Dish Rises On Dividend - Multichannel

Dish Rises On Dividend

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Dish Network stocks soared on Monday after the company said it would issue a $2 per share one-time cash dividend and on speculation that the No. 2 satellite TV company was talking to programmers about creating a streaming video service that would rival offerings from satellite, telco and cable companies.
Dish stock was up as much as 7% ($1.67) to $25.15, before settling down later in the day. The stock was up 4.8% ($1.10 cents) to $24.60 each in afternoon trading.
According to a report in the NY Post citing unnamed sources, Dish has been talking to programmers about a streaming-only video service, possibly under its Blockbuster brand, that could allow it to offer a version of ala carte programming.
Most analyst believed that the hurdles to offering a streaming ala carte video service would be to big to clear - and programmers would have to be willing to scrap their existing model since every other distributor would clamor for the same treatment. Instead, many of the analysts that follow the company believe that Ergen will pursue the Netflix model of offering older TV shows and movies (instead of live network programming) for a fixed monthly price, basically an extension of the streaming service that Blockbuster already has.
Pivotal Research principal and media & communications analyst Jeff Wlodarczak said in an e-mail message that Dish chairman Charlie Ergen's main motivation may be more to rattle some cages in the industry.
"Is he [Ergen] looking to shake things up? Absolutely," Wlodarczak wrote. So is Google. "
Ergen did not comment specifically on the Post story, but said that the second largest satellite TV service provider has to keep its eyes open for all opportunities in a changing competitive landscape.
The speculation wheels have been spinning vigorously around Dish ever since it began snapping up wireless spectrum earlier this year at bargain process, In February Dish agreed to purchase DBSD North America for about $1 billion and bid for the assets of defunct wireless broadband provider TerreStar Networks in July for $1.375 billion. The deals would give Dish access to about 40 Megahertz of spectrum for a wireless broadband offering, which could also serve as a conduit for streaming video.
Ergen on the call said that given the state of the economy and rising competitive pressures from over-the-top providers as well as traditional distributors, those in the video business have to be willing to change.
"Satellite is still the most efficient way to deliver video; we're just not getting our fair share of it yet," Ergen said on the call. "Consumers are consuming more bits and bytes of data, video and voice. Strategically we believe we have to be in something other than a standalone video business as a company. We are in the transition of being able to do that. It's going to take some time."
A combination of high programming costs - especially for sports - a sluggish economy and non-existent housing growth could force change in the distribution model, including causing some companies to gamble with a sports-free video offering, Ergen said.
"There could be a day when one of the big providers doesn't have a sports offering," Ergen said. "...We almost went there last year with Fox Sports," Ergen said referring to last year's carriage fight with Fox Networks.
Ergen said that while Dish was able to reach a deal with Fox , it was prepared to not carry the regional sports networks, just like it eschews carriage of some RSNs in the New York market.
"There's a limit to where sports costs can go," Ergen said. "At some point it's not going to be in 90% of the homes if the costs go too high."
While operators have struggled with rising sports costs for years, building a national broadband networks isn't easy either. And though Dish would like to get in the broadband game, it is still in the very early stages.
Dish Network is still waiting for approval from the Federal Communications Commission to combined the spectrum assets of DBSD and TerreStar While those hurdles don't appear too difficult for the satellite giant to clear, it still has to build the network, which could cost billions of dollars.
Ergen has said in the past that he would refer to partner with another provider to build a wireless network - Sprint Nextel has been speculated as the most likely choice - but on the call Monday he said he would be willing to go it alone.
"We would be a natural partner for some," Ergen said. "But I believe there is a path for us to go it alone."
Asked how he would value a business that has so much uncertainty, Ergen said that was a problem for the analysts to figure out.
"There is a tremendous business opportunity on the wireless side and on the macro side of wireless consumption," Ergen said. Every model assumes that the government want to create jobs and the government wants to create competition, if you believe that, there are a lot of ways for us to compete in the business beyond where we are today. ...We're in fixed video today. We hope to get into the mobile voice, data and video business And we will likely do that in some kind of partnership, if we are allowed to do it. But it might not end up that way."

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