Dish Network Hits Q4 Targets, But Chairman Charlie Egen Concedes Wireless Transition Has “Taken Longer Than We Thought”
Dish Network, which is in the midst of a years-long shift from satellite pay-TV operator to wireless provider, met Wall Street expectations in the fourth quarter.
The company said revenue came in at $4.45 billion in the period ending December 31, down slightly from $4.56 billion in the year-earlier period. Earnings per share totaled 87 cents, down from $1.25 in the 2020 quarter.
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Both pay-TV and wireless subscriber levels dipped. The company closed 2021 with 10.71 million total TV subscribers, down 273,000, a much steeper decline than the loss of 133,000 in the year-ago period. Of the 10.71 million overall, 8.22 million were on Dish TV and 2.49 million were on internet-delivered bundle Sling TV.
On the wireless side, Dish shed 245,000 subscribers in the quarter, a smaller dropoff than the 363,000 recorded a year ago. The company reported 8.55 million retail wireless subscribers as of the end of 2021.
After acquiring significant wireless spectrum holdings in federally administrated auctions and additional assets disposed of by T-Mobile and Sprint when they merged, Dish has emerged as the No. 4 telco with visions of challenging Verizon, T-Mobile and AT&T. The company’s transition has been bumpy, as acknowledged by Chairman Charlie Ergen.
“We have a long-term view — and it’s certainly taken longer than we thought,” Ergen said, “that “the best use of that [spectrum] was to build a new company.” He conceded that the company’s corporate narrative has become difficult to follow — a fact borne out by Dish’s stock price, which has moved sideways since 2018.
“I realize that we’ve been a company that haven’t talked a lot about our strategy,” Ergen said. “But our strategy is in place now.” He said the company planned to host an investor day in Las Vegas on May 10, enabling analysts to try out Dish’s wireless network and also learn more about the company’s plans.
As far as the legacy TV business, Ergen reiterated his view that a merger between DIsh and DirecTV — which is now a stand-alone entity owned by AT&T and private equity firm TPG — is “inevitable.” If a combination is not allowed by regulators, he said, “both companies will just melt away and customers will be left without service.”
A carriage dispute with Tegna, which was resolved earlier this month, proved a “lose-lose situation,” Ergen said. “Tegna lost a fair amount of capital – probably sold their company [to private equity firm Standard General] a little cheaper. We did lose some customers who lost the networks and felt they were important.”
As far as dealings with programmers overall, he said costs are going “down, not up” because of ongoing declines in ratings amid an industry reorientation toward streaming. Ergen cautioned that pay-TV operators should be mindful of keeping a lid on prices given the uncertain environment. The traditional bundle will “die a death on its own if people try to overcharge for their product … We’ve seen that from operators who didn’t sense where things were going and at some point they self-destruct.”
In a note to clients after the company released its results, veteran analyst Craig Moffett argued that Dish has arrived at a crossroads. While it has long found a secure financial foundation by serving rural communities where it has often been the only pay-TV option, there is a limited amount of time left to rely on that strategy. In the third quarter, he noted, “Churn began to rise and subscriber losses began to reaccelerate. That naturally raised questions about how effectively, and for how long, the satellite business would be able to fund Dish’s wireless ambitions.”
Investors have gotten a “wakeup call” on the expense of building out wireless capabilities, Moffett added — tower lease commitments alone exceeded $13 billion.
“These same factors are starkly on display in Q4,” the analyst wrote. “The limits of Dish’s rural retreat are clear; the satellite segment is rolling over.”
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