DISH Network Corporation Class ADISH

Morningstar Rating

Stock Research and Analysis

by Michael Hodel, CFA

DISH Network has faced numerous distractions in recent years, including a constant legal battle with TiVo TIVO and the spin-off of EchoStar SATS in 2008. The firm was caught off guard as mounting competition in the pay-television business cut into its Read more

Bulls Say

Due to DISH's low-cost platform and focus on efficiency, no other cable or satellite company can match DISH's prices. The firm has smartly stuck to its price-leadership strategy, leaving the high end of the market, which may prove more susceptible to cable competition over time, to DIRECTV.

Other than the NFL Sunday Ticket package, DISH can offer the vast majority of the most popular content available on DIRECTV. Once its operational issues are resolved, there's little reason why DISH shouldn't hold its own in the battle for customers.

Although it lost AT&T as a partner, the firm has relationships with several other large telecom companies, including Frontier FTR and Windstream WIN. These carriers are less likely than AT&T to upgrade networks and offer their own video services.

DISH has been willing to experiment with new technologies, a key attribute given the change the television industry will likely experience. For example, the firm is testing a mobile television service using the wireless spectrum it owns. Read more

Bears Say

DISH is at severe disadvantage to cable competitors that can offer Internet access and phone service in conjunction with video programming. Several phone companies, including Verizon and AT&T, are also upgrading networks to add television capabilities. This disadvantage could be exacerbated as consumers increasingly turn to the Internet for content.

DISH spends heavily on marketing and equipment to acquire new customers, and it takes the firm a couple of years to break even on each.

Rather than keep a close eye on customer service to maximize the investment it's made to acquire customers, DISH allowed itself to get distracted with the EchoStar spin-off and other matters. The firm has lost customers as a result, killing growth and hurting profitability.

DISH has a tendency to push the envelope in legal and regulatory matters, sometimes getting itself in trouble. The firm could hit a major roadblock if TiVo is successful in demonstrating that DISH has continued to willfully violate its patents. Read more

Strategy

DISH's focus is on the core pay TV market, where it aims to be the price leader. A tight focus on costs is a big part of this strategy. Although customer growth is important to the firm, its overarching Read more

Management

CEO Charlie Ergen, his wife, Cantey Ergen, and executive vice president James DeFranco founded EchoStar/DISH Network in 1980. The Ergens, directly and via family trusts, own more than half of DISH, including all the supervoting Class B shares, giving Read more

Profile

DISH Network serves 13.6 million customers in the U.S. via a network of owned and leased satellites. The firm spun off its set-top box business, excess satellite capacity, Read more

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