Dish Network reported a gain of 16,000 pay TV subscribers in the third quarter—with losses of 145,000 hurricane-impacted users in Puerto Rico notwithstanding and gains to its low-margin Sling TV virtual service factored in.
“Truth be told, the traditional satellite T losses in the quarter (adjusted for hurricane impact in Puerto Rico and the Virgin Islands) were not quite as bad as feared,” said MoffettNathanson analyst Craig Moffett. “But the accumulated damage of Dish’s ongoing subscriber losses have become impossible to hide.”
With the hurricane attrition factored out, Moffett estimates that Dish’s core satellite business is shrinking at a rate of 8.4% annually, with revenue down 4.3% and EBITDA declining by 9.7%.
Dish’s total revenue declined 0.5% to $3.58 billion in the third quarter, which was below consensus. In fact, just a year ago, Dish’s revenue was still growing, but it’s down 4.3% for the year.
As for Sling TV, analysts suspect that service has now surpassed 2 million users, making it far and away the biggest virtual MVPD. The low-priced service, however, is not generating enough money to be as relevant to Dish’s overall economic situation, however.
“The wheels are officially coming off the satellite business. And we’ve now seen Sling TV contribute to the top and bottom lines long enough to make clear (as if anyone had any doubts anyway) that Sling TV is economically irrelevant,” Moffett added. “It is doing nothing to arrest Dish Network’s slide.”
Moffett, meanwhile, also discounted rumors that AT&T might go after Dish, now that the Justice Department is in the way of its attempt to buy Time Warner Inc.
“Let’s focus on the business AT&T would be acquiring,” the analyst wrote. “Sure, the synergies would be huge. But before AT&T can count the synergies, they would first have to commit to doubling down on the satellite business itself. How has DirecTV worked out for them so far? Do you think they have a hankering for more of where that came from?”