dwy000

Long NYT article on exactly that today. As the CEO puts it, "we needed to stop being about what men want and to be about what women want." Their market share of women's underwear has dropped from 32% to 21% in the past 5 years. They needed to try something else because the "angels" weren't working anymore.

I don't think Amazon would ever acquire Dish. Too much baggage and other issues. I think Dish wants Amazon as an MVNO that anchors the new network they build. And for the $11/month price it might make sense for Amazon. But (agreeing with the article) there's probably no way Amazon signs on to an unbuilt, underbuilt or crappily managed network. Bit of a chicken and egg for Dish. It doesn't make sense to build a robust network without an Amazon like anchor. But Amazon will never anchor without a robust and highly functional network.

Good writeup Chesko. Thanks. There were a number of questions that immediately came to mind as I read it (and I haven't read the 10k's or done any other research). Would love to hear your thoughts. - there appears to be a massive long term headwind in that the move rate has declined steadily for 40 years. Why do you see that changing (other that short term covid related)? The market share gains are great but probably just offset the market decline. Unless this turns around you are constantly fighting an uphill battle. - why is everyone else of scale getting out of the business if it's so attractive ? You mentioned Budget has been shrinking fleet for years while Penske and Ryder are shifting to commercial. What do those companies know that UHaul doesn't (or vice versa)? - Isn't storage an increasingly saturated business? It's about as low barrier-to-entry as they come and you're basically competing on price. I get it for movers who are full service and they will only take your stuff to their facility, but if you're DIY, you can literally call around to 20 places and take the lowest price. Finally, this isn't a question as much as an observation but I always thought UHaul's value was almost entirely in the non-local space where you could rent a trailer in city A and drop it off in city B. If you're local, you're competing against anybody with a truck to rent (you can get them at Home Depot super cheap). Why are the returns so low given they are almost the only company out there where you can do that? Please don't take this as a slight to the analysis - it's more a piquing of interest prior to doing any other research. The 10-12% ROIC is a bit scary for a high capital business in a competitive market.

Lots of discussion on how Dish will play in the wireless space on CoBF (under various different investment names) so I thought this was interesting. It pretty much agrees with all the analysis here on the board but adds interesting comments on how they could play with Amazon. I thought the $11 number was quite interesting. Speaks to margins for incumbents even at the $30 or wholesale rate. Dish Stock Falls as Analyst Doubts Wireless Play’s Success | Multichannel News (nexttv.com)

Spek that's at least 3 "what are you selling" posts in the past week. Are you sitting on cash or selling to buy something more appealing?

On a broader note, I'd add any of the large scale enterprise software companies that are almost impossible to move off of even if you hate the supplier. Salesforce, Oracle, SAP, Workday, even IBM on many products (customers still using green screens because it's too difficult to switch).

I wouldn't put Amazon for AWS in there. Maybe for Prime membership but pricing at AWS has come down rapidly, pressured by Azure, Google and all the other wannabes.

Yeah. That.

I haven't looked into spectrum assets remaining to be sold. I'm not technical enough to understand the nuances of who can use what. They also keep moving things around the spectrum to free things up. The key I would think, is do the companies have enough for their build out plans, not what is available. Verizon (and T) overspend at the last auction so they won't have to worry about spectrum for a long time and will only look to add opportunistically not because they have to. This is why Dish is flailing. They hoarded an asset thinking everyone would beat down their door, and then the FCC and the other companies worked around them. By rapidly falling ARPU's i meant that you can now get 5G unlimited for $30. Comcast has taken Sprints place as the irrationally low priced competitor in order to stabilize their customer base.. ARPU's have been stable overall but the service you get for the price has exploded. When Charlie started hoarding people were paying like $120/month. Prices keep coming down and won't go up again very soon. I just don't get the end game for Dish that makes sense for shareholders.

I honestly doubt that Apple or Google will try to be a network provider. The other carriers would drop promo and support for their products if they were a competitor. Who knows with Amazon but I think this is too big for them to try - they do a great job of trying lots of things but the smartest part of Amazon is their willingness to admit they were wrong and move on. They can't do that with a $50bn build out. And they also just went all in on content with the MGM acquisition. I'm probably wrong but I continue to believe that the country simply can't support a 4th network. At the rapidly falling ARPU's out there there just isn't the money to support the ongoing network maintenance costs let alone the build itself for a 4th network. VZ and T combined spend $40bn PER YEAR on capex o. Their existing network on top of operating expenses and tower leases. If Sprint couldn't do it with 50mn customers and an existing network how is any new network going to justify it? Dish is painted in a corner. They spent so much on spectrum that has build out requirements to keep that they have no choice but to at least look like they are making a go of it. And the cable side funding it continues to melt away. The only rationale anyone ever talks about for buying Dish stock is the possibility of a buyout. Not sure who that makes sense for.

I think you summed it up very astutely!! The only possible Hail Mary i could see here is the company being acquired by Comcast/Time Warner to be their mobile platform (and possibly roll in Direct TV to consolidate what's left of cable). But that doesn't change the competitive dynamics against 3 massive players with existing infrastructure and the build out spend required, it just gives a customer base to market to. I'm also not sure Comcast/TW want to do a "build from scratch" in a market where they need to be competing today. But well summarized. The wild card is always Charlie Ergen and his willingness to risk the company on things whether they make long term sense or not. As a shareholder you are just along for the ride with Charlie - and his horse is getting old and tired.

In media, content spend isn't the same category as capex when looking at a traditional EBITDA. Content spend is effectively your cost of goods sold. It gets capitalized and amortized because of the lead time for production vs. when it get broadcast. If you exclude it altogether you are effectively excluding all COGS and your EBITDA is going be artificially (way, way) too high. If you are trying to calculate the earnings power of the business and the operating earnings/cash flow then you really need to include content spend. Whether you do it using amortization number or the cash number is up to you but looking at the business without accounting for the product that people are paying for would make the analysis flawed.

If you add back the content amortization, you need to subtract content spend.

Its a question of how you use the FCF (i.e. is it really "free cash"). If you spend it on capex you have lower FCF (and FCF/share) than if you have acquisition spend every 5-10 years that you pay for with debt. But if all that extra FCF in the acquisition scenario has to be used to repay the debt incurred it's not apples to oranges. If you want to look at it equally, you need to factor in the cash flow required to equalize the debt level. Otherwise you could just keep using more and more debt to buy back stock. Your FCF/share would go way up even though FCF might have declined. If you equalize for net debt it helps even it out.

And now the dividend levels (which was the primary difference) are similar too. I think VZ is better managed but hopefully now that T is a single business and not a wannabe conglomerate they can focus more on efficiency and driving margins.