Satellite TV purveyor DISH Network (Nasdaq: DISH) just released a spartan earnings report, in more ways than one.
First-quarter sales grew 5.2% year-over-year to $3.06 billion, net income fell from $0.70 per share to $0.52 per share, and DISH added a modest 237,000 net subscribers to land at 14.34 million customers. And that's all she said.
If you want to know anything else, you've got some work to do. Put the numbers in context versus the industry, for example, and you'll see that DirecTV (Nasdaq: DTV) is growing even slower with just 100,000 new subscribers last quarter, and cable companies like Comcast (Nasdaq: CMCSA) and Time Warner Cable (NYSE: TWC) are actually losing video customers these days. In that light, DISH looks like a winner.
Or you could read the 10-Q report that DISH also filed yesterday to get some more meat on the bare-bone numbers. The higher sales was a result of aggressive promotional campaigns during the quarter, and that discounting also goes a long ways toward explaining the sinking profits. DISH sucked 1.6% more revenue out of each subscriber compared with the year-ago period, but every new customer cost 12.4% more in marketing and installation costs. At the current subscriber-related expense rates, DISH doesn't make an operating profit from new customers until they've paid for over 22 months of service.
The company recognizes that it's up against a new paradigm, noting that "competition has intensified" with assaults from telecom vendors and online video providers alike. In other words, semi-traditional TV broadcasters like DISH and Comcast are being squeezed between Verizon (NYSE: VZ) on one side, and by Netflix (Nasdaq: NFLX) and Amazon.com (Nasdaq: AMZN) (and Hulu, and YouTube, and TV network websites, and ... ) on the other.
Times are relatively good right now as DISH is stealing market share from the cable guys and even DirecTV. Just don't be surprised when the bottom drops out of the entire satellite TV market.
How long will that take? I'm thinking it'll happen in the next two to four years, but I'd love to hear what your view might be. The comments box below is wide open, my friend.
