DISH and Hearst TV Bury the Hatchet

Zacks Equity Research
April 10, 2014

Yesterday, DISH Network Corp. (DISH) and Hearst TV settled their TV broadcasting issues and signed a new agreement on this. As a result, DISH Network subscribers will regain access of the ABC, NBC Universal and CBS TV network programs.

Earlier, Hearst TV had demanded higher retransmission fees from DISH Network which had led to legal hassle. DISH Network currently carries a Zacks Rank #3 (Hold).

Hearst TV owns 29 local TV broadcast affiliate stations in 25 markets across the U.S. DISH Network subscribers in all of these markets were deprived of the popular TV shows of Walt Disney Co. (DIS) controlled ABC, Comcast Corp. (CMCSA) controlled NBC Universal and CBS Corp. (CBS) controlled CBS network.

Retransmission fees related disputes between TV broadcast network or content developers and pay-TV distributers (cable TV/satellite TV/fiber-based TV) are very common in the U.S.

DISH Network is transforming itself from a low-priced leader in the U.S. pay-TV industry to a premium service provider to reduce its subscriber churn rate. The company is focusing on higher-priced subscribers while raising the prices of its products and cutting discounts. As a result, average revenue per user in the reported quarter was $81.24 against $77.47 in the year-ago quarter.

Average monthly subscriber churn rate for the pay-TV in the fourth quarter of 2013 was 1.53% compared with 1.54% in the prior-year quarter. At the end of the fourth quarter of 2013, DISH Network had approximately 14.057 million pay-TV subscribers against 14.056 million at the end of the prior-year quarter.

Recently, DISH Network achieved a significant milestone by signing an online pay-TV deal with Disney. The agreement will allow DISH Network’s customers to watch live shows on devices like PCs, smartphones and tablets, thereby bypassing the need for a set-top box. 

Moreover, Disney will also drop its earlier objection against DISH Network’s ad skipping Auto Hop device. The deal will also set the platform for future online TV agreements with network companies.

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