The second largest U.S. satellite TV service provider Dish Network (NASDAQ:DISH) will report its Q4 and full year 2011 results on Feb 23rd 2011. Given the recently released results from its rival DirecTV (NASDAQ:DTV), we expect Dish Network to substantially reduce its subscriber losses. The company lost 111,000 net subscribers in Q3 2011, which was still an improvement over Q2 2011 (see article Despite Weak Results, Dish Network Should Regain Market Share in 2012). However, the game has changed a little in Q4. DirecTV’s recently released results indicate that its competitors are doing better than before. Comcast (NASDAQ:CMCSA) significantly reduced its subscriber losses and we expect the same for Dish. It is this reason that DirecTV’s net subscriber gains have reduced by more than half compared to prior period.
Besides looking out for the improved subscriber trends, investors should also keep a keen eye on update on Dish’s strategy of deploying wireless broadband and thus utilizing its acquired wireless assets. A successful deployment will significantly increase the value of assets and lift Dish’s stock. However this is going to take some time and is more of a long-term value gain potential.
With an improving economy, as foreseen by several media companies and automakers, Dish can continue to push hard for adoption of HD & DVR services. Moreover, the company will strive to increase the penetration of its Blockbuster streaming service within its current subscriber base as well as use it as a tool to attract new ones. 2012 could be a turnaround year for Dish Network.
The company’s stock has gained significantly in 2011 itself despite subscriber losses. This was resultant from settlement of patent dispute with TiVo and initial success of Blockbuster.
Our price estimate for Dish Network stands at $30.88, implying a premium of more than 15% to the market price.