Weekly Pay-TV Notes: Dish Adds Netflix, Netflix Soars After Earnings, DirecTV Adds More Streaming Content

The pay-TV industry saw significant activity this week, with Dish launching Netflix on its Joey receiver. Additionally, Netflix reported a good set of numbers for the first quarter which sent the stock soaring. In yet another, DirecTV added 22 new channels to its streaming service. On that note, we discuss below these developments related to the pay-TV companies over the past few days.

Dish Launches Netflix On Its Joey Receiver

Dish Network (NASDAQ:DISH) recently announced that its subscribers will be able to access Netflix through their Joey receivers. ^[1] Netflix is generally associated with the “cord-cutting” phenomenon and is considered a cheaper alternative to traditional pay-TV providers. However, Dish became the first major pay-TV provider to associate with Netflix when the streaming service was made available on Dish’s second-generation Hopper DVR last December. ^[2] Now the streaming service will also be available on Hopper’s accompanying Joey units for second, third and fourth-room viewing within the coming weeks. With this update, Dish has become the first major U.S. pay-TV provider to offer its subscribers a whole-home Netflix experience. Dish also announced that Vevo will be available on its Hopper platform. Vevo is a global all-premium music video and entertainment platform with over 10 billion monthly views.

Dish Network’s stock declined around 3% over the week through Thursday. We currently have a price estimate of $79.8 for Dish Network. For the year 2015, we estimate revenues of $15.3 billion, compared to consensus estimate of $15.2 billion, and EPS of $2.1, compared to a consensus estimate of $1.7.

Netflix Reports Strong Q1 Numbers

Netflix (NASDAQ:NFLX) released its Q1 2015 earnings report on April 15. The company reported a strong set of numbers and its revenue came in at $1.57 billion, up 24% from $1.27 billion during the same quarter last year. ^[3] The subscriber base grew by a record 4.9 million during the quarter and the company’s global subscriber base now stands at 62.3 million. User engagement is at an all-time high and subscribers streamed 10 billion hours this quarter. ^[4] However, the strong dollar hurt the company’s international revenue and margins. In a letter to shareholders, the company reaffirmed its focus on original content and its commitment to improving its margins in the long term. Netflix also acknowledged the increased competition in the streaming market but stated that the same will not have a material impact on the company.

Netflix’s stock gained around 24% over the week through Thursday. We currently have a price estimate of $375.5 for Netflix. For the year 2015, we estimate revenues of $6.63 billion, compared to consensus estimate of $6.75 billion, and EPS of $3.44, compared to a consensus estimate of $3.43.

DirecTV Adds More Channels To Its Streaming Service

DirecTV‘s (NASDAQ:DTV) DirecTV Everywhere streaming service will now carry 22 new channels, including CNN, Cartoon Network, Comedy Central, TBS, MTV, TBS, TNT, etc. ^[5] With these additions, the streaming service will carry a grand total of 90 channels. DirecTV currently provides the streaming service without any additional charge to all its subscribers. Content providers are increasingly opting to broadcast their programming through the internet. Sony’s Playstation Vue streaming service is priced at $50-70 and broadcasts around 85 different channels. Other streaming options such as Dish’s Sling TV ($20 monthly for 20 channels) and Apple’s streaming service ($25-$35 monthly for 25 channels) are cheaper but have less content. DirecTV could potentially convert its streaming service into a paid service and could price it somewhere in the $20-$25/month region based on the richness of its content. This could potentially open up an additional revenue stream for the company.

DirecTV’s stock remained flat over the week through Thursday. We currently have a price estimate of $95.07 for DirecTV. For the year 2015, we estimate revenues of $34.6 billion, in line with consensus estimate, and EPS of $6.07, compared to a consensus estimate of $6.00.

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1. DISH Leads Industry in Whole-Home Entertainment, Delivers Netflix and New Vevo App, Dish Press Release [↩]
2. DISH First Major US Pay-TV Provider to Integrate Netflix, December 17, 2014, Dish Press Release [↩]
3. Netflix’s SEC Filings [↩]
4. Q1 15 Letter to shareholders, Netflix Investor Relations [↩]
5. DirecTV adds to its streaming lineup with 22 new ‘Everywhere’ channels, April 12, 2015, TechHive [↩]