Citigroup Downgrades Dish

[cablewithaview]

Predicting higher-than-expected churn for direct-broadcast satellite this year, Citigroup Inc. Monday downgraded its rating for EchoStar Communications Corp. to “sell.”

In a report, analyst Jason Bazinet predicted that cable -- spurred by its rollout of voice over Internet protocol and digital-video recorders -- will actually increase its number of basic subscribers this year.

“Cable voice penetration translates into basic-sub growth … We estimate that around 90% of new cable subs will come from DBS, while only 10% will come from new pay TV growth,” Bazinet wrote. “As such, the churn rates of satellite firms should increase going forward.”

Citigroup estimated that there will be 950,000 new cable subscribers this year, of which 90%, or 800,000, will come from DBS. Of those, 372,000 will come from EchoStar, according to Citigroup’s projections.

As a result, the Wall Street firm is increasing its churn estimate this year for EchoStar to 1.8% from 1.5%. The firm also increased raised its churn estimate for DirecTV Inc. to 1.8% from 1.6%.

Citigroup -- which doesn’t believe EchoStar will go private or be sold to a third party in the near future -- downgraded its rating from “hold/high risk” to “sell/high risk.” The firm didn’t change DirecTV’s rating, which remains “hold/high risk.”

http://www.multichannel.com/article/CA6301428.html?display=Breaking+News&referral=SUPP&nid=2226

 

[mitchflorida]

I think Dish is good for the customer but not really a good investment. Verizon and AT&T are spending billions of dollars bringing in video over fiber to the customers house and that will start a price war that will damage profits.

 

[riffjim4069]

To put this into perspective, at the old churn rate Dish was expected to lose 2.16M customers in 2006. The new churn rate projects Dish will lose 2.592M customer. If these projections hold true, that means Dish will churn an additional 432,000 subscribers during 2006. Yikes! If true, we just may be witnessing the contraction of the DBS marketplace. I predict that E* and D* will be forced to merge in some form or fashion in order to survive the onslaught of cable and the telcos. In any case, it should be interesting to see what happens.

 

[HokieEngineer]

I dont trust wall street analysts any farther than I can throw them. I read a lot of these types of reports on tech companies from some guy who has no clue about the technology hes writing about. I don't believe wall street has any long term vision anymore. Its all about next quarters profits. Such short sighted-ness is a real problem.

I don't believe the market is for anyone who wants to stay and hold anymore. Its all about these daytraders pressuring the stock of the day up and down to make their bucks.

I've noticed critical articles come out about Verizon, DirecTV, and now Dish. First it was bash verizon for spending so much for FIOS to compete with cable/dbs. Then D* is losing HD subs. Now dish is losing subs.

Again, I don't trust these guys. Especially when every other week you read about another analyst who got fired because they were just writing to pump up stock they already owned. IMO wall street needs a serious crackdown.

 

[fenwah]

I received a flyer in the mail yesterday from Time Warner Cable. They are offering me a nice package deal (cable, internet, and phone) for $99.99 for 18 months. I'm paying $119 a month right now through SBC. We're moving out of town in appx. 15 months, so I might call SBC to see if they can match this...otherwise, I may switch....and then go back to Dish when we move to our new house in July 07. And this is NOT because of LifeTime...always looking to save a few bucks.

 

[Stargazer]

Dish and DirecTv cannot merge, that was already shot down once, at least with the current sub counts that they have. Now if their sub counts were to drop a LOT then maybe they would then be allowed to merge.

I have no doubt in my mind that churn will continue to go up. I have seen a LOT more people switching from Dish Network to DirecTv the second half of 2005. It is happening a bit more rapidly. Dish Network and DirecTv would have to get even more subscribers to make up for the churn. If they cannot do this then the churn will catch up with them eventually preventing them from getting as many additional subscribers. Eventually they will lose more customers than they gain when they reach their threshold and the sub counts will drop like C-Band did especially wtih the new cable/fios/wireless rollouts.

 

[navychop]

IMHO, both E* & D* will end the year with more subs than they began with.

 

[Stargazer]

I believe they both will have more subscribers than they did beginning this year. The question is will they gain as many subscribers as they did last year? If they do not then that in combination with more churn will show less growth than previous years. Another question is whether or not all of these HD local markets and national HD channels will help increase the sub count much or not.

 

[Peter Parker]

Since they have not yet lost subs in even a single quarter I would say that isa safe bet. The problem is that this is ano longer a growth stock. It is ina more mature phase.

 

[rtt2]

Well to give you perspective I am seriously contemplating switching in the next 6 months.

In short DBS has become more expensive and offers less channell offerings that cable.

 

[Sarang]

Well to give you perspective I am seriously contemplating switching in the next 6 months.

In short DBS has become more expensive and offers less channell offerings that cable.

Not around here with Comcast under usual rates, the way they nickel and dime you for every thing. I like how Satellite lets you OWN in your equipment in that respect.

 

[navychop]

DBS is certainly cheaper AND MORE RELIABLE than the local cableco, which apparently is trying to get folks to pay for service calls and meet them during the working day at home, even when the problem is in their lines OUTSIDE the home.

The bitter taste in my mouth (from 1st hand experience) will likely ensure I -NEVER- deal with the local cableco again.

 

[mb1058]

I will go step further. When I built my house 3 years ago, our local utility doing the underground work said I needed 2 sets of conduit to run both telephone and cable to the house. I gave them conduit only for the telphone side and said I would never run cable into my house. The cable bill would go up monthly. Recently, I priced comparable packages between E*, D*, and the local cable company and D* was $10 higher per month and cable was $25 higher per month. Until one of them is significantly cheaper or significantly better quality why change.