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Dish's Operational Efficiency Will Get Better Amid Aggressive Cord-Cutting

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Companies such as Dish Network have experienced diminished revenue growth due to the cord-cutting trend, as they have been losing Pay-TV subscribers to online streaming services. In the wake of this trend, which is beyond the company’s control, it is imperative to adjust expenses so as to lessen the impact of falling revenues on net cash profits. To this end, revenue generated per dollar spent on (operating expenses) can be regarded as a key metric of how well Dish has leveraged its operating expenses.

From $4.41 generated in revenues per dollar of SG&A in 2014, the figure came down $4.15 in 2015, as Dish continued to lose Pay-TV subscribers. However, looking at the near future, we expect the figure to increase as the company regains some of its subscribers through its recently launched service Sling TV. THis should offer some relief from this Pay-TV struggle. In fact, apart from Sling TV, HD (high definition) broadcasting and advertising can drive revenue growth for the company at a faster pace than the increase in its expenses. With growing competitive pressure from its direct counterpart Comcast and alternate digital video platforms such as Netflix, Dish is looking to identify avenues to cut costs. With its efforts to control expenses and grow its other businesses, we believe that the company’s operating efficiency should improve going forward.

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