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Video services

Dish's Satellite TV Business Is Crumbling

It's hard to put a positive spin on Dish's operating metrics from the first quarter. The only good news is that the company beat earnings-per-share expectations with an EPS number of $0.76, compared to analyst predictions of $0.69 for the period. Even so, the EPS number is still below where Dish was a year ago when it reported earnings of $0.86 per share.

And the news only gets worse from there.

Dish Network LLC (Nasdaq: DISH)'s revenue dropped to $3.63 billion, well below its expected revenue of $3.78 billion. And the company lost 143,000 pay-TV subscribers in the quarter, a number that includes any customer gains from Dish's low-cost, over-the-top Sling TV service. Dish doesn't break out the Sling TV numbers, but a research note from analyst firm MoffettNathanson LLC estimates the company added around 177,000 Sling TV subs, which puts its total satellite TV customer losses at around 320,000.

Why does that matter? Because satellite TV subscribers bring in a lot more money than Sling TV subs.

Dish points out that the cost of acquiring a Sling TV customer is also much less than the acquisition cost of a satellite TV customer, but that doesn't help with overall revenue. And despite a rise in average revenue per user last quarter, Dish's Q1 ARPU dropped to $86.55 from $87.94 a year ago. (See Dish in 2016: ARPU Up, Video Subs Down.)

The bottom line is that Dish's satellite TV business is declining rapidly, and that not only shines a light on how Sling TV is faring (estimates of Sling TV subs range from 1.3 million to 1.36 million), but also on Dish's plans for the expensive wireless spectrum it has collected over many years.


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With the satellite TV business tanking, there's increasing pressure on Dish to make money from its wireless assets; assets that include the $6.21 billion worth of spectrum that Dish just purchased in the 600Mhz auction. (See T-Mobile, Dish & Comcast Big Winners in $19.8B 600MHz Auction.)

Dish announced in March that it will build out a narrowband Internet-of-Things network using its wireless spectrum by March of 2020. That plan is in accordance with a requirement by the FCC that Dish not squat on spectrum rights, but it's not necessarily Dish's first-choice strategy for wireless profitability. Dish has indicated that it might prefer to sell its spectrum assets rather than operate a new network, but if that's the case, the company appears to be running out of time to make a deal. (See Dish's 5G Plans Should Rouse Cablecos.)

Dish Chairman Charlie Ergen addressed the issue of a sale on Dish's earnings call with investors. He reiterated a point he's made before that the company's focus is on building out the promised IoT network with or without a partnership or M&A deal.

However, Ergen also spoke at length about how he sees the wireless industry changing and why he thinks a deal still holds value.

"We think the world of wireless can be materially different than [it is today]," said Ergen. "It can be different because there's a paradigm shift in technology; the way you build your radio, the way you're going to propagate your network... the ability to slice your network in different slices, the ability to let other people share your network. All those things are possible in the 5G world." And he added that if Dish can find a partner or buyer that shares that vision, the company could get very excited about a potential deal.

That certainly sounds like Dish is still on the lookout for M&A riches. But if it wants to find them, it will have to make sure its sustaining satellite TV business doesn't disappear first.

— Mari Silbey, Senior Editor, Cable/Video, Light Reading

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SDWANClo51763 7/10/2017 | 10:58:46 AM
Mobile Sat Verntures - Dish ready to dish it out Interesting how recent marketing ratings of Dish are good, despite declining Dish TV revenues.

Interesting how Dish is going to meet its FCC dates to build out 5g/IoT infrastructure.

Interesting how AWS has had good press and business results with Dish this year.

Is this an M&A marriage better than than Time/Warner? Is it a marriage at all?

Such an interesting context to debate upon? I'm just a guy with a Kellogg MBA, ex-Lightsquared team, and SD-WAN architecture plans for public cloud and White/Grey Box overlays. What do you think will happen?
kq4ym 5/13/2017 | 2:14:31 PM
Re: Leftovers With the "$6.21 billion worth of spectrum that Dish just purchased," one would wonder if they are going to sell it off, or actually use it for possibly IoT, which seems a bit unlikely at this point. But, the FCC is certainly going to be after them, or at least were, to avoid squatting on the spectrum. But, with the new FCC attitide now, maybe not?
mendyk 5/4/2017 | 11:17:20 AM
Re: The Kodi Factor Napster may be gone, but the permanent damage that it and other digital sharing services did to the music industry cannot be disputed.
James_B_Crawshaw 5/4/2017 | 5:41:02 AM
6% of NAm households have a Kodi configured for unlicensed content This just in from Sanvine:

https://www.sandvine.com/resources/global-internet-phenomena/spotlight/the-fully-loaded-kodi-ecosystem.html
DCulver 5/2/2017 | 5:30:34 PM
The Kodi Factor Sure. Tell that to the hundreds of Kodi add-ons out there that no one can touch. Good luck with that. I don't know a single person 35 or under who pays a dime for any television -- premium, sports, Netflix -- whatever. They only go to the movies for a sort of retro date because, well, why would you when you can watch the new release 24 hours later for free on any of 25 different add-ons? See just how effective the UK has been at stopping this (https://www.theregister.co.uk/2017/02/08/kodi_crackdown) and then be sure to rest easy on the ol' telecoms and broadcasters will shut 'em down mantra.
brooks7 5/2/2017 | 5:04:52 PM
Re: The Kodi Factor Sorry, its a bittorrent service with a media player...Its not that big a deal.  Napster died because the content companies killed it.  If this takes significant money, it will die as well. 

 

Right off of their webpage:

 

Kodi® media center, formerly known as XBMC Media Center, is an award-winning free and open source cross-platform software media player and entertainment hub for digital media for HTPCs (Home theater PCs). It uses a 10-foot user interface designed to be a media player for the living-room, using a remote control as the primary input device. Its graphical user interface (GUI) allows the user to easily browse and view videos, photos, podcasts, and music from a harddrive, optical disc, local network, and the internet using only a few buttons. The Kodi project is managed by the non-profit XBMC Foundation, and developed by volunteers located around the world. Since its creation in 2003 more than 500 software developers have contributed to Kodi, and around 60 developers on regular basis. Also 200-plus translators have worked to expand its reach, making it available in more than 72 languages.

 

See Roku, PS4, Fire, Chromcast, Apple TV, Xbox...etc...etc...etc...

These exist and can basically do everything that the others can do.  Stream content from a disk or off the internet.  Yep, the stream services are changing things...this is one more.  If you start STEALING Content...then your platform will die.

seven

 
James_B_Crawshaw 5/2/2017 | 4:48:08 PM
Re: The Kodi Factor Relax! Freetopia and PayTVmageddon have not arrived. England's Premier (soccer) League has a court order to block the streaming servers. 

https://www.theregister.co.uk/2017/03/14/uk_new_realtime_live_server_blocking_order/

Telcos - you have the DPI technology. Perhaps you can offer anti-piracy services to the media industry above and beyond just complying with requests to block specific servers. 
DCulver 5/2/2017 | 4:34:24 PM
The Kodi Factor I'm going to refer you back to my age comment.

Here's a little anectdote that might bring this home better. AT&T sent a guy out to do something to my Wi-Fi connection last week. He did whatever it was he needed to do, and as he was working in my office, we started talking about different services and so on. And I asked him if there were any rumblings yet about Kodi. I also told him about my son's experience.

His response: They bought one? Huh. I just did it myself. You can look it up on Youtube and jailbreak whatever device you want yourself. It's easy. Then you just go out and get the extensions. It took me about 30 minutes. 

You really need to understand what this is and how it works before you start throwing out the results of a technology that went away 10 years ago. Things have changed just a little bit with the InterWeb since then.
brooks7 5/2/2017 | 4:28:21 PM
Re: The Kodi Factor See napster....seven
DCulver 5/2/2017 | 2:51:59 PM
The Kodi Factor I would encourage you to do a search on eBay, Amazon (yes, they're selling jail-broken versions of the Amazon products on Amazon, and Amazon can't keep up with stopping them, at least not before they've sold several thousand; and when they are kicked off, they just re-list again under a different name, etc.), etc., which will be a much better indicator than my word.

This post also provides some really insightful info:

https://torrentfreak.com/unlikely-pirate-kodi-users-will-get-in-trouble-experts-suggest-170105/

My favorite line: Content providers need to keep upping their game, or the Kodi content free-for-all (or whatever else comes along next) will continue.
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