Summary:
DISH Network reported dismal financial numbers for the third quarter of 2014, wherein both the top and the bottom line missed the Zacks Consensus Estimate. An extensive wireless spectrum portfolio, innovative product launches, higher ARPU and a video streaming deal with Disney are likely to spur growth for the company going forward. However, the failure to strike any deal with wireless operators to deploy a nationwide wireless network has been a major drawback for DISH Network in recent times. Moreover, rising programming costs and mounting debt may act as headwinds for the company. In addition, the acquisitions of DIRECTV and Time Warner Cable by AT&T and Comcast, respectively, will likely further mar DISH Network's prospects. Hence, we maintain a Neutral recommendation on DISH Network.
Overview:
DISH Network Corporation (DISH) was founded in 1980 and is headquartered in Englewood, CO. The company, together with its subsidiaries, operates the DISH Network direct broadcast satellite (DBS) subscription television service in the U.S., servicing 14.056 million subscribers. On Jan 1, 2008, the company spun off its technology and set-top box business and certain infrastructure assets into a separate publicly-traded company called EchoStar Corporation. DISH Network offers more than 150 national HD channels, local HD channels in 152 markets, and the top-rated 1080 technology that provides the best picture available. Additionally, customers have access to international programming in the U.S., including over 175 channels in more than 28 languages along with one of the largest Spanish-language channel line-ups.
DISH Network operates through three reportable segments such as:
Subscriber Related Revenues: This segment's primary sources of revenue are basic, premium movie, local, pay-per-view, Latino and international subscription television services, equipment rental fees and other hardware related fees, including fees for DVRs and additional outlet fees from subscribers with multiple receivers, advertising services, fees earned from DISH HOME Protection Plan, equipment upgrade fees, HD programming and other subscriber revenues. This segment contributed approximately 99.1% of the company's total revenue in the third quarter of 2014.
Equipment Sales & Other Revenues: This segment primarily includes the non-subsidized sales of DBS accessories to retailers and other third-party distributors of the company's equipment domestically and to DISH Network subscribers. This segment contributed approximately 0.4% of the company's total revenue in the third quarter of 2014.