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Dish Reports 2.2 Million Sling TV Customers in Q4 2017, Up 47% for the Year, as Satellite Subs Sag

Sling TV, Dish Network’s internet-delivered skinny bundle, stood at 2.21 million subscribers as of the end of last year — the first time the satellite operator has broken out figures for Sling TV from its legacy pay-TV base.

According to Dish, Sling TV’s customer base grew 47% in the fourth quarter of 2017 from 1.5 million in Q4 of 2016 — while its legacy satellite TV business continued to shrink, dropping 1.1 million over the course of last year.

The company closed Q4 of 2017 with 13.242 million total pay-TV subscribers, a net gain of 39,000 sequentially but down 429,000 from the year-earlier period. For the most recent quarter, Dish had 11.03 million traditional satellite-TV subs in addition to the 2.21 million Sling TV subs.

With 2.2 million customers, Sling TV is the largest “virtual pay-TV” service in the U.S., ahead of rivals including Sony’s PlayStation Vue, YouTube TV, Hulu’s live TV service, FuboTV, AT&T’s DirecTV Now — which launched nearly three years after Sling TV.

Dish’s total Q4 2017 revenue of $3.48 billion (down 7% year over year) was slightly under Wall Street estimates, but the company turned in earnings that far exceeded analyst forecasts thanks to a tax benefit from the U.S.’s recent tax reform.

The company posted net income $1.39 billion, which included an income tax benefit of approximately $1.2 billion due to an adjustment to deferred tax assets and liabilities related to tax reform legislation. Dish’s diluted earnings per share were $2.64 for the fourth quarter of 2017, versus Wall Street consensus estimate of 56 cents per share.

In its 10-K filing with SEC, Dish disclosed historical subscriber figures for Sling TV. In 2015, its first year of commercial launch, Sling TV had 623,000 subscribers, more than doubling to 1.5 million in 2016. Sling TV, which is priced starting at $20 monthly, yields lower revenue per sub than satellite TV service but benefits from far lower subscriber-acquisition costs.

Dish’s subscriber net gain included 75,000 reactivations in Puerto Rico and the U.S. Virgin Islands in the aftermath of Hurricane Maria, which caused extension damage in the region.

For the full year 2017, Dish’s operating income fell 32%, to $1.57 billion, on a 5.1% decline in revenue (to $14.26 billion) as well as higher litigation costs of $295.7 million (versus $21 million in 2016) and a $145.9 million impairment charge related to the T1 satellite in its AWS-4 satellite fleet.

Dish has invested more than $11 billion to acquire wireless spectrum licenses and related assets, which are subject to certain build-out requirements under FCC regulations. In March 2017, the company notified the FCC that it plans to deploy a next-generation 5G-capable network, focused on supporting narrowband Internet of Things applications. Dish expects to spend $500 million to $1 billion on the first phase of the network deployment, slated to be completed by March 2020, the company disclosed in the 10-K.

In December, Dish announced that chairman Charlie Ergen would step aside from the CEO role to focus on the company’s emerging wireless business. Erik Carlson was named president and CEO, after previously serving as president and COO, and Dish announced other senior management changes.

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