How Is Dish Network Likely To Grow In The Next 2 Years?

+102.58%
Upside
5.77
Market
11.69
Trefis
DISH: DISH Network logo
DISH
DISH Network

Dish Network (NASDAQ:DISH) is the fourth largest Pay TV provider in the U.S. behind Comcast, DirectTV, and Charter Communications. The company offers Pay-TV services under the DISH and Sling brand. Pay-TV service providers have been struggling with subscriber losses driven by cord cutting and the increasing popularity of over-the-top (OTT) streaming services from companies such as Netflix (NASDAQ:NFLX), Amazon (NASDAQ: AMZN) and Hulu. Consequently, Dish Network saw its subscribers decline from 14.1 million in 2013 to 13.2 million in 2017. While the entire Pay TV domain is suffering, the impact on Dish has been significant, as evidenced by the fact that the company has been unable to sustain its subscriber base despite a positive contribution from its streaming service Sling TV.

Accordingly, we expect Dish Network’s revenue and EBITDA to decline nearly $750 million (-3% CAGR) and $400 million, respectively, through fiscal 2019. To arrive at our fiscal 2019 net revenue and EBITDA estimates for Dish Network, we have broken down the revenues and estimated separately. We have also created an interactive dashboard analysis which provides a detailed analysis of how to arrive at this growth number. You can make changes to these variables to arrive at your own revenue and EBITDA estimates for the company. We have a $40 price estimate for Dish Network, which is about 10% ahead of the current market price.

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Overview Of Estimates

We expect Dish Network to generate over $14 billion and $13.6 billion in revenues in 2018 and 2019, respectively. Our revenue forecast represents a modest year-on-year decline. Of the total expected revenues in 2019, we estimate $13.5 billion from the subscription-related business and over $100 million from equipment sales. In 2017, Dish Network lost approximately 284,000 net Pay-TV subscribers compared to a loss of approximately 392,000 net Pay-TV subscribers in 2016. We forecast the company’s total subscribers to continue to decline to around 12.9 million, with an average monthly fee per subscriber of around $91, translating into $14 billion in subscription-related revenues in 2018. We further estimate the company’s total subscribers to decline to 12.3 million, with an average monthly fee per subscriber of around $91.5, translating into $13.5 billion in subscription-related revenues in 2019.

Dish Network saw its stock decline by more than 20% in 2017, and is now down nearly 25% year-to-date as of March 29. We expect the company to continue to see subscriber losses in 2018 and 2019, which, coupled with pressure on average revenue per user (ARPU), will negatively impact Dish’s revenues in this period. Our dashboard suggests that Dish Network’s valuation still has some upside, given the company continues to offer “skinny bundles” to lure customers back to its Pay TV services through Sling TV, which could offset some of the secular pressure.

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Like our charts? Explore example interactive dashboards and create your own.