Cord Cutting Continues To Impact Dish Network’s Revenues
Dish Network (NASDAQ:DISH) posted its Q4 results on Wednesday, February 21, with revenues declining by over 7% year-over-year to $3.48 billion. Diluted earnings per share grew to $2.66 as an income tax benefit of approximately $1.2 billion due to an adjustment to deferred tax assets and liabilities related to tax reform boosted the bottom line. Nevertheless, Dish added 39,000 pay-TV subscribers in the quarter after accounting for the addition of 75,000 subscribers in Puerto Rico and the U.S. Virgin Islands, where services were disrupted due to Hurricane Maria. The company has also started disclosing subscriber numbers for its OTT service Sling TV, with its subscriber base standing at 2.12 million while the traditional Pay-TV subscriber base stood at 11 million. We have created an interactive dashboard that illustrates Dish’s results. You can modify drivers such as the number of subscribers, monthly revenue per subscribers, net margins and share count to ascertain the impact on EPS for Q1’18 and FY2018.
Below we discuss the key takeaways from the company’s earnings.
- With Echostar Merger Approaching, What To Expect From Dish’s Q3 Results?
- Can Dish Network Stock Return To Its Pre-Inflation Shock Highs?
- Dish Stock Has Big Upside Potential To Its Pre-Inflation Peak
- How Will The Cyber Attack Impact Dish’s Q1 Results?
- Is Dish Network Stock A Buy Despite Many Headwinds?
- Will Dish Network Stock Continue To Underperform?
Sling TV Growth Continues To Drive Subscriber Numbers, Revenues
In 2017, the company’s Sling TV subscriber base grew by 47% to 2.12 million. Furthermore, Sling TV ad sales have increased tenfold year-over-year due to better-targeted ads. ARPU declined for the year due to a higher mix of Sling TV, which is currently offered at a lower price point, as well as cord cutting measures. The company’s Pay TV ARPU declined by 2% year-over-year to about $89.70 in 2017. As a result, Pay-TV and broadband revenues declined to $3.45 billion for Q4 compared to $3.7 billion in the prior year quarter.
We expect that Dish will continue to see revenue pressure and subscriber losses for 2018, as over the top (OTT) services from companies such as Netflix (NASDAQ:NFLX), Amazon and Hulu promote cord cutting. These losses, coupled with pressure on ARPU, will negatively impact Dish’s revenues in Q1 and 2018. We project that both the subscriber base and monthly revenue per subscriber will decline in the coming quarters.
We are in the process of updating our model. At present, we have a $50 price estimate for Dish Network, which is above the current market price.
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