To All on Thread,
I just took another look through the dishnetwork site. DISH is running a new promotion to sell model 1000 receivers for only $129 to people with the top of the line 5000 models. They are marketing it to people who want a second TV connected to DISH. I didn't see any mention of reduced subscription costs for the additional TV, but this seems like a great way to up the average monthly subscriber revenue without eating the loss of selling dishes at below cost.
As for long term prospects, I encourage anyone who hasn't to read the text of the last earnings report, available in a convenient format at excite.elogic.com, to have a look. The management overview gives some great insights into the potential of this company. Average subscriber revenue is running nearly $40 a month, while subscriber related expenses are running only 52% of that and falling. If you include all operating expenses (call center, insurance, etc.), these account for only 69% of subscriber revenue. Even if DISH stopped all promotions and kept these margins, the firm would be making $163 million a year on its DISH operations assuming a current base of 1.1m subscribers (with market cap of around 700m, not to bad). Keep in mind that as DISH has expanded services its subscriber margins have risen. Also, the typical USSB/DIRECTV dual subscriber can pay a lot more than the $40 a month DISH averages.
My only worry is the large amount of short term debt DISH has taken on recently. I am not very familiar with the details, so I welcome any comments from those of you who know more about this situation. This may be the Achilles heal of this company, b/c if Charlie makes a wrong move or the subscriber numbers plateau (economic slowdown, Government rulings, etc.) we could all be in trouble. I consider this a medium term hold.. right now its my impression that DISH is viewed as 'the other guy' in DBS, with little interest from the big institutional players, and I think a lot of them may have cold feet after the Murdoch deal. Also, the change in the way DISH costs its new customers (cost it up front) makes for an ugly trend on the earnings front. Any predictions on profitability timing and/or continued subscriber growth could change it all.
We really need a bear on this thread b/c I think I'm getting overly enthusiastic about this stock!
Welcoming all criticism,
John Thrall |
