Dish Network Corporation (DISH, Financial) is slated to report its first quarter results for fiscal 2015 on 11th May 2015. The company competes with businesses such as Comcast Corporation (CMCSA, Financial), DirecTV (DTV, Financial) and Times Warner Cable Inc. (TWC, Financial) in the diversified entertainment sector.
Dish Network has seen revenue growth in each of the previous three quarters, ending fiscal 2014 with 4% jump in Q4 revenue to around $3.68 billion compared to the year-ago quarter on the back of increased subscription fees. However, revenues have fallen short of the consensus estimate in three of the four previous quarters. Further, the growth in revenues and earnings was offset by loss of subscribers and a higher pay-TV churn rate. Dish Network reported a net loss of 63,000 pay-TV subscribers in Q4 2014 as against an addition of 8,000 subscribers in the year-ago quarter, while the number of gross additions stood at 615,000 compared to 654,000 in the prior-year. Net income for the fourth quarter of fiscal 2014 came in at $409.9 million or 88 cents a share compared to the prior-year quarter’s net income of $288 million or 64 cents, while also surpassing the consensus estimate of 43 cents a share. The company’s shares are down 15.4% since its last earnings report.
Results Likely to Indicate Success of SlingTV
Early 2015 saw Dish Network rolling out Sling TV, an all-new online service for video-streaming, to counter its subscription-based losses. The service, which features a slimmer channel subset, offers inexpensive streaming TV service targetted at a younger generation of TV viewers. The network currently offers subscribers 20 channels for $20 a month. Further, the company reached a new distribution agreement with 21st Century Fox, putting Fox News back on Dish Network’s satellite-TV service, a move that is likely to have stiffles churn-rate and added new subscribers. Sling TV also recently added HBO to its portfolio of over-the-top programming in a bid to increase its subscriber-base. Dish Network’s venture into Internet TV is likely to minimize Q1 losses in its legacy pay-TV business where the company faces competition from Netflix Inc. (NFLX, Financial), Verizon Communications Inc.’s (VZ, Financial) FiOS and AT&T Inc.’s (T, Financial) U-Verse pay-TV services.
However, Dish Network’s industry reputation has taken a beating during the first quarter, with the company coming under scrutiny over its bidding in the record sale of wireless licenses in the US in January 2015, securing $3.3bn in discounts that were intended for small businesses. At the same time, the company has failed to strike a deal with wireless operators for the deployment of wireless networks across the country. This is likely to weigh heavily on Dish Network’ Q1 results along with other aspects such as mounting debt and increasing costs of programming.
Final Thoughts
Following the Q4 2014 results, consensus estimates had pegged Dish Network’s Q1 2015 earnings at $0.44 per share on revenues of $3.75 billion. This has now dropped to $0.41 a share, although the figure still represents a climb from the year-ago quarter’s earnings of $0.38 a share. While the success of SlingTV would indicate the future growth prospects for Dish Network, the company’s failure to deploy its wireless networks during the quarte is likely to drag revenues. However, experts are expecting the company to report revenues of $3.74 billion for the quarter, up 4% from the year-ago quarter’s $3.59 billion. The company’s shares have mostly traded in the $66-$77 range in the last three months, hitting a 52-week high of $80.75 in February 2015. The Dish Network stock carries a price estimate of $67.2 a share, and a ‘hold’ guidance.
