DISH has a huge asset in their customer base of 2.1M users. Customers pay an average of $50/month, or $600/year, for a total annual revenue to DISH of $1.2B (B=Billion$).
That customer base is not going to go away, because they get hooked on the quality viewing and invest about $200 in a DISH-specific antenna and set-top-box (correct me on this, I don't have the details). Actually the customer base is now increasing at a 50% clip, about 100,000 new users monthly.
Because of the stability of the user base (it won't shrink and will likely keep on growing fast) we can think of it as a bond that pays interest of $1.2B per year. How much would an investor need to pay for that bond? They would pay lots more than $12B, depending on prevailing interest rates. Looking at it another way, we are saying each customer is worth about $6,000, or more.
Because of the 50% growth rate of the customer base, DISH could have over $18B worth of these "bonds" in a year.
The market cap of DISH is now 45M * $80 = $3.6B, a relatively small number compared to those customer "bonds".
The satellites and ground base cost a lot to build and operate, of course, but this shows that DISH has huge and very fast growing "customer assets" that can be relatively easy to evaluate.
I wonder what Mario Gabelli thinks of DISH. He is the guru in cable and media stocks.
- ILG
PS - another nice thing is that except for subsidies and marketing costs there is no incremental equipment or operating cost to DISH for new subscribers.
I am a bit worried about competition from digital cable in the near future, they might do well because of easier customer installations (no dish to aim). But the cable wiring will take a few years to be upgraded by all the CATV operators, and the satellites have national coverage footprints right now. |
