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Stock Analyst Update

Strong Quarter Propels Dish

The no-moat firm is seeing a decline in its satellite segment, but is enjoying continued growth at the Sling OTT service.


 DISH (DISH) posted a strong second quarter as revenue met consensus expectations and EBITDA came ahead of the Street projection. The company lost 156,000 net pay-TV subs in the quarter despite the continuing growth at the Sling OTT service. Sling now has 2.34 million subscribers, up from 1.8 a year ago. The satellite segment (Dish TV) ended the second quarter with 10.7.8 million subs, down from 11.5 million at the end of the same quarter in 2017. Our no-moat rating and our $51 fair value estimate for Dish are unchanged. 

Total revenue fell just over 5% year over year to $3.5 billion as the company continues to replace higher-revenue satellite customers with lower-revenue Sling ones. Dish remains disciplined about not chasing lower-profit customers with promotional pricing, helping to lower subscriber acquisition cost for the quarter to $763 per subscriber from $806 a year ago. Dish TV churn fell to 1.46% from 1.83% from the same quarter a year ago due in part to the higher quality subscriber base. We note that the firm’s new Dish TV specific churn rate continues to show strong quarterly improvement as the second quarter rate was the lowest of the past six quarters. Adjusted operating income margin expanded to 16.5%, up 150 basis points year over year as the lower costs from a smaller subscriber base more than offset increased content costs.

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Neil Macker does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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