Sling TV’s Lynch: vMVPD under ‘intense margin pressure’ but has ‘cracked’ dynamic ad insertion

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Sling TV CEO Roger Lynch conceded that his virtual MVPD service is “under intense margin pressure,” but also said that relief could come soon from dynamic ad insertion (DAI) revenue.

The disclosures were made last week during the second quarter earnings call for Sling TV’s parent, Dish Network. 

“We're under some relatively intense margin pressure from our programming partners as well as just given the way Sling is currently priced,” conceded Lynch, whose virtual service offers a $20-a-month entry-level price, the lowest in the vMVPD market. (Seeking Alpha provided a transcript of Dish’s earnings call.)

While subscription fees are far less robust for Sling TV than they are for Dish’s linear satellite TV packages, Lynch said the targeted advertising capabilities enable Sling to command a higher cost per impression on ad sales. 

“The technology to implement that was harder than we expected,” Lynch said. “It took longer than we expected. But we think we have it cracked now. So now, it's just a matter of we're continuing to expand the number of networks on which we have enabled dynamic ad insertion and our ad sales team is doing quite a good job sort of selling those and getting strong CPM. So it is an important part of it for our business.”

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Added Dish Chairman and CEO Charlie Ergen: “I think it's fair to say that advertising will be a bigger portion of revenue and margin for OTT than it is in linear TV.”

Dish reported pay-TV subscriber losses of 196,000 for the second quarter, but it didn’t make clear how much attrition of its core satellite service was offset by Sling TV growth. Analysts estimate Sling TV has around 1.7 million subscribers, making it far and away the biggest vMVPD service. 

On Monday, Sling TV competitor DirecTV Now announced a key program acquisition, touting a long-awaited licensing deal with CBS Corp. Sling TV still doesn’t have a deal with CBS more than two and a half years after its launch.