DISH Network Corporation Form 10-K for the Fiscal Year Ended December 31, 2024
DISH Network Corporation filed its Annual Report on Form 10-K for the fiscal year ended December 31, 2024. The company reported a significant decline in revenue, with a net loss of $1.4 billion compared to a net income of $1.1 billion in the prior year. The decline was primarily due to a decrease in wireless revenue and a non-cash impairment charge related to the company’s wireless business. The company’s operating expenses also increased, driven by higher costs associated with its wireless business and a non-cash impairment charge. Despite the decline in revenue and net income, the company’s cash and cash equivalents increased to $2.3 billion, and its debt decreased to $4.5 billion. The company did not pay any dividends during the fiscal year and did not repurchase any shares of its common stock.
Overview
Recent Developments
DIRECTV Transaction On September 29, 2024, DISH Network and DTV entered into a purchase agreement for DTV to acquire DISH’s Pay-TV business. However, DTV terminated the agreement on November 22, 2024 as DISH DBS Exchange Offers were not completed by the deadline.
Sale and Transfer of Assets to EchoStar In 2024, DISH sold certain assets and equity interests to its parent company EchoStar, including the sale of a financial asset for $246 million, the transfer of subsidiaries holding wireless spectrum licenses and assets like the EchoStar XXV satellite, and the sale of DISH’s 700 MHz spectrum for $1.037 billion. EchoStar also transferred the EchoStar XXV satellite to DISH. These transactions resulted in a $3.775 billion increase in deferred tax liabilities.
Segments DISH currently operates two primary segments: Pay-TV and Wireless. The Pay-TV segment offers DISH and SLING TV services, while the Wireless segment provides 5G services and devices.
Future Capital Requirements DISH expects to fund future operations through cash from operations, existing cash, contributions from EchoStar, and raising additional capital. Significant investments are needed to continue 5G network deployment and commercialization. DISH’s capital expenditures may decrease in the near-term but are expected to increase as it approaches build-out deadlines. Declines in the subscriber bases for both Pay-TV and Wireless could negatively impact cash flow.
Economic Environment DISH experienced inflationary pressures in 2023 and 2024 that impacted its operating results.
Operational Liquidity DISH’s future cash flow is affected by subscriber churn, service margins, subscriber acquisition rates, 5G deployment, litigation, and financing activities. DISH has experienced negative free cash flow due to 5G investments and subscriber declines.
Debt Issuances and Maturity In 2022 and 2023, DISH issued $3.5 billion in 11 3⁄4% Senior Secured Notes due 2027. In 2024, DISH received $2.5 billion in new financing, including term loans and preferred shares. DISH also redeemed several senior notes that matured in 2022, 2023, and 2024.
Pay-TV Segment
Competition The pay-TV industry is highly competitive, with DISH facing substantial competition from other pay-TV providers, broadband/streaming services, and programmers offering direct-to-consumer content. This has contributed to declines in DISH’s Pay-TV subscriber base.
Programming Programming costs, particularly for local broadcast channels, have been increasing substantially, putting pressure on DISH’s margins. DISH may not be able to pass on all these cost increases to subscribers.
Other Developments DISH has licensed its adaptive bitrate streaming patents to companies like Peloton, Nordictrack, and Mirror, generating revenue.
Pay-TV Segment Results
Subscribers DISH lost 785,000 net DISH TV subscribers in 2024, an improvement from 945,000 lost in 2023. SLING TV added 37,000 net subscribers in 2024 after losing 279,000 in 2023. Gross new DISH TV subscriber activations declined 39.2% in 2024.
Financials Pay-TV service revenue declined 6.8% in 2024 due to a lower subscriber base, partially offset by a 4.2% increase in Pay-TV ARPU. Cost of services decreased 6.2% in 2024, while selling, general and administrative expenses declined 23.9%. DISH TV SAC decreased 10.6% in 2024.
Wireless Segment
Strategy and Operations DISH’s Wireless segment provides 5G services and devices. DISH is transitioning from an MVNO to an MNO as its 5G network becomes commercially available. DISH has met FCC deployment commitments and received extensions for certain spectrum licenses.
Subscribers DISH’s Wireless segment lost 304,000 net subscribers in 2024, an improvement from 617,000 lost in 2023. Gross new Wireless subscriber activations declined 8.1% in 2024. The Wireless churn rate improved to 3.00% in 2024 from 4.17% in 2023.
Financials Wireless service revenue declined 5.4% in 2024 due to a lower subscriber base, partially offset by a 1.2% increase in Wireless ARPU. Equipment sales and other revenue increased 13.8%. Cost of services increased 53.8% in 2024 due to the inclusion of 5G network costs, while cost of equipment and other declined 40.7%. Selling, general and administrative expenses decreased 14.5%.
Other Consolidated Results
Income Statement DISH reported an operating loss of $180 million in 2024, compared to income of $175 million in 2023. This was driven by increased losses in the Wireless segment and lower income in the Pay-TV segment.
Interest expense, net of capitalized amounts, increased $651 million in 2024 due to lower capitalized interest and new debt. Other income, net, improved $2.485 billion in 2024, primarily due to gains on debt extinguishment and asset sales.
DISH recorded an income tax benefit of $10 million in 2024, compared to a $372 million benefit in 2023. The effective tax rate was 14.2% in 2024.
Non-GAAP Measures DISH provides segment OIBDA (operating income before depreciation and amortization) as a non-GAAP measure. Consolidated OIBDA was $1.293 billion in 2024, down from $1.357 billion in 2023, primarily due to the factors impacting operating income.
Analysis and Outlook
DISH’s financial performance in 2024 was mixed, with its Pay-TV segment showing some stability but the Wireless segment continuing to struggle. The key takeaways are:
Pay-TV Segment Trends
- Pay-TV subscriber losses are moderating, but DISH TV still lost 785,000 net subscribers in 2024. SLING TV added subscribers, but the overall Pay-TV base continues to decline.
- Programming cost increases remain a headwind, putting pressure on margins despite ARPU growth.
- DISH is focused on acquiring and retaining higher quality subscribers, which has impacted gross activations but improved churn.
Wireless Segment Progress
- DISH is making progress on 5G network deployment, meeting FCC commitments and receiving extensions.
- Wireless subscriber losses are improving, but DISH still lost 304,000 net subscribers in 2024.
- The transition to an MNO model and migration of subscribers to DISH’s own systems has been challenging, impacting financials.
- Significant investments are still required to fully commercialize the wireless business.
Consolidated Performance
- DISH reported an operating loss in 2024 as the Wireless segment losses offset modest improvements in Pay-TV.
- Debt refinancing and asset sales generated one-time gains, but the core business remains under pressure.
- Free cash flow has been negative due to 5G investments and subscriber declines, raising concerns about DISH’s long-term financial position.
Looking ahead, DISH faces several key challenges:
- Continuing to stem the decline in its core Pay-TV subscriber base amid intense competition.
- Successfully transitioning the Wireless segment to a profitable MNO model and driving subscriber growth.
- Funding the substantial investments required for 5G network deployment and integration.
- Maintaining liquidity and managing its debt load as free cash flow remains negative.
DISH’s ability to navigate these issues will be critical to its long-term viability. The company’s diversification into Wireless provides opportunities, but also adds complexity and financial strain in the near-term. Prudent management of capital, costs, and the customer experience will be essential for DISH to return to sustainable profitability.
