How Much Revenue Is Dish Network Set To Lose Due To Cord-Cutting?

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

Dish Network Corp (NASDAQ: DISH) has seen its total revenues decline by 9.8% from $15.1 billion in 2016 to $13.6 billion in 2018. Revenue is expected to drop further to $12.7 billion and $12.2 billion in 2019 and 2020, respectively. Revenue loss of close to $1.4 billion over the two years would primarily be a reflection of decreasing subscriber count on account of people switching away from traditional cable network (referred to as cord-cutting), to streaming giants such as Netflix, Amazon, Disney, AT&T, etc.

Takeaway

  • Dish Network’s Subscriber-related revenue, which mainly earns revenue from digital TV-subscription fees, is expected to contribute $12.6 billion to Dish Network’s 2019 revenues, making up 99% of Dish Network’s $12.7 billion in revenues for 2019.
  • Dish Network’s subscriber-related business is likely to lose about $2.5 billion in cumulative revenues between 2016 and 2019, which is more than the company’s total revenue loss of $2.4 billion during this time.
  • This continuous decline in subscriber-related revenue has been key to Dish Network’s 40% decline in stock price between December 2016 and December 2019, further exacerbated by largely declining margins and volatility in its valuation multiple. We discuss Dish Network’s valuation analysis in full, separately.
  • In our dashboard Dish Network Revenues: How Does Dish Network Make Money?, we discuss Dish Network’s business model, followed by sections that review past performance and 2020 expectations for the company’s revenue drivers, including segment-wise revenue performance, and competitive comparisons with Comcast, Disney, and Verizon.

Relevant Articles
  1. With Echostar Merger Approaching, What To Expect From Dish’s Q3 Results?
  2. Can Dish Network Stock Return To Its Pre-Inflation Shock Highs?
  3. Dish Stock Has Big Upside Potential To Its Pre-Inflation Peak
  4. How Will The Cyber Attack Impact Dish’s Q1 Results?
  5. Is Dish Network Stock A Buy Despite Many Headwinds?
  6. Will Dish Network Stock Continue To Underperform?

Dish Network’s Business Model

What Does It Offer?

Dish Network is the fourth largest pay-TV provider in the U.S. (after AT&T, Comcast and Charter Communications), with 12.3 million Pay-TV subscribers. Dish makes money by charging digital TV subscription fees to customers, selling digital TV boxes, selling premium services like HD and DVR, and by charging advertisers to advertise on some of the channels it carries.

Has 2 Operating Segments

Subscriber-related: It consists of revenue from basic, local, premium movie, pay-per-view, Latino and international subscriptions; equipment rental fees and other hardware related fees, including DVRs and fees from subscribers with multiple receivers; advertising services; fees earned from Smart Home service operations; broadband services; warranty services; and other subscriber revenue.

Equipment Sales: Includes the non-subsidized sales of DBS (direct broadcast satellite) accessories to independent third-party retailers and other independent third-party distributors of Dish’s equipment, sales of digital receivers and related components to third-party pay-TV providers, and revenue from services and other agreements with EchoStar.

Competition?

The company faces intense competition from Comcast, AT&T, and Verizon. The competition is based on acquiring additional customer/subscriber base.

Segment-wise Revenue Performance

Subscriber-related Revenue

  • Subscriber-related revenue has seen a continuous decline, with the segment losing $1.5 billion in revenues in the last 2 years (2016-2018), primarily due to a constant fall in number of subscribers.
  • With increasing number of users switching to SVOD (streaming-video on demand) platforms, like Netflix and Amazon, subscriber count has continuously decreased from 13.7 million in 2016 to 12.3 million in 2018.
  • This trend is expected to continue, exacerbated by the launch of Disney+ and Apple TV in 2019, which could put pressure on the already dwindling subscriber base, expected to reach 11 million by 2020.
  • Additionally, Univision and AT&T’s removal of certain of their channels from Dish Network’s programming line-up, is also expected to drive subscriber count downward.
  • Fee per TV subscriber is likely to remain flat in the near term, due to increase in Sling TV subscribers as a percentage of Dish Network’s total Pay-TV subscriber base, which signals a shift in DISH TV’s programming package mix to lower priced programming packages and a decrease in revenue related to premium channels and pay-per-view boxing events.
  • Lower subscriber count and flat ARPU (average revenue per user) is likely to lead to the division losing about $1.5 billion in revenues over the next two years, with segment revenues projected to slide from $13.5 billion in 2018 to $12 billion in 2020.

Equipment Sales

  • This division has seen continuous growth in revenues over recent years.
  • The trend is expected to continue with the segment projected to add about $15 million in revenues over the next two years, mainly due to higher revenue from the agreement with EchoStar.

To understand how Dish Network’s revenue trend compares with that of its major competitors, view our dashboard analysis.

 

What’s behind Trefis? See How it’s Powering New Collaboration and What-Ifs

For CFOs and Finance Teams | Product, R&D, and Marketing Teams

More Trefis Data

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