The idea of dropping a traditional pay-television package for a cheaper alternative that offers some popular cable channels on a live-streaming basis seems like a good idea. But when you consider what you're giving up, it's worth thinking about whether simply paying less makes DISH Network's (NASDAQ:DISH) Sling worth $20 a month.
What is DISH Sling?
Traditionally, to receive pay-television channels, live consumers needed either a wired "cable" connection or a satellite dish. In recent years it has become possible to get some cable programming on a delayed, on-demand basis through Hulu (and other similar offerings), but live programming was strictly a cable, satellite, or -- for broadcast networks -- over-the-air offering.
DISH changed that when, in January 2015, it introduced Sling, a purely digital streaming service that offered a number of top cable channels on a live basis. Sling can be viewed on a computer, a tablet, or a phone, or it can be streamed to a television through a smart TV or a device such as a Roku player.
When the service launched, it offered roughly 20 channels for $20 as part of its basic package while selling add-on packages in areas including news, sports, and family for $5 each. The same is true now, with the company's base "Sling Orange" pack costing $20 for 31 channels. The lineup includes ESPN, AMC, CNN, HGTV, Cartoon Network, TBS, and TNT. Of the 31 channels, about 20 could be considered top-tier cable properties
In fact, of the top 10-rated cable channels in 2015, Sling is missing only USA (No. 3), Fox News (No. 5), and Discovery (No. 7). Sling Blue, a $25 alternative package, which can be purchased with or instead of Sling Orange, has Fox News, USA, and a few extras, but it doesn't offer ESPN or Disney Channel.
What does DISH's Sling offer?
For traditional cable subscribers with an expanded basic package, the most popular offering. rates as of Jan. 1, 2015, stood at $69.03, a 2.7% increase, according to the Federal Communications Commission's 2016 Report on Average Rates. On a per-channel basis, costs came in for the average expanded basic customer at $0.46. That's number has been dropping, because cable providers have been adding channels, which is a value only if you actually want those stations.
With 31 channels for $20, Sling Orange comes in at $0.64 per channel, while Sling Blue offers 45 channels for $25, or $0.55 per channel. In both cases, the overall price of the service is dramatically less than what a cable customer would pay to get access to top-tier basic cable channels. but DISH customers pay slightly more per channel, don't get quite every top station, and, perhaps most importantly, don't get broadcast networks.
Is DISH's Sling a good value?
A deal makes sense only if you actually need or use the item you save money on. Getting half off a sweater you never wear or paying 99% off for a car when you don't drive are not values.
In the case of DISH Sling, either the $20 or the $25 package would be a good deal for an individual who wants access to some live programming, including some sports, who can accept that he or she will be missing out on some major shows. Not getting broadcast networks -- some of which are available on a limited basis with Sling Blue in some markets -- means not seeing any major awards shows, missing out on the Super Bowl, and not seeing some top prime-time programming.
If those don't feel like major sacrifices for you, then DISH offers a great way to save money over traditional cable -- which, in addition to the numbers cited from the FCC, tends to have lots of add-on charges. The best deal, especially for families, might be getting both Sling Orange and Blue for $40 a month (there's a $5 savings for bundling). That pushes the per-channel price higher, because some stations are in both packages, but it comes very close what traditional cable offers minus some of the fat, and without much or all local programming, depending upon where you live.
DISH Sling offers a clear way to save money by giving up channels you may not miss. Whether it's a value should be an easy decision based on your viewing habits, but the service offers a path for people to save money.
Daniel Kline has no position in any stocks mentioned. He likes Sling TV for one person, but not for a family. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.