DISH Network Corp. (
- the second largest satellite TV operator in the U.S. has
decided to pay a special cash dividend of $1 per share on the
company's common stock. The dividend is payable on December 28,
2012 to stockholders of record at the close of business on
December 14, 2012.
Earlier, Dish Network issued two special dividends of $2 each
in the year 2009 and 2011. In fact, over the last thirteen years,
the company has issued only five dividends (inclusive of the
recent dividend). Even its close rival and the largest satellite
TV operator in the U.S.,
) has never paid any dividend over the years. Unlike Dish
Network, however, DIRECTV repurchase shares in order to boost its
Despite having a strong cash position of nearly $6.5 billion,
the company has done little over the period to improve the
shareholders' wealth either by means of share repurchase or
We believe that such muted response toward Dish Network's
investors over the years is mainly due to the company's highly
leveraged balance sheet (nearly $10 billion outstanding debt in
the recently concluded quarter). Moreover, stiff competition from
other pay-TV service providers coupled with lack of triple play
service offerings have forced the company to invest heavily on
product and service upgrades. Additionally, the company also
acquired DBSD North America Inc. and TerreStar Networks Inc. for
a total cost of about $2.9 billion, last year, which has given
them 40 MHz of satellite spectrum. Such acquisitions will not
only help the company to set up terrestrial wireless network in
the domestic market but at the same time will put huge pressure
on its cash flow going forward.
Moreover, the recent fiscal-cliff crisis is expected to bring
about a hike in taxable rate on dividend income of the
shareholders from next year onwards. So, in order to defend its
investors from paying higher taxes, most companies like Dish
Network are offering higher dividend payments in fiscal 2012.
Currently, Dish Network has a Zacks #3 Rank, implying a
short-term Hold rating on the stock. We are also maintaining our
long-term Neutral recommendation on the company's shares.
DISH NETWORK CP (DISH): Free Stock Analysis
DIRECTV (DTV): Free Stock Analysis Report
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