DISH Network Pins Hopes on Internet TV, Risks Potent - Analyst Blog

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On Apr 6, 2015, we issued an updated research report on DISH Network Corp.DISH - the second largest satellite TV operator in the U.S.

Notably, DISH Network was one of the major license winners of the Advanced Wireless Services-3 spectrum auction conducted by the Federal Communications Commission (FCC). AWS-3 spectrum ownership will enable the company to interoperate LTE service AWS-1 (1700/2100 MHz) spectrum band. This is likely to be a major long-term positive for the company.

In Feb 2015, DISH forayed into the Over-the-Top (OTT) video delivery market with the commercial launch of its Internet TV service - Sling TV - across the U.S. The service is supported by iOS, Android and Roku devices and is available at an exceptionally low price ($20 per month to start with). The service offers access to top-rated TV channels such as ESPN and Disney Channel of The Walt Disney Company, AMC, TNT, TBS, Food Network and HGTV. Customers can also access add-on packages comprising additional sports, movie, kids or news channels for an additional $5 per month.

Internet TV is gradually gaining traction in the U.S. and has emerged as a strong alternative to counter the competitive threat from online video streaming service providers. Thus, venturing into the Internet TV industry may help the company minimize its losses in the legacy pay-TV business.

Moreover, the company's plan to deploy triple-play services coupled with the increased rollout of its popular Hopper devices should help it drive subscriber growth and offset competition from Netflix, Inc. NFLX , AT&T, Inc.'s T U-Verse and Verizon Communications Inc.'s VZ FiOS pay-TV services, going ahead.

However, availability of Internet TV at an exceptionally low price, topped with easy access to popular TV channels, is likely to be a game changer for the pay-TV industry while posing significant threat to cable MSOs (multi-service operators). This is because a large chunk of DISH's existing subscribers may opt for the lower-priced Internet TV service instead of the much broader but expensive satellite TV services.

Moreover, the failure to strike any deal with wireless operators to deploy a nationwide wireless network has been a major drawback for DISH in recent times. Also, rising programming costs and mounting debt are likely to act as headwinds for the company.

DISH currently has a Zacks Rank #3 (Hold).

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

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

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