This Media Giant Seems Set To Outperform Dish Network

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The shares of Dish Network (NASDAQ: DISH) currently trade at $34 per share, which is slightly lower than its pre-Covid level. On the other hand, shares of ViacomCBS (NASDAQ: VIAC) is trading at $35 per share, which is 5% above its pre-Covid level. Does that make DISH a better stock pick compared to VIAC? Both companies belong to the media industry, with one being a new entrant in streaming and the other focusing on 5G technology. ViacomCBS is a bigger company, with its market cap and revenue base being larger than Dish Network. However, DISH has seen better revenue and profit growth over recent years, which has helped it command a slightly higher valuation (P/S) multiple. But in a reversal of trend, ViacomCBS’ top line has seen a sharp recovery over the recent quarter and is likely to grow faster going forward, with recovery in traditional businesses and rapid growth in streaming. This is likely to help VIAC stock to give much better returns compared to DISH over the next three years. We compare a slew of factors such as historical revenue growth, returns, and valuation multiple in an interactive dashboard analysis, DISH Network vs. ViacomCBS: Industry Peers, But ViacomCBS Is A Better Bet

Revenue Growth

  • Dish Network revenues have demonstrated better growth compared to ViacomCBS over recent years, with Dish revenues expanding more than 3% over the last three years. On the other hand, ViacomCBS revenue declined by 1.5% during this period. If you look at the last twelve months (LTM) period, DISH recorded 41% revenue growth while ViacomCBS’ revenue growth lagged at 4%. Dish Network’s top line benefited from the acquisition of Boost Mobile and Ting Mobile. Whereas, ViacomCBS’ revenues slowed as its studio business was severely affected during the pandemic. However, in the latest quarter (Q3 2021), ViacomCBS revenue growth of 13.2% has outperformed a decline of 1.8% in DISH revenues.This was mainly due to high streaming growth and reversal in advertising revenues. This trend is likely to continue in the near term.
  • Dish Network offers pay-TV services, broadband, advertising, digital receivers and related components.
  • ViacomCBS generates revenues from cable networks, TV entertainment, and studio business.

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Returns (Profits)

  • Dish Network had better average profit margin for the last three years mainly because the pandemic affected VIAC’s business performance much more than DISH.
  • However, over the last one year both companies have seen strong profit growth and Dish’s LTM operating profit margin standing slightly ahead of VIAC.
  • VIAC’s margins are affected by the costs of the merger between CBS and Viacom as well as its studio business being affected during the pandemic. (related: Check out our theme on Value Tech Stocks)
  • However, with VIAC planning to get rid of its non-core assets and focus on fast growing business segments like streaming, we expect the margin gap to narrow further between these media giants.

Risk

  • With respect to debt, Dish Network has a higher debt load. Debt as a percentage of total equity and liabilities stands at 41% in the case of DISH. On the other hand, the metric stands at 32% for VIAC.
  • As far as liquidity is concerned, Dish is in a slightly better position. Cash as a percentage of total assets is 12% for DISH as against 8.6% for VIAC.

Net of it all

Though Dish Network has seen better historical revenue growth and margins, the trend seems to have started to reverse from Q3 2021, with ViacomCBS posting strong recovery in revenue growth and business prospects being favorable for the coming quarters. Streaming revenue surpassed $1 billion for the first time in Q3 2021, reflecting an impressive growth of 62% y-o-y. This was driven by 4.3 million additional streaming subscribers, bringing the total to 47 million subscribers, a 79% y-o-y growth. ViacomCBS is also faring very well in the advertised streaming space, largely driven by Pluto TV, which grew monthly active users to over 54 million, nearly double (99% growth) compared to the previous year period. Going forward, VIAC aims to be a more focused organization as it seeks to dispose of non-core assets, as evidenced by its recently announced sale of CW Network (jointly owned by AT&T’s Warner Media). VIAC is likely to see much better revenue growth than DISH driven mainly by streaming revenue from Paramount+ and Pluto TV, advertising revenue, and recovery in traditional businesses severely hit by the pandemic.

What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio that’s beaten the market consistently since the end of 2016.

Returns Jan 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
DISH Return 6% 6% -40%
VIAC Return 17% 17% -44%
S&P 500 Return -2% -2% 109%
Trefis MS Portfolio Return -6% -6% 271%

[1] Month-to-date and year-to-date as of 1/10/2022
[2] Cumulative total returns since the end of 2016

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