Dish Upside From On-Demand and TV Everywhere Offerings


Dish Network ( DISH ) competes with satellite pay-TV service provider DirecTV ( DTV ), cable companies like Comcast ( CMCSA ) & Time Warner Cable ( TWC ) and telecom operators like AT&T ( T ) and Verizon (VZ) in pay-TV business.

The company has struggled to find an engine of subscriber growth in the recent past and is instead looking for ways to improve its financial position while holding on to its current subscribers. One of the ways to do so is extract more revenues out of the current customers and Dish has been trying to just do that by perking up its on-demand offerings. If Dish Network can grow its subscriber fee as a result to close to $60 per subscriber per month by end of our forecast period, it could lift our current price estimate of $24.87 by more than 5%.

Dish Adding to On-Demand Content Gradually

Dish experimented with a 99 cent offering for selected Hollywood hits via its on-demand service. The company recently signed a deal with Starz entertainment to include its MoviePlex channel to its package. The content from this channel along with other titles from Starz and Encore are expected to be available for on-demand offering soon.

Additionally, the company has now started offering certain 3D movies as well. While these movies are likely to be higher priced, their sales could be lackluster as adoption of 3D TVs has been rather slow. Sony and Best Buy have specifically pointed to weak 3D TV sales as a concern.

TV Everywhere + On-Demand

Dish Network's TV everywhere initiative allows customers to access their satellite TV services remotely with the use of an application over 3G or WiFi networks and aims to provide increased convenience to customers, thus increasing the chances of more content being watched. Couple this with its additional on-demand offerings, and it looks like Dish is betting on the fact that customers will likely ordering more on-demand movies given the flexibility of viewing.

While these moves are encouraging, Dish Network's ability to increase its average subscriber fee due to incremental revenues from on-demand offerings could be challenged by growing popularity of online video platforms like Netflix (NFLX) and Hulu as well as Apple's (AAPL) digital rentals and sales through iTunes.

You can see the complete $24.87 Trefis price estimate for Dish Network's stock here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Investing Ideas , Stocks , US Markets

Referenced Stocks: CMCSA , DISH , DTV , T , TWC



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