Dish Network (NASDAQ: DISH) will not be able to assemble a programming package featuring higher-priced Disney channels such as ESPN and the broadcast networks for its new over-the-top programming service without breaking the $30 subscription ceiling it has set for the new venture.
That's the conclusion of Bernstein Research analyst Todd Juenger, who created a hypothetical model for the new service in a just-released report originally obtained by Re/code.
Juenger predicts Dish's program licensing costs alone will exceed $21, with the broadcast channels and ESPN accounting for nearly $17 of a package that might also include AMC, Nickelodeon, FX, Syfy and Adult Swim (see graphic).
Once broadband fees are factored in, Juenger believes Dish will struggle to differentiate the OTT product from traditional lower-tier satellite programming packages offered by Dish. And perhaps worse, he says the introduction of the service will spur a pay TV rival to offer a more cost-efficient, stripped down OTT offering that actually will find a market.
Juenger says that if an operator were to remove the free-to-air broadcast channels, and the Disney networks, for example, they could package a fairly robust collection of about 50 basic cable channels for around $11 per month, then offer the service to subscribers for around $15 a month.
- see this Re/Code story
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