Cord-cutting nicked Dish Network profits in 2015. Officials told analysts Thursday the company’s profit fell as Dish lost pay-TV subscribers and also recorded an auction-related expense.
Overall, Dish and other pay-TV industry providers feel pressure as viewers shift from cable and satellite subscriptions to over-the-top service providers. Online video streaming providers are proving to be a significant threat to the U.S. pay-TV business model.
Yet some analysts feel the company is making progress.
Dish is trying different things to evolve like adding content from Sony Pictures Television to its SlingTV portfolio in December. Zacks believe including this kind of content will help boost SlingTV viewership.
Last summer, Dish was talking merger with T-Mobile; for the year, net income dropped to $747 million compared to $945 million a year ago. On a per-share basis, profit dropped to $1.61 from $20.04.
Total revenue for the year edged up 3.4% to $15.1 billion. Analysts were looking for $1.97 in 2015 adjusted earnings per share on $15.02 billion in revenue.
The company reported a 38% drop in operating income, to $1.3 billion — due in part to an FCC auction expense of $516 million and an asset-impairment charge of $123 million — to $1.3 billion last year from $1.8 billion in 2014. Dish has filed to potentially take part in the upcoming FCC spectrum auction. “We thought the way this was worded was very specific — and would note that this just allows Dish some optionality,” says Wells Fargo analyst Marci Ryvicker. “We do not believe Dish will be a significant bidder, if at all, in this auction. Also, there were no shares repurchased in 2015 — we believe this is due to Dish’s leverage ratio (4.6x as of 12/31) and the $1.5B repayment that was made on 2/1,” she writes in a client report.
Net Pay-TV subscribers declined approximately 81,000 in 2015 compared to a loss of approximately 79,000 in 2014. Dish ended 2015 with approximately 13.897 million Pay-TV subscribers compared with approximately 13.978 million at the end of 2014.
RBR+TVBR observation: But that’s not the whole story. Though Dish subscriptions are down its churn is “much better” and so too is the company’s Average Revenue Per Unit, according to Ryvicker.
Sling TV subscribers are reported net of disconnects in its gross new Pay-TV subscriber activations. In 2015, Dish activated approximately 2.773 million gross new Pay-TV subscribers compared to approximately 2.601 million in 2014. Pay-TV ARPU was $86.79 during 2015 versus $83.77 in 2014.
