that it will be successful in obtaining new financing or restructuring of existing debt obligations, putting its 5G plans in jeopardy. Dish said it may not have the capital "to meet future FCC build out requirements and wireless customer growth initiatives," leaving those plans "adversely affected."

Related:Dish wireless retail chief, Michael Kelly, quits

But EchoStar/Dish isn't without options. New Street Research believes EchoStar could raise about $3.2 billion of spectrum-backed notes from its DBSD and Terrestar holdings, and raise an additional $4.3 billion against AWS-3 licenses.

"Taken together, this should provide enough liquidity to deal with the converts and close the funding gap while also accelerating the network deployment and investing in subscriber acquisition at Boost," New Street analyst Jonathan Chaplin wrote in a research note just ahead of the release of EchoStar's Q4 results.

"We believe there is a deal that would be acceptable to Dish Network Corp bondholders that would reduce total debt outstanding, push out maturities, and provide access to additional capital ... Getting to that deal will be no trivial matter though," Chaplin added in a follow-up note issued today.

'Unrealistic' to expect a turnaround

MoffettNathanson analyst Craig Moffett offered a blunt assessment of the company's future based on Dish's deteriorating pay-TV and mobile subscriber customer base: "Dish's business is spiraling towards bankruptcy. Gradually, then all at once, the declines are gathering speed," he wrote in a research note (registration required) issued today.

Related:At CES, Dish touts $50 million grant alongside spectrum transaction

Dish, Moffett added, "is losing subscribers in every business. Revenues are declining in all segments. Each quarter comes with new defections of senior management [Michael Kelly, the head of Dish's wireless retail business, recently quit]. It is simply not realistic to expect a turnaround."

Subscriber losses continue

Starting with mobile, Dish lost 123,000 Boost prepaid subscribers in Q4 2023, widened from a year-ago loss of 25,000. That leaves Dish with 7.38 million Boost subs. Boost gross adds of 609,000 were down 35.1% from the year-ago period. Boost's average revenue per unit (ARPU) declined 4.2% to $36.04.

Moffett estimates that Dish, which has yet to move ahead with its full-scale launch of the post-paid Boost Infinite product, has shed 2.6 million Boost subs since it entered the wireless business in 2020.

Dish's 5G network outlay also declined with capex of $427 million versus $856 million in the year-ago quarter.

"To state the obvious, neither the Boost pre-paid business nor the nascent 5G business looks like a meaningful operating asset in the likely event of a bankruptcy. Spectrum salvage value is all there is here," Moffett wrote.

Related:Dish's 5G revenue hopes hard to swallow

Sticking with spectrum, Dish noted in its SEC filing that it's unlikely to exercise an option to buy T-Mobile's 800MHz spectrum.

"Throughout 2023, we were actively involved in negotiations with counterparties to obtain the financing necessary to exercise the 800 MHz purchase option. However, we have been unsuccessful in our attempts to reach terms for a definitive financing agreement," the company said.

On the pay-TV front, Dish lost 314,000 subs in the quarter, a figure that includes a loss of 249,000 satellite TV subs and a loss of 65,000 Sling TV customers. Dish ended the period with 8.53 million pay-TV subs – 6.47 million satellite TV customers and 2.06 million Sling TV subs.

YouTube TV's sub base – now at about 8 million – has surpassed Dish's satellite TV business and is flirting with surpassing Dish's combined satellite and streaming video business.

EchoStar Chairman Charlie Ergen has long-proclaimed that a merger of Dish and DirecTV, which would drive new scale into the company's video business, as "inevitable." However, Moffett believes that the declines in that combined business could erase any potential synergies that a combined company could hope to muster.

EchoStar lost 59,000 broadband satellite customers, up a smidge from a loss of 57,000 in the year-ago quarter, lowering its total base to about 1 million.

EchoStar partly attributed its widened broadband sub losses to capacity limitations and competitive pressure from other satellite broadband service providers. However, it is getting some relief from the new Jupiter 3 satellite that packs 500 Gbit/s of capacity and entered service in December 2023. EchoStar's Hughes Network Systems unit has launched faster speeds and uncapped plans in the wake of that launch.

Financial results snapshot

On the financial end, EchoStar posted consolidated Q4 2023 revenues of $4.16 billion, down from $4.53 billion in the year-ago quarter, driven by subscriber declines. That was paired with a net loss of $2.03 billion.

Dish pay-TV Q4 revenues fell 9.3% to $2.81 billion. Retail wireless revenues were $898.28 million, down from $928.09 million a year earlier. Broadband and satellite services were $447.77 million, down from $499.85 million.

Dish shares were down 85 cents (-6.48%) to $12.26 each in mid-morning trading Friday.

About the Author(s)

Jeff Baumgartner

Senior Editor, Light Reading

Jeff Baumgartner is a Senior Editor for Light Reading and is responsible for the day-to-day news coverage and analysis of the cable and video sectors. Follow him on X and LinkedIn.

Baumgartner also served as Site Editor for Light Reading Cable from 2007-2013. In between his two stints at Light Reading, he led tech coverage for Multichannel News and was a regular contributor to Broadcasting + Cable. Baumgartner was named to the 2018 class of the Cable TV Pioneers.

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