After the close tonight,
Dish Networks (DISH 31.26, +0.11, +0.35%) is set to issue its Q4 results with an earnings conference
call to follow tomorrow at 12:00 ET. Historically, the company has not
provided financial guidance in its press release, nor during its call. Ongoing
consumer cord-cutting has steadily cut into DISH TVs subscriber base and its
topline, while recent content disputes with programming companies has lifted
its churn rates higher.
Still, heading into tonight's print, the stock has been running higher, up about 30% from the December lows. While DISH outperformed analysts' top and bottom line expectations over the past couple of quarters, providing a boost for the stock, DISH was not rallying sharply higher into those reports. In other words, it would appear that investors are anticipating another upside report, consequently, raising the risk profile if it does not meet these elevated expectations.
What's Expected/Key Metrics
For the quarter, the Street is forecasting DISH to generate EPS of $0.69 on revenue of $3.27 bln -- representing a decrease of 6% yr/yr. This quarter figures to be its ninth in a row of declining revenue as Over-the-Top competitive threats from the likes of Netflix (NLFX), Amazon (AMZN), Hulu, and YouTube continue to take a toll.
That said, DISH does have an answer to this transition with its Sling TV offering, which has been a source of growth and has helped to offset the declines in its satellite TV business. Unfortunately, Sling has not been able to stop the bleeding quick enough, as seen in its recent Net Pay-TV Subscriber metrics:
- Last quarter (Q3), Net Pay-TV subscribers declined by 341K, as DISH TV saw a 367K customers exit. Meanwhile, Sling TV increased by about 26K subscribers.
- In Q2, the company lost 151K net paying TV subscribers with a 192K drop in DISH subscribers and a 41K increase for Sling.
- For Q1, DISH's net paying TV subscribers dropped by 94K as DISH TV experienced a 185K decline. Sling TV was up 91K subscribers.
Outside of the main
headline numbers and its subscriber numbers, other key metrics include
operating income and EBITDA. Last quarter, EBITDA increased by 9%, or, $62 mln
to $743 mln, and operating income jumped by 25%, or, $114 mln, to $563 mln. One
major caveat here, though, is that the positive impact of the new revenue
recognition standard had a $41 mln positive impact to both operating income and
For this quarter, analysts are expecting EBITDA of $657 mln.
Another headache for DISH and its subscribers and investors revolves around a couple recent programming disputes. Specifically, the company and Univision Communications have not been able to reach a programming agreement, leading to Univision blocking out DISH customers. This was partially responsible for its churn rate rising to 2.11% last quarter from 1.46% in Q2.
Additionally, just before its Q3 report came out, AT&T (T) pulled HBO from DISH. This stems from a demand in which HBO is requiring DISH to sign up a guaranteed number of subscribers to its programming -- something that DISH is adamantly against.
On top of these two issues, the merging of large content providers like Fox and Disney, and Viacom and CBS, is likely to cause even more aggressive price increases for DISH. So, while Sling has been a bright spot for the company, its growth may not be enough to ward off these strong headwinds facing the company.