Sling Needs to Cut the Cord From Dish

August 5, 2017

As Charlie Ergen drags his feet in finding a deal for Dish Network Corp., it's becoming clear that Sling TV especially deserves a new home sooner rather than later. 

Sling is Dish's live TV streaming service that starts at $20 a month and offers networks from HGTV and ESPN to CNN and Lifetime — a chubbier skinny bundle, if you will. Its name is also appropriate given that Sling is helping support Dish's wounded satellite-TV business, as cord-cutting accelerates across the industry. 

While the company doesn't break out figures for Sling compared with the satellite business, Dish did lose 339,000 pay-TV subscribers overall in the first six months of the year — worse than Charter Communications Inc. and Comcast Corp. Sling alone is said to have 1.7 million users (and growing), making it the leader in the online TV market, Bloomberg's Gerry Smith reported last month. This means the satellite business is shrinking even faster than one would initially glean from Dish's financial statements.

Still, Sling isn't receiving its fair share of attention both inside and outside the company. Instead the focus, understandably, is on Ergen's strategy to build a wireless data network for the so-called internet of things that will finally make use of Dish's treasure trove of spectrum, the very assets underpinning the entire $29 billion company's valuation and investment thesis. Shareholders have long waited to see Dish do something with these airwaves, and the window to monetize them is closing as rivals hook up and wireless carriers begin building out their own 5G networks. While Ergen has reportedly discussed with Inc. CEO Jeff Bezos a potential wireless partnership, most Dish investors probably favor a sale to Verizon Communications Inc. or another party because it's the most immediately lucrative move

All this uncertainty around Dish's future is distracting from Sling, which simply hasn't lived up to its potential. That impressive 1.7 million subscriber figure becomes less so when considering that Sling TV launched more than two years ago and that its brand is 13 years old, yet it's still relatively unknown to many people. Ergen was an early investor in Sling Media — which got its start with the Slingbox — and Dish acquired the business in 2007, back when Netflix Inc. was still mainly a DVD-rental service. Sling was far ahead of the game. 

But all that time passed and the brand was somewhat neglected. This allowed AT&T Inc.'s DirecTV Now, Sony Corp.'s PlayStation Vue, Alphabet Inc.'s YouTube TV and Hulu Live TV — all powerful brands – to pounce on the rising number of cord-cutters with their own Sling-like offerings. It just goes to show Dish just let some of its opportunity slip, and that's because it's not the right home for Sling. 

Analysts such as Amy Yong of Macquarie Group Ltd. have suggested that if Dish were to combine with, say, T-Mobile US Inc., then Sling could be rebranded to T-Mobile, which resonates far better with consumers and whose CEO John Legere has proved to be a brand-building expert. Similarly, I still think Verizon and Dish should get together, and so Sling could be Verizon's answer to DirecTV Now, which will soon have the power of Time Warner Inc.'s HBO and other networks behind it. 

Just like the use-it-or-lose-it requirement the government has placed on some of Dish's spectrum, it's time for Ergen and his team to make a bigger push to grow Sling or sell it to someone who can. And with the satellite-TV business in rough shape, which Sling is helping to conceal, he may as well sell the entire company. Verizon, if you're listening … .

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

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