SlingTV's "Take Back TV" Campaign Seeks to Woo a Tough Crowd

Could ESPN walk away from Dish's Sling TV?

Jamal Carnette, CFA
Jamal Carnette, CFA
Jul 25, 2015 at 5:03PM
Consumer Goods

Source: Dish Network

For those considering cutting the cord, new options for content are seemingly popping up daily. On one hand, there are new streaming offerings from networks themselves, like HBO's Now, CBS' All Access, and the new service from Showtime. For multinetwork TV offerings and older movies, there's Hulu Plus and market-leader Netflix.

But while these are great options, they do obscure an uncomfortable fact.

Specifically, there is still tremendous value in traditional TV for a large section of Americans. Overall, when you consider the fact that you receive live television, news, and sporting events, among other programming, traditional TV still carries value the other options can't quite touch. That doesn't mean we're in the golden age of television, however, as many are trading down in package size and looking for cheaper options to get their content.

Many analysts thought they had found the proverbial holy grail with Dish Network's (NASDAQ:DISH) SlingTV. Combining the best part of streaming-based offerings -- price, as the service costs $20 per month -- while adding the live events of traditional TV, the service seemed to be a can't-miss hit. And a report last month found the service has roughly 250,000 paying subscribers. Not bad for a 5-month-old service, but not approaching older streaming services like Hulu and Netflix, which had 9 million subscribers and 41 million at that time, respectively.

A new campaign could boost those numbers
When SlingTV was introduced, then-DISH president and CEO Joseph Clayton positioned the service as a "viable alternative for live television to the millennial audience." And its newest ad spot appears to be geared to converting millennials as well -- but also speaks to the vast majority of users who have had negative experiences with their subscription-TV provider.

Oddly enough, Dish itself can be included in this indiscriminate characterization. The spot, which uses apparently precocious pre-teen bullies to act out "Old TV's" worst transgressions, can be viewed below.

And while I'm sure the spot will be effective for the firm, there are other issues Dish's subscribers -- and SlingTV's -- should worry about going forward. The service should worry about content providers that are wary of its business model, most notably Disney's ESPN, which has a legitimate reason to end its inclusion in SlingTV's lineup.

Going, going, (maybe) gone?
While Disney is not solely responsible for bloated cable bills, it has certainly pulled above its weight. According to cable analytics firm SNL Kagan, Disney costs cable subscribers $6.61 per month, approaching the cost of a basic subscription to Netflix. Of course, this isn't pure profit for Disney -- it has to pay exploding content costs for the sports it covers. The company is taking a number of steps to cut network costs, including a recent on-air talent purge.

One reason for cost cutting is that many viewers are specifically choosing lower-cost packages (aka cord-slimming) to save money. This trend hit ESPN rather hard, as the channel has lost over 7 million households since 2011 according to a Wall Street Journal article. And how does this relate to SlingTV, you ask? ESPN attached some rather onerous clauses to its deal with Dish that included the right to remove its programming if SlingTV grew larger than 2 million subscribers or if the channel lost more than 3 million Nielsen households after May 2014, according to The Journal.

Right now, the second clause has been breached, according to The Wall Street Journal report,  allowing Disney to pull its marquee station from the service. And considering Disney's ESPN was essentially a key selling point of the service, Dish should currently be a little more wary about a certain Bristol, Conn., content provider than about millennials.