Dish Network has introduced a new advanced advertising product designed to blend connected TV advertising on virtual MVPD Sling TV with premium inventory on Dish satellite TV.
By allowing Dish TV’s live linear inventory to be programmatically executed, Dish Connected delivers real-time, targeted advertising to internet-connected Dish set-top boxes.
Advertisers are now able to programmatically transact premium Dish set-top box inventory through private auctions set up with demand-side platforms (DSP) including The Trade Desk and Yahoo DSP, as well as the sell-side platform (SSP) Magnite.
As viewers watch content on their Dish internet-connected set-top boxes, advertisers can bid on and deliver advertisements to them in real time.
“Marketing dollars continue to shift more towards the most effective and efficient solutions that allow for optimal targeting and full campaign measurement,” Dish Media senior VP Kevin Arrix said in a statement. “Dish Connected is the latest example of how technology can resolve traditional TV’s inefficiencies and puts DISH Media at the forefront in driving more accountable, impression-based buying.”
Added Alexander Stone, senior VP of advanced video and agency partnerships for Horizon Media: “We continue to place a strong emphasis on programmatic advertising, recognizing it as a powerful tool for delivering targeted and effective ad campaigns. Having invested heavily in programmatic buying across premium CTV inventory, we’re excited to take advantage of this new offering from Dish Media. Dish Connected allows us to open up a larger inventory pool for our clients, making the buying experience more accessible than before.”
Back in the 1st quarter of 2023, Dish suffered a security break that knocked Dish’s website and others they owned offline. Now, Dish, Boost Mobile, Sling TV, and AirTV’s websites are all back online. This also includes Dish and Sling TV’s apps being back at 100%. But the damage is real and very serious as Dish now says it suffered $30 million in damages.
According to CEO and president of DISH Erick Carlson, the $30 million covered remediation, customer support, consulting, and IT costs. He also went on to say that well some data had been taken from the company they have received confirmation that the data had been deleted. Anyone whose data has been compromised has already been contacted by Dish. According to Dish, no customer data had been compromised during the attack.
The area hit hardest by the attack was DISH TV customers who couldn’t log into their accounts. The good news was during the attack, their TV services, including Sling TV and wireless services for Boost Mobile, continued to operate without issues. DISH customers where able to continue to make calls, watch TV, and more but not able to access their accounts to make changes or call customer service.
After the attack, Dish reportedly fired the company that was in charge of antivirus and security. According to Dish, well, it spotted the attack it failed to stop the attack.
Attacks like this are very hard to stop. One employee making a mistake will open your company up to attacks like this. DISH was able to surprisingly quick get back online, considering the scale of the attack.
$30 million in damages to DISH from this attack is a huge amount to lose but the damage from the attack could have been even higher if the attack had dragged on preventing DISH from adding new customers or raising the cost to recover from the attack.
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The last time I covered DISH Network (NASDAQ:DISH) was in September 2020 when in sharp contrast with other U.S carriers, it had adopted a capital-light strategy to implement 5G. Thus, it partnered with Amazon’s (NASDAQ:AMZN) AWS for hosting the underlying IT infrastructure and, now, there is a possibility of this partnership beingextendedto also cover product sales.
However, the market seems more focused on the company's finances and ability to deliver on time, with the stock falling from its mid-2021 high of $45 to trade at under $7. There are more downside risks as flagged in red below.
DISH Performance (www.seekingalpha.com)
However, while the company's balance sheet is certainly tight in view of forthcoming expenses, the aim of this thesis is to also highlight the merits of the operator's disruptive strategy as a latecomer to the 5G arena already filled with strong competitors.
I start with how the nation’s fourth carrier and, by far, its smallest one too differentiates itself through partnering with the world’s largest public cloud provider.
How DISH Differentiates Itself
First, the deployment of the fifth-generation wireless network across the United States implies significant capital expenses. In addition to frequency spectrums which are auctioned at billions of dollars by the FCC, equipment is required for the core network installed in data centers and radio access atop towers.
Now, after purchasing frequency spectrum from T-Mobile (NASDAQ:TMUS), and the 9 million customers of Boost Mobile in 2019, DISH had to build a 5G network to cover the majority of the nation by 2023. Unlike its peers which proceeded through the conventional way involving selecting a single source of supply like Ericsson (NASDAQ:ERIC) for everything from hardware, software, and communications gear, DISH opted for several suppliers. These included Mavenir and Nokia (NOK) for software, antennae from Japan’s Fujitsu (OTCPK:FJTSY), and virtualization from VMware (VMW) just to name a few. The company also opted for Open RAN compared to more proprietary standards adopted by peers.
Furthermore, again in contrast with other operators, it did not buy container loads of servers for its data centers but opted for an Opex (operating expenditure) approach where you pay on a pay-per-use basis, namely through a partnership with AWS as illustrated below.
press.aboutamazon.com
Therefore, far from being something "out of the blue", going through Amazon for selling represents a real possibility of the existing collaboration being extended, which this time could significantly improve DISH's go-to-market strategy.
Fast and Capital-Light Go-To-Market Strategy
The reason is first that selling subscription plans through Amazon's online shopping portal would give recognition to the DISH brand in a marketplace boasting nearly 38% of the U.S. eCommerce market share in June 2022, well ahead of eBay (EBAY) and Walmart (WMT). Furthermore, the giant online retailer has a vast network for DISH to sell 5G subscriptions.
This is somewhat analogous to the carrier outsourcing its marketing function while maintaining the network activation part. On the flip side, it will not necessarily obtain all the profits as some markup will go to Amazon (depending on the agreement made) but, in return, DISH does not have to spend money on marketing and sales, areas where competition remains tough. At the same time, the carrier stands more chances to abide by the FCC deadline as to the commercial availability of its product offerings.
Thinking aloud, financially constrained DISH is transiting from an MVNO (mobile virtual network operator) where it is essentially hitching a ride on top of T-Mobile’s and AT&T's (T) networks to becoming an MNO (mobile network operator). Here, since building its own infrastructure is capital-intensive, an Amazon deal may represent a much-needed lifeline somewhat similar to the IT infrastructure part.
In this respect, with cash and equivalents of only $2.5 billion and debt of around ten times more, the company’s balance sheet is flying close to the Sun since, after investing to achieve nationwide coverage, it still has to spend more money to enhance its network as it launches the commercial offers.
This may be the reason why investors' reaction was positive with the company gaining almost 19% premarket when the Amazon news broke out on May 25.
Focusing on Capex Usage Amid Challenges and the Deadline
In this respect, with lenders aware of the company’s current liabilities exceeding current assets, it becomes more difficult to obtain capital at reasonable costs, a problem which is exacerbated by the high prevailing interest rates, the result of the Fed's aggressively tightening monetary policy. Furthermore, with operating income margins of only 12% last year from its legacy businesses including satellite TV, and revenues having peaked in FY2021, it cannot rely on organic growth to generate enough cash.
Worst, as a late participant in the 5G game, it cannot count on a first-mover advantage but on the contrary, faces strong competition from AT&T, T-Mobile, and Verizon (VZ) throughout the United States. For this matter, its newly built network Boost Infinite network still has to support the iPhone which is currently proposed on a prepaid basis on Boost Mobile.
In these conditions, some may not have the stomach to invest, but, for those who are ready to take on the risks, I perform a comparison of the quarterly capex progression for the four carriers during the last three years.
As shown in the deep blue chart below, after peaking in 2022 due to the $7.3 billion spent on mid-band 3.45 GHz spectrum acquisition, DISH's capex has stayed much lower, at the $900 million level, which is at least four times less than its peers.
Tellingly, in case the company is able to achieve its June deadline to cover 70% of the population or 235 million people which is feasible according to its Executive Vice President for Network Development, this will be a meaningful achievement in terms of Capex to coverage ratio.
Now, as per the executive during the earnings call, investment should drop as the company attains its June milestone and subsequently, it will be more incremental expenses as DISH densifies or increases the quality of the coverage in regions where it is already present in preparation for commercial launch.
Do not Write off DISH Yet
They also add that expansion for the remaining 30% of markets will only continue in the late 2024 to 2025 time frame which gives the company some breathing space for the $1 billion of convertible notes becoming due on March 2024. As per the issuance details, it will settle its obligation either in shares, cash, or both. Now, given the liquidity conditions and the share price which is well below the $62.05 stock price at issuance, the most probable option will be a convert.
However, an even larger amount will be required for purchasing the 800 MHz spectrum from T-Mobile for about $3.6 billion, and in case DISH is not able to meet up with the deadline, it will incur a $72 million penalty. Add to this the $30 million of financial impact pertaining to the cybersecurity incident, and, you have two additional reasons for staying away from the stock.
Still, you cannot write off a company with $53.6 billion in total assets on its balance sheet, which exceeds overall liabilities of $34.9 billion. Noteworthily, these assets include the $34 billion of spectrum purchased at auctions and whose value has appreciated. In this respect, possessing more frequencies helps carriers deliver a better user experience through higher upload and download speeds, and as competition grows tougher the three other operators are likely to look for these, thereby providing DISH with an opportunity to monetize unused assets.
Continuing on a positive note, after seeing its value being eroded, the company has a valuation grade of A+ implying that its Price-to-Sales and Price-to-Earnings multiples are now lower than the sector median by more than 70% on average as pictured below.
Valuation Grades (www.seekingalpha.com)
Also, this remains a profitable company with a profitability grade of B.
However, low valuations and profitability alone are not sufficient for DISH to be on your watchlist and the reason for my "hold" position. My main rationale is the possibility of the operator covering 70% of the country to meet the regulatory mid-June deadline, and doing so while incurring four times fewer capital expenses than its peer (above Capex chart). This should be due to its differentiated strategy encompassing the Amazon collaboration which circumvents the need to purchase certain equipment. Now, just think of the possibilities in case this collaboration is extended to product sales as the company starts monetizing its greenfield network.
Finally, the May 25 price action may have been ephemeral since the upside was not sustained, but, as per the old saying, "there is no smoke without fire". Therefore, there must have been some concrete talks between Amazon and DISH, and given their partnership history, we can't eliminate the possibility of a deal, something positive for the operator. On the other hand, investors also need to price in the downside risks in case penalties are inflicted if it is not able to deliver on time, and this is precisely the reason why you may want to see a corporate update on the 70% coverage before investing.
Watch The Real Housewives of New Jersey on Bravo Tuesdays 8/7c and next day on Peacock. Catch up on the Bravo App.
The Real Housewives of New Jersey dad kicked off Memorial Day weekend with an intimate birthday celebration at the Jersey shore. Frank, the ex-husband of RHONJ’s Dolores Catania, documented the shindig on his Instagram Stories and shared a slew of sweet messages he received on his special day.
The Irish-born businessman posted a photo of him and Dolores enjoying a night out with Frank and his girlfriend, Brittany Ann Mattessich.
“[Frank] happy birthday & as we say in Ireland (not in irish) your only as young as the woman your feeling [sic],” Paulie wrote in the Instagram Story. “So you must be feelin fookin really good right about now.”
Frank and Paulie's Past Tensions
The message came just months after Frank suggested there was a bit of drama between him and Dolores’ new man.
“We’re not on the best of terms because Paul is not used to the dynamic between Dolores and me,” Frank told Us Weekly at BravoCon 2022. “If you spend more time with Dolores and me, you get to see there’s nothing to worry about, right? I love her. I will always love her. I always take care of her.”
“[Paulie] laughed. He was like, ‘That’s pretty funny,’” Dolores recalled in the February 7 episode. “He took it like a man. He took it well. He made a joke out of it. And Frank actually had a blanket made for [Paulie] with his face on Buzz Lightyear.”
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Dolores' Most Recent Ex Celebrated Frank's Birthday
Dolores and Paulie went Instagram official on Valentine’s Day 2022, less than a year after the New Jersey Wife announced her split from David Principe. While dating Dolores, David developed a close friendship with Frank and even allowed him to live in his house back in 2020. Though their bond was mildly surprising, it appears to be going strong, as David was among the friends who attended Frank’s most recent birthday bash. You can check out his cameo below.
