Editor’s Corner—Is Dish Network spiraling?

Dish Network
Dish has lost two high-level executives in a matter of weeks. (Dish Network)
Editors_Corner-MUNSON

For years Dish Network has been holding up against cord-cutting trends and FCC-mandated wireless network build-out deadlines. But recent developments suggest the company is spiraling.

Today, the company announced that Vivek Khemka, executive vice president and chief technology officer, is leaving the company effective Sept. 7, 2018. Khemka is joining Liberty Latin America as senior vice president and chief technology and product officer.

“This position is important to our business strategy with technology being one of the foundations to our success. He shares our ambitions for commitment in innovation and operational excellence, and we are thrilled to welcome him to our leadership team,” said Balan Nair, CEO of Liberty Latin America, in a statement.

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Khemka was a key member of Dish’s team. He led the effort around Dish’s Hopper whole-home HD DVR and took on the role as acting president of Echostar Technologies. He even served shortly as chief marketing officer.

Khemka’s departure comes just days after Dish announced the resignation of Steven Swain, senior vice president and chief financial officer. In his stead, Paul Orban was named principal financial officer for both Dish Network and Dish DBS, effective Aug. 22, 2018.

Swain, who had been Dish’s CFO since October 2014, joined Brookdale Senior Living as executive vice president and chief financial officer.

While departure of two C-level executives in such close proximity is never a great thing for any company, Swain and Khemka’s exits are significant since they are two of the four direct reports to relatively new Dish CEO Erik Carlson.

When Dish founder Charlie Ergen stepped down as CEO in late 2017 to focus on his company’s wireless network ambitions, it was then-COO Carlson that stepped up. Tim Messner, executive vice president and general counsel; and Bob Toevs, vice president of corporate communications, are the two direct reports left over from that executive shuffle in December 2017.

In addition to the top-level executive changes, Dish Network also had to deal with media analyst group MoffettNathanson downgrading the company to sell. The firm said all of Dish’s equity is tied up in its wireless spectrum and that the odds of successfully building out a wireless network to meet the March 2020 deadline, or of selling the spectrum, are low.

All these developments spell trouble for Dish Network, even if the company did just manage a 20% stock rally with earnings featuring a net loss of 151,000 pay TV subscribers, an improvement over the 196,000 subscribers it lost in the year-ago quarter. Dish’s satellite service lost 192,000 subscribers and Sling TV subscribers rose by only approximately 41,000.

In his comments to investors, Carlson described Dish’s core TV business as the legacy “cash engine.” He described Sling TV as the growth business. And he described wireless as Dish’s future.

But with another 151,000 subscribers lost, Dish’s cash engine is leaking fuel. With only 41,000 added Sling TV subscribers, even Dish admitted that competition is starting to catch up with its pioneering virtual MVPD.

“This competition, among other things, has caused the rate of growth in subscribers to our Sling TV services to decrease. In June 2018, we launched additional Sling TV services which include offering consumers a la carte channel subscriptions, access to pay-per-view events and movies, and access to free content. There can be no assurance that these additional services will positively affect our results of operations or our net Sling TV subscribers,” Dish wrote in an SEC filing.

And although Dish said it’s on track to meet its phase 1 March 2020 deadline for building an NB-IoT network, doubts from analysts and investors remain.

Now, Dish has lost two of its highest-level executives in the span of a few weeks. Add it all up and it’s beginning to look like the company is going into a tailspin. — Ben | @fierce__video

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