Dish Network Reported 3Q15 Results on November 9, Revenues Up

Dish’s EPS exceeds Wall Street expectations

Dish Network (DISH) announced its 3Q15 earnings on November 9, 2015. Dish reported revenues of $3.7 billion for 3Q15, a rise of 1% over the same quarter last year. Dish had subscriber-related revenues of $3.7 billion in 3Q15, a growth of 1.5% over 3Q14.

Subscriber-related expenses were $2.2 billion in 3Q15, a growth of 2.3% over 3Q14. The growth in subscriber-related expenses was primarily due to an increase in programming costs and higher expenses related to broadband subscribers.

Dish Network Reported 3Q15 Results on November 9, Revenues Up

Dish reported a net income of $196 million for 3Q15, a growth of 34% over 3Q14. Dish had a diluted earnings per share (or EPS) of $0.42 in 3Q15, an increase of 35% over the same quarter last year. The company’s diluted EPS exceeded consensus Wall Street analysts’ expectations of EPS of $0.39 by 7.7%. Dish’s EBITDA (earnings before interest, depreciation, and amortization) was $717 million, a growth of 18.5% over 3Q14.

Key metrics of the pay-TV segment

Dish’s pay-TV subscriber losses are increasing as the company had subscriber losses of 23,000 in 3Q15, compared to subscriber losses of 12,000 in 3Q14. The reason for the increase in subscriber losses was due to a higher pay-TV churn rate of 1.86%, compared to a pay-TV churn rate of 1.67% in 3Q14.

However, as the chart above indicates, Dish had 751,000 gross pay-TV subscriber additions in 3Q15 compared to 691,000 in 3Q14. A large part of these subscriber additions were related to the addition of Sling TV subscribers. Dish includes Sling TV subscribers as a part of its pay-TV business.

Dish’s pay-TV segment had an ARPU (average revenue per month per user) of $86.33 in 3Q15, a 2.3% increase over its 3Q14 ARPU. The increase in ARPU was primarily due to the rise in the price of programming packages.

The pay-TV segment had decreasing subscriber acquisition costs (or SAC) in 3Q15. The SAC in 3Q15 was $736 compared to $861 in 3Q14, a decrease of 14.5% year-over-year. Dish had pay-TV subscribers of ~14 million at the end of 3Q15, nearly the same as in 3Q14.

Key metrics for Dish’s broadband business

Dish’s broadband subscriber net additions decreased from 28,000 subscribers in 3Q14 to 13,000 broadband net additions in 3Q15. At the end of 3Q15, Dish had 608,000 broadband subscribers, a 10% increase over its broadband subscriber base in 3Q14.

Dish makes up 0.27% of the PowerShares QQQ Trust Series 1 ETF (QQQ). QQQ also holds 12.83% of Apple (AAPL), 8.14% of Microsoft (MSFT), and 5.58% of Amazon (AMZN).