Why Is Dish Investing In Sports Rights For Sling TV?

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Recently, Dish Network’s (NASDAQ:DISH) Sling TV signed an agreement  with the regional college sports networks of the NCAA Pacific 12 conference (PAC-12) to bolster its sports offerings. Under this agreement all six PAC 12 networks will collectively offer about 800 sporting events, which can be viewed on Sling TV regardless of the location. As Dish TV faces significant subscriber losses, with an increasing number of viewers “cutting the cord”, the company is looking to attract internet users who do not subscribe to Pay-TV to its streaming service – Sling TV. Sports programming, while a key attraction for users, can increase churn as subscribers disconnect the service once a favorite sporting season has passed.  Yet there is sure to be offsetting factors.  While Sling TV is targeting Pay-TV customers through its new marketing campaign, access to a diverse set of popular sporting events should lead to lesser churn in subscribers and higher subscriber loyalty in the longer term. As the TV channels streaming market becomes intensely competitive, with Hulu expected to launch a similar service next year, investing in popular content which appeals to young subscribers is critical for Sling TV’s growth.

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Wooing The Younger Subscribers

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Sling TV’s is looking to attract the millennial generation—cord cutters and cord nevers who are averse to paying high cable charges for viewing content. With its deal with PAC-12 network, Sling TV is looking to become the destination for college sports fans. These viewers can watch the sporting action at a fraction of Pay-TV cost with a strategy that is likely to draw younger subscribers towards Sling TV. Online streaming is immensely popular among sporting fans who prefer watching sports events in a social setting. With social media companies such as Twitter and Facebook looking to stream live sports events, viewers are moving towards the next generation sporting experience. Furthermore, these options are much cheaper compared to a traditional Pay TV subscription. Sling TV is looking to capitalize on this trend and by increasing the sports programming content on its service, the network is looking to attract younger users.

Building A Competitive Advantage

Dish TV is losing a significant number of subscribers to the cord cutting trend and the company hopes that a rapid pace of increase in Sling TV subscribers will soften the blow. Dish Network does not report Sling TV subscribers separately and in Q2 2016 the company reported a decline of 281,000 subscribers (including Sling TV subscribers), significantly higher compared to a net loss of 81,000 subscribers in the same period last year. This has raised questions on the subscriber growth of Sling TV and whether this service is losing ground. (Read Is The Growth Of Dish’s Sling TV Slowing Down?) Competition for Sling TV is intensifying with Hulu launching a similar service, targeting its existing on-demand viewer base of 10 million subscribers.  Sony Corp’s Play Station Vue already competes with Sling TV, but with Hulu’s expected launch in 2017, the space is likely to get more competitive. YouTube is also reportedly launching an online TV channel streaming service called “Unplugged” in 2017. To compete with these new entrants, Sling TV has to ensure that its content is popular among the targeted viewers and it needs strong sports programming content to reduce subscriber churn.

We believe Sling TV is a critical part of Dish Network’s strategy to reduce subscriber losses and ensure growth in the long term. As this service faces an immensely competitive market in the future and looks to attract and retain subscribers, investment in sports programming can help meet this goal to some extent.

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