Dish Surprises in Q4


On the heels of a stronger than expected fourth quarter, Dish Network CEO Joe Clayton told analysts this morning that the second largest satellite TV service provider would focus on delivering content across all platforms, bundling satellite video with mobile options in the coming year to continue to drive customer growth.

Dish unveiled a broadband partnership with wireless data service provider ViaSat in January, and has begun to offer a 12 Megabit per second offering to rural homes. In addition, new products like its Hopper whole-home digital video recorder - also announced in January - should help drive further customer additions.

Joe Clayton

Dish, which has been plagued by customer losses in the prior years, seemed to have turned the corner in the fourth quarter, adding 22,000 net new subscribers, soundly beating analysts' consensus estimates of 5,000 net new customers.
Lower churn in the quarter - 1.5% compared to consensus estimates of 1.67% -- seemed to make the biggest impression on analysts, who said that efforts to retain and attract quality customers appear to be paying off.
"We believe that investments in, and a focus on, core operations, including customer service, conditional access, more stringent credit checks, auto-pay, are yielding favorable results," wrote Credit Suisse media analyst Stefan Anninger. "In our view, churn is the key metric by which Dish's operational performance must be judged. And from this perspective, 4Q11 was a solid quarter."
The better subscriber metrics helped boost financial performance above estimates. Dish reported revenue of $3.6 billion (up 13% from the prior year and slightly ahead of consensus estimates) and cash flow of $828 million (ahead of $810 million consensus).
On a conference call with analysts, Clayton said that the pay TV market is shifting rapidly and that Dish is moving with it.
"With the economy changes, the consumer changes, the technology changes and the competition changes, guess what? You'd better change," Clayton said on the call. "There is no question that significant shifts are taking place in the pay TV industry today. The market is most certainly approaching a saturation point."
Clayton added that there is still potential for single digit growth in Pay TV, but other segments like the Hispanic market and business markets have higher growth rates. That's where he said Dish will redouble its efforts to address in 2012.
"Going forward we want Dish products to be perceived more like the mobile phone industry, to things like the Razor, the iPhone and the Droid," Clayton said, pointing to its recent rebranding initiatives, complete with a Kangaroo corporate mascot, that he said brings a personality and attitude to the products.