Dish Network, now part of EchoStar since completing a merger, lost 314,000 net pay TV subscribers in Q4 across its satellite and virtual MVPD Sling TV services. And analysts at MoffettNathanson say “Dish’s business is spiraling towards bankruptcy,” alongside subscriber losses and revenue declines in all of its businesses.
Indeed, the firm, in a March 1 note to investors, pointed to the disclosure accompanying EchoStar financial statements, which said, “the Company has debt maturing in 2024 and expects to use a substantial amount of cash in the next twelve months. This raises substantial doubt about its ability to continue as a growing concern.”
Drilling down into the pay TV business, analysts led by Craig Moffett cited “little room for optimism” in the satellite TV segment and don’t see a potential merger with DirecTV as saving Dish.
Dish’s combined Q4 pay TV losses were worse than the 268,000 net subscribers it shed in Q4 of 2022. Fourth quarter net sub losses include around 65,000 Sling TV subs and about 250,000 Dish TV subs. It reflects an improvement for Sling TV compared to 77,000 losses a year prior, but return to decline sequentially, as Sling in Q3 had gained 117,000 net subscribers. The company ended 2023 with a Dish TV subscriber base of 6.47 million and a Sling TV base of 2.06 million. It marks a continued contraction for Dish, which at the end of Q3 counted 6.72 million Dish TV and 2.12 million Sling TV subscribers. MoffettNathanson analysts noted that Sling TV’s base has been shrinking for six years and is down 12% year over year.
And in satellite TV, Dish’s subscriber base is shrinking at a 12.7% annual rate, “once again setting a new mark for the all-time worst rate of decline,” wrote Moffett, while also noting the base is now smaller than that of vMVPD YouTube TV, which has 8 million subscribers.
EchoStar attributed the increased pay TV losses to higher net Dish TV losses due to lower gross activations and a higher churn rate. It said the decrease in Sling TV losses was due to fewer subscriber disconnects in 2023 thanks to the company’s focus on acquiring high-quality subscribers.
For the satellite TV business, MoffettNathanson analysts also zeroed in on increased churn rate (estimated by the firm to be 1.68%) and gross additions that it said have nearly come to a halt (where Q4 gross additions were down 40.3% compared to a year ago).
“This is a business perilously close to shut-down mode,” wrote Moffett of the satellite business.
While a DirecTV-Dish merger has long been floated before, the analysts indicated it might not be the answer, in part because Dish’s gross addition metrics mean the companies wouldn’t be able to realize the largest synergy of a combination, according to the firm, which it said would be removing churn between the two providers.
“Net adds for the two combined would be unchanged, by they would get there with significantly lower gross additions and therefore lower costs,” wrote Moffett. “But when gross additions are already near zero…well, then so are the potential synergies.”
And while pay TV continued to be the largest revenue contributor for the company, which also includes retail wireless, 5G networks deployment and broadband and satellite services, in Q4 Dish’s pay TV revenue delivered its “worst result ever,” declining 9.3% yoy, per Moffett. EchoStar reported Dish pay TV yoy revenue declines both for the quarter and for the full-year 2023. Fourth quarter pay TV revenue totaled $2.8 billion, down from $3.1 billion in Q4 2022. Full-year 2023 pay TV revenue of $11.57 billion declined by almost $1 billion from 2022 when it totaled $12.5 billion. Pay TV OBIDA for the quarter declined to $809 million and was $3.1 billion for the full year.
“Dish’s rural retreat strategy, which had worked so well during the pandemic, is no longer protecting the satellite business from steepening declines,” wrote Moffett. “As terrestrial fiber builds bring wired networks, and cord-cutting optionality to rural America, it is hard to expect anything other than continued acceleration in Dish’s rate of decline.”
Across its segments, EchoStar posted a total net loss of $2 billion for the quarter ending December 31, 2023.