Q3 2019 Earnings Call

Good day.

Yes.

<unk>.

2019 earnings conference call.

Today's conference is being recorded.

I'd like to turn the conference over to Jason Kiser. Please go ahead.

Thank you and thanks for joining us everybody joining today by Charlie Ergen, Our chairman, Tom Cullen VP of corporate development work Carlson.

That does not work right now when the President this works lifting the prison swing.

Our CFO .

Some measure our general counsel.

A couple have some opening remarks, but for over 10% over just.

Alright, Thanks, Jason Good morning, everyone. Thanks for joining us any forward looking statements that we make during this call are subject to risks uncertainties and other factors that could cause our actual results to differ materially from historical results and or from our forecast.

Cautionary statements that we make during this call should be understood is being applicable to any forward looking statements, we make wherever they have here.

You should carefully consider the risks uncertainties and other factors discussed in our SEC filings and should not place undue reliance on forward looking statements, which we just don't assume no responsibility for updating.

As part of the process for FCC auction one of those three we filed an application to potentially participate as a bit or for those spectrum assets because of the fccs anti collusion rules.

We're not able to discuss what if any spectrum resources, we may intend to bid on and we will not be answering any questions on the on the auction on todays call.

This morning, we announced that are board approved propose rights offering to raise proceeds of approximately a billion dollars until the prospectus supplement filed in connection with that rights offering.

We're not able to discuss any additional details and we will not be able to answer any questions on that offering on todays call.

That I want to turn it over to our CEO Eric Colson.

Thank you Jim and welcome everyone. We have a lot going out operationally across the industry and of course.

<unk>.

Let the first congratulations you're free I thought border.

First grade.

17.

So weve been able to total pay TV subs.

Hi, I'm pleased to report that are discipline pursuit of our service technology and value strategy continues to pay off.

No, we're finding the right customers right geography, and giving them lots of reasons, you out to buy dish and stay with dish.

Third quarter with 140000 total Ptv deposition.

No I recognize that we lost 66000, that's outside dish TV. This is notable progress.

And I'm pleased that were clearly bucking the industry trends.

No we realized year over year growth in a dish TV. Gross addition, 416000 subscribers chose addition to third quarter compared to a year ago.

294000 gross additions.

The trends thought accidental obviously.

There were both headwinds and tailwinds in the third quarter and it's fair to conclude.

That are that we both benefited and were like and were impacted by programming dispute across the industry.

Again, we're adding the right customers in the right geography in aggregate additions in the quarter represent the highest average credit scores that we've seen.

So I thought you want to 14000 net additions largest job growth we've seen since we started publicly announcing swings that.

We credits affected promotions more flexible value proposition that our direct competition.

Yes, when does he puts and takes with regard to programs.

Of course, there of course seasonality continues to play a role insulin growth.

Organizationally and close our acquisition of assets from Echostar September It officially welcome to key employees responsible for satellite operations.

Oh, I'm going to touch on the impacts of the transition.

Yeah.

That could happen our financial.

Moving on to wireless Charlie and Tom or both here to address our progress.

I'm pleased to see the FCC issued its order this week approving the proposed T mobile spread merger.

The framework established by the FCC will facilitate accelerate dishes entry.

The new nationwide facilities based provider.

Our goal is to spur a competition that drive Americas leadership in Fiveg, all the benefit of American consumers in the industry.

Yeah with regard to our announced acquisition of sports prepaid business, including boost wireless we're moving forward.

To me that the T mobile sprit merger will close.

Sure the merger receive approval, we're confident that our day one planned for booth sports team as partners and its customers we will be right.

So I hope you saw the news walk them into new members to our wireless leadership team Mark was accomplished wireless executive.

As many assignments he served as Nokia's chief innovation at operating officer, and if the chairman of Alcatel Lucent.

Technologist at heart will serve as our Chief Network Officer.

Yes, Stephen by former President of T. Spirals, TCOS, Fred you will serve as our Chief commercial officer.

I guess, what would have stayed at markel architect and that working people will commercialize it.

We may have more AD, but it's fair to say both individuals are rock stars in our industry.

I understand it's your our vision and we're certainly glad to have them aboard.

Finally, let me close that's an incredible news JD power to a dish number one in overall customer satisfaction among national TV provider sort of second your Roe.

Honors at our category, earning a top ranking in all four geographic regions and that's the first for a company at our industry I.

Across the entire team for supporting this brand.

Especially our frontline personnel or service and field reps.

Good day in day out delivered excellent customer experience. So congratulations I'm really proud of the team.

Thank you and data like to travel to Paul for a bit of color on a quarter call Hey, Thank you Eric Eric just mention dish gross additions gets you do not upward trend and just as important are coming in with all time high credit scores.

Looking at the piano, our operating income in EBITDA are both down compared to last year, that's primarily due to a lower subscriber base and higher sac.

These decreases were partially offset by reduced satellite in transmission expense as a result of our acquisition of the Echostar satellite services segment I'll discuss that shortly.

Our revenue declined due to a lower subscriber base to low ARPU.

While we were pleased with the ARPU increases that both dish and swing or pay TV subscriber base continues to have a higher percentage of sling TV subscribers, which lowers overall pay TV ARPU.

We also saw decreases premium channel revenue, mainly mainly related to the removal of HBIO.

Our subscriber margins for the quarter were positively impacted by reduced costs related to try to removals quoting regional sports H.B.L.

However, we continue to face long term pressure from programmers, who want higher and higher rates.

Even in the face a declining viewership.

Just to be stock increased to $827 per activation up from seven to 21 last year.

The increase a dish TV Soc was due to higher hardware advertising and installation cost practice nation.

We continue to supply a greater percentage of our new customers with hopper receivers.

This drives additional hardware and installation costs, but we believe offering our best equipment influences loyalty over the long term.

It delivers a better customer experience.

<unk> expenses were up this quarter as a result of cost to support our wireless initiatives and legal fees.

Year to date, we generated over 830 million in free cash flow despite increases in wireless Capex ANSAC.

Free cash flow is impacted by timing differences between book expenses and cash payments, including taxes.

An example, the third quarter was negatively impacted by the payment of $61 million litigation judgment that was previously accrued.

After the redemption of our 1.3 billion dollar debt maturities back in September we ended the third quarter with approximately $1.6 billion of cash and marketable securities.

And finally during the quarter, we closed our agreement to acquire the majority of Echostar satellite services segment as well a certain real estate in exchange for approximately 23 million shares.

Prior to this transaction.

I'll start providing a satellite capacity and other services that was mainly recorded in satellite transmission expense.

Going forward. These satellites are now capitalized on our balance sheet and will be depreciate over their remaining useful life.

We no longer my cash payments to Echostar for the satellites. They previously owned which positively impacted EBITDA and free cash flow for the quarter.

For the two satellites echostar leased from third parties, we assumed the echostar leases and we'll continue to make payments pursuant to those agreements.

We did not realize the full benefit of this transaction in Q3 at the close during the quarter.

With that I'll turn it over for questions operator.

Thank you.

Okay.

Community.

Good question Keith.

Thank you for questions.

First question from <unk>.

Please go ahead your line is.

Oh, thanks, so much a couple questions for Charlie Charlie I don't think you've paid yourself a billion dollars a compensation the entire history. The company and you can correct me if I'm wrong in that but your commitment to backstop. The rights offering does that mean, you're willing to borrow against a you're just stock to fund it into any.

I don't think I can comment on that.

I'm looking at I'm looking at the lawyer.

Yeah, Yeah, we're not going to look until the first until the.

Prospectus supplement is out we're not gonna say anything about the rights offering that we haven't already said in the press release this morning.

But I really I would say as I have liquidity.

Yeah.

Thank you.

Next question.

Q.

Morgan. Please go ahead your line is open.

Hey, guys, thanks, and congratulations to season in Mark it'd be great to have them onboard.

Can you give us any update on first on the RFP process and what kind of responses you're getting thanks.

Exactly yeah, Phil this is Tom.

Very healthy response rate from both traditional and non traditional vendors. We we cast a wide net as I said I think on previous calls so not only the traditional infrastructure vendors in wireless, but enterprise technology companies cloud service providers startups and different response.

Tons for different pieces of the RFP as you know it was pretty comprehensive so.

The respondents Ari.

You know dozens and dozens of them and we have been meeting with them pretty much nonstop for the last three to four weeks.

Trying to isolate and and refine the architecture that we want to go forward with obviously as we've said earlier, we're taking a very cloud centric approach to a virtualized network, which will allow us we believed to deploy this at a lower capex and opex.

Level than not only legacy players, but even what we assumed going into the RFP process. We're encouraged with the responses, even though we have yet to negotiate final agreements.

Okay.

And then.

And then any conversation happening with the FCC around the de process.

There hasn't obviously been an announcement, but any progress happening there.

We can't comment on that.

It's oh, sorry, thanks, guys.

Thank you.

Thank you.

We will never take our next question from <unk>.

<unk>.

Please go ahead.

Thanks, I, Charlie Timo will have their call today.

Mounting a new some new rate plans that are contingent on sprint T mobile deal getting done one of them once they got 15 dollar plan.

For two gig it seems like that could have an impact on boost.

And the types of subs I guess, but in addition to that.

He said that they were in some type of discussions with spread.

In terms of extending their agreement.

He mentioned I guess value indemnification number different things that they might be renewed renegotiate and I'm just wondering.

Is it does this have to be part of those discussions if they're changing.

Any structure of the transaction and that we're doing things that.

Centrally impact what dishes getting.

As part of this this deal.

Would you be part of that discussion that that's going on between.

T mobile and sprint right now.

Short answer is where is.

We're would not be involved in any kind of renegotiating renegotiation between sprint and T mobile and I think there.

And I have no inside information one way the others, whether that's happening actually happening.

Regard to the first question I think the you know from a big pitchers perspective I think.

I think this this proposed track transaction T mobile and spread so you know I think you could you give the FCC and the just department take a lot juts FCC to advance Fiveg and justice to provide remedies.

In competition, but I think you've got to give the state attorney generals.

A lot of credit.

And.

And.

Yes, incentivizing I should say you know T mobile to take a look at lower income.

People, who are some of the people that that maybe are that are getting the best is low income people always credit cards other all parts of our.

Our economy, they sometimes don't goods, they sometimes get did the worst deal because of their income status. So that's a big step forward.

That T mobile's committed to.

I'd only say that based on what they.

We can't publicly talk about RMB, you know deal, but obviously they made some caught promises to the FC into justice and based assuming they keep those promises we believe that said that dish will be competitive with boost and we're going to grow that business.

So any changes that they make that that's you don't envision that triggering a need.

In order to stick with us deal of getting anything alternatives, you're kind of you know.

I guess straightforward.

The the Big Pictures T Mobile's has committed to making sure that the ambient those competitive.

Well.

Charlie.

Rich Greenfield.

When you look good.

Drop of the are a sense I think.

Sort of shock the worlds.

Only losing 66000 subs.

Back at the envelope math looks like you just saved half a billion dollars annually.

You're only going to lose.

20 plus million dollars of EBITDA.

It seems like a fantastic trade I'm sure you'll lose some more subscribers is baseball season comes back et cetera, but.

Seems like it was Oh I truly amazing decision.

Missing anything or is this sort of.

During the rest of the industry that are a sense aren't needed anymore.

Rich. Thank you for that softball question, [laughter] I'd I'd be it a little bit differently I I think that.

That.

Short term long term our preference that there's no question that that it's complicated because what happens bought one box don't all all the assets.

With that they've sold the Disney into Sinclair and themselves they they price that.

They price that uniquely.

And to some degree.

Subsidizes, the regional sports with some of their Bergen, because they split that a part of course, both Disney and Fox one of their fair share for there what their program it was worth and and the the regional sports. We're we're mispriced in marketplaces leased as it relates to dish.

The second thing is the dish as you know consumers are a little bit different so as many of you know and regional sports there's different zones and people in the city's tend to pay more for regional spit sports and people on.

And the rural areas, but contractually that.

[noise] contractually Sinclair want to go a little different route there and so there was lot of complications, there and and and the bid but the biggest complication was that dizzy themselves, who would contracted the negotiations out.

I didn't extend the contracts. So we lost the best we lost the the highest value regional sports customers.

Because the months of August .

August and September the hot at least for us or the highs highest viewed months for regional sports by by a long shot so to be down during that period of time. They felt that was negotiating leverage against us and so that's why that they did it but the they actually they actually.

Good my opinion that illogical thing, because we lost or best customers. Therefore, we couldn't pay as much money to put regional sports back up again, so because our cost for the viewers who want it would go up and.

You're in a situation so having said that we we'd rather have a deal we like Sinclair. We've had a long term relationship was going Sinclair like the company like the people there.

We'd rather have regional sports, but we're not going to.

The company, we're not going to subsidize, we're not going to subsidize regional sports and so.

You know that there's there's economics that that that may not work for them, but theres economics, we know what the economics are for US we actually analyzed stuff is actually.

Well, we believe our customers our customers value is little bit different that somebody other so we can't be treated they always want to treat everybody. The same it's just not worlds not going that way. The other thing is you have taken a macro environment rich which is.

As things go as things go to streaming we're going to an all a car world and you're going to be able to.

I would imagine baby bonds, even taking programming.

Disney's taking programming also dish as we speak kind of TV everywhere and moving it to Disney plus I mean, they're doing that with all distributors as we speak.

And that doesn't increase their value to us right. So obviously that has to be taking consideration in negotiations. Additionally.

I would imagine that even regional sports, even even teams themselves will probably stream directly and will people will be our customers are customers get HBIO different way today, they don't have to get it from us they they can.

Pirated they can use code sharing they can get it do another distributor or they can get or Amazon.

Our customers will be able to get regional sports.

Local channels when that comes up with Sinclair, they're just going to get a different way and and so.

Sometimes.

We're so it works I wanted to the weeds in this business for so long but.

We just see the world a little bit differently than other people, but we having said that we'd like to strike.

Agreements that are good good for both companies and the fed long term relations and you have to make us leap kicking and screaming but.

HBIO did that.

And.

Refused to negotiate a deal other than one that we would lose a significant amount of money on.

They had strategic reason because they wanted to grow subs a directv.

And they have game of Thrones coming up so they had they had a balanced strategic reason for wanted to do that.

That reason may not be out there anymore.

But that they certainly did that in Sinclair now Unfortunately.

Given dizzy decision not to extend the contract.

Is in a situation where they've got to make.

They've got to make decisions, but.

But if everybody has regional sports and we don't.

And.

Trust me the vast vast vast majority of our customers don't watch a single second of any of those regional sports and our network.

That's an advantage for us if thats if that's the strategy we have to go down because we won't have to increase the prices to our consumers and I know, what's going to happen Sinclair will start running that meant to this.

So many times Sinclair I'll start right and add the sand you can't get.

This hockey team on dish and you're getting on our competitors and we'll run an AD that says you're paying more from our competitors because we don't have that hockey team that you don't watch right and so it'll it'll be more mindless stuff, but that's the way things go ahead.

We accepted that that's probably the logical thing that happens in this business.

Thank you.

Thank you.

Take our next question from Doug Mitchelson Credit Suisse.

Yeah, sorry about the difficulty before the other question I was asked Charlie just with Timo what else you got limited today at $50 about that their deal gets closed LTC is out there at 20 cable selling by the gig I just wanted to get your latest thoughts on on the wireless opportunity if your as confident as ever that.

Have you build out the business will be as attractive as you hope given we're seeing some pricing cuts in the industry. Thanks.

Yeah, you know.

I think there I think there proven our point the United States as the highest some of the highest.

Prices in the world for mobile services the.

Different plans or maybe not.

Attractive to certain segments of our our population.

And the margin, 60% margins are really pretty nice margins when you're when you're selling air so its ripe for disruption disruption, but if you're going to get down to $15. The only thing I'm sure. Obviously, you better have the most efficient flexible.

Lowest capex network and I'm, telling you.

This is going to have a huge huge advantage there as we build a greenfield Virtualized network, that's primarily in the cloud.

It is it just huge cost advantages.

Long term.

Yes that allow us to compete wherever they want to go.

All right. Thank you.

Thank you.

We will now take our next question from Kanan Kate.

Bakkies does go ahead your line is open.

Thank you Charlie a couple if I could the first is on on your DBS business. Obviously, it's been pushing 80, indeed to do something with Directv and the obvious choice has been potentially combination with dish and obviously, it's not a new implementation you. They just talked about it in the back.

Many times.

But structurally is did given youre focused on telecom and given the need for capital build that out.

Is there any we envisage you can partner with Directv, even if there is not an explicit deal in the pipeline, which could make this.

Vin mental both of you.

And then secondly from a financing timeline or they don't directly addressing the billion dollar rights issue today.

What's the timeline in terms of that 10 billion dollar number how you're thinking about that from a.

Jeopardy structure perspective in terms of debt equity makes sense on it so for that you could just help us with that can be very useful. Thanks.

So I think the second part question.

As far as are our capital requirements.

As we get bars at the RFP process will have a bit about flavor for that obviously the rights offering is going to secure the first billion of that the company. Eric Steen is cash flow and you can look at those numbers that's in the neighborhood of $100 million a month.

Perspective. So you can you can kind of calculate that out and and there is obviously other any good business plan today can raise way way more than $10 billion. So.

The.

As we got the RFP process, though that that guides us a little bit and as Tom I'll, just reiterate what Tom said I mean, their RFP process so far.

As you.

The cost of come have come in below maybe where we expected on that 10 billion number and obviously, we haven't finalized the vendors and obviously, it's still in the more negotiation.

To go and a lot of people.

You know that there'll be a time next year that were you won't be hearing dish, saying about the power Fiveg Virtualized network, you're going to her other companies talking about it you can have you're going to hear from different sources. The kind of things that we're talking about just like people talked about didn't talk about digital compression back in 1990 on what did that sure talked about at 1994, even though we.

We're talking about it 1991, so you're going to sit you're going to see.

Lots of investment and lots of.

Creativity around the kinds of things that we're doing.

And it would be more obvious to people.

It's just.

I spent the last 10 years of my life learning about wireless and I'm still.

I'm, a little better than a novice, but I still have a lot to learn it's really hard to understand where this pull thing is going with that being in the weeds of it.

In the Nitty gritty detail so.

And I forgot the first part your question.

Great.

Look there's.

There's industrial logic for.

For dish and Directv tend to be doing some things together there is industrial logic. For addition, 80, indeed be doing things together, but I, sometimes but but when somebody with a gun to your head with HBIO and says you will you do carry aged really going to lose money, that's not a door opener for us.

As a company and this merger with T mobile on sprint Scott.

You know we're focused on that were the FCC is.

As.

Gift, giving us an opportunity justice as we're part of a remedy we're we're really focused to make sure that transaction this transaction.

As Scott is completed and were totally focused on that and that's going to take all our efforts along with <unk>.

But along with Architecting our network.

The into year end.

We finalized my direct reports we have.

Arguably one of the finest teams in wireless now at the high level. We've got to go feeling some gaps in our my direct reports you got to build their teams and they have carb wants to go do that.

With anybody and everybody that can help us.

But we've got a really really.

Solid senior leadership team both on Eric side.

Worn on sling and and now with on the wireless side. So.

That's where our focus is.

Alright, thank you.

Thank you.

Take our next question from Ric Prentiss Raymond James.

Thanks, one quick one longer term one I think you mentioned the satellite transmission expense was not fully reflected in the quarter. How much more do you think will come out from the 92 million in third quarter to fourth quarter, but then more long term.

On the Echostar call today, they were pretty excited about the S band spectrum and their purchase of Healios and then possibly working with the decide on the S. Band. So Charlie maybe you can elaborate on what I spend might bring to things and.

Third question light him up is the 600 with T mobile any progress.

I'll take the first one here as it relates to satellite transmission expense from the majority of the benefit was received so you'll see a little bit more going going forward.

And I just direct you to take a look at the related party footnote you can see what we've been paying them and how it's dropped and there's some more that I can go down, but we're still have a surfaces that they provide so that will be some amounts that we will pay them in the future.

Correct.

600 megahertz as you know the T mobile is required to negotiate in good faith with dish to Delever some that capacity until we're able to use the you know that.

You can imagine.

They don't want to pay much.

What is worth so that.

That's yet to be seen where that goes but that's certainly potential upside the capital for dish.

And what was the.

Fantastic Westmin S band that's bands that this again.

Potential for dish, the what what because I understand what echostars doing, particularly with HEALOS wire there in a position to.

Do you have priority rights worldwide.

An S band dish already has property rights over North America.

Yeah Costar has it over Europe , Northern Africa, so that combination of that acquisition.

Enables a lot of opportunity to coordinate S band between terrestrial and satellite between meal and Leo and that particular frequency is very very flexible from.

Any anywhere from Aiotv too.

We used to make calls on S band, but when we first bought.

First our.

Yeah, so with phone. So you can imagine you could use your imagination to.

To think about where that might go.

And that certainly that's upside for dish and certainly part of part of we're connectivity company. So we're connecting people and things and machines and microprocessors and part of that is going to be terrestrial and part of that is going to be satellite.

Great. Thank you.

Thank you.

We'll take our next question from.

First of Deutsche Bank. Please go ahead. Your line is now open.

Great. Thanks as.

As we think about the longer term economics of your wireless business can you help us to understand how you're thinking about the ongoing operating expense to support the wireless network operations as well as the continued capital investment beyond the 10 billion initial Buildout investment and then just.

One on the satellite side as well.

How should we think about your capital investment requirements to replace satellites going forward.

Now that you've expanded the fleet through the Echostar transaction. Thank you.

Well I think our Capex, obviously, we want to.

Big picture is we're going to build a network that is less expensive operate that's more flexible.

In terms of why they can do and as Mark vision and because it will because we'll be cloud native and that network. We can we can just do things faster.

Better cheaper, we don't have the legacy of.

The two GE Threeg and Fourg. So did the cost structure goes down across the board, but it's more than just the cost structure structure. It's we're able to do things that features and things. We can do for consumers enterprises that would be difficult are costly for other people. Obviously you read about slicing of network as one of the Big things you can do for enterprises.

The and I would say it this way the vast majority.

Capex for the incumbents is too is not for not for Fiveg is to maintain the legacy Gigi three for two to two I'm talking vast majority of their capex is to maintain that leg. We don't have that cost going forward and its tens of billions of dollars for those guys that the to maintain that and it's it's.

Brutal did.

It's brutal drive change your software in the network. So much computation. So much rowdiness, there's so many complex transactions it go through but it's all happening.

A lot of what's happening with sophisticated equipment is expensive equipment at the tower and that that Thats just not the way the world Thats just not the way things are going be architected in the future. So.

Again, well you know as we get to the transaction as Timo in spring of that transaction, obviously, we owe it to the street.

To show you some of our cost structures, but but we want to be accurate when we do it we give me a generalization.

Of where we think it's going to be.

And as we get into the as we get into the actual vendors that we have an actual costs that we contractually that we have we'll be able to to get that down I think one of the analyst has gotten.

Theres one analyst that that's that's in the street today to spend a lot of time thinking about it started looking at some of the numbers I don't think there, particularly far off.

There is my other analysts that really haven't Doug it they look at US just like a carrier that's an income, but and if you looked at us like going to come in we we wouldn't be a viable business. So I.

I think that that we owe it to you guys to to get that too and we'll get that to you next year, but we want make sure it's accurate.

And.

We already passed a stage internally, we're where we know where we where we know where we get too, but we got we want to be approved.

Yes.

Okay. Thanks, a quick that's like.

The other question.

Okay.

Yeah that obviously that acquisition satellites.

From Echostar Lousteau controlling destiny, a little bit more we have total control I mean, there maybe want to speak more to because there has to deal with it but.

Okay, I think where your head is obviously website total control the had customer experience.

The.

The agreement with Echostar put us.

Pretty good position from what we perspective, so the near term, we don't see any capex.

From new satellite perspective.

Okay. Thank you.

Thank you, we'll now take our next question from Ben Swinburne Morgan.

Morgan Stanley . Please go ahead. Your line is now open.

Thank you [laughter] I wanted to ask about the core today's core business the video business I.

I think gross adds were the highest in a couple of years and same with the sling net ads can you guys just talk maybe Eric or Warner both just.

Your strategy to grow this business I mean, I know you've been focused on quality and churn but to see the connects grow this quickly and the marketing was up a lot and just wondering how you're thinking about going to market.

Any specific drivers you'd call out on either the satellite side or the sling side and.

How much you're seeing some of the issues. Your competitors are having are helping you or if you think this is sustainable just would love to get some more color on on the strong quarter.

Yes. This is Eric I'm glad to jump reward can provide more color a little deeper color on the sling side, but that.

As with my opening comments I mean really for Paytv perspective, we are we're focused on a service technology value and so.

We've had a plan.

The other decide that that we started with back 345 years ago that we've been talking about.

These calls to really make sure that.

That we're focused on bringing on.

Quality customers that can be with us from a long term perspective and so.

As we were continuing to build momentum.

Argue the right customer in the right geography.

Continuing to improve the level of customer experience we provide.

The products that we provide.

You know the hopper with.

Just go through a laundry list of a few right.

Ability to skip commercials, the ability to use your voice remote and now we've added to that with Google and the ability to.

Browse and five over 100000.

Demand titles along with.

You are live linear.

Programming.

People. There are there are a cohort of customers that really want to.

You have to pay for that experience.

You see the value and so we've got a lot smarter over the years I'd DALI customers that we target to acquire but the the customers that we that we invest into to retain.

Sling.

It's very similar approach right working hard to you know we've got a long way to go and we've got lots of opportunities but.

Prove the customer experience and.

Continue to to fight to provide choice and flexibility from a packaging perspective. So look at we make hard decision that we talked about these a little bit earlier on the call whether it's a you know nothing.

Appeal to come to agreement with a HBO or our ascends or.

Making sure that.

On the sling side, we provide the the right choices value.

You know broadcast TV. These are decisions that we've made to try to grow.

Our customer relationships and a profitable manner.

It's not.

The quarter is the last four or five six I'll make it it off.

Thank you, Rob a little bit have not come without.

Some tailwinds and headwinds I can't remember a core recently that we entered a programming.

Dispute.

So.

We we definitely you know as a team just about all the all the individuals and as a whole and figure out what decisions, we need to make Thats best for our company long term and.

Our customer base.

So I think right now.

The team has been executing at a decent level and we'll just continue to reevaluate as we do every day and put strategies and tactics in place to try to to try to win.

Yeah, if I can chime in.

Cord cutting trends continue so those are favorable for slaying.

So our job is really to grow responsibly.

We still believe we're the only.

A major player in that virtual EVD world that had positive gross margin and so how do we actually take that responsibly and that and work on our products continue to provide value for the subscriber.

So we like the trends in the future and we'll just continue to mind our netting.

Got it and just one follow up for Charlie you guys announced that deal with.

The state of Colorado around settling their challenge our there how are you feeling generally about the sort of position with the states are there opportunities you're seeing too.

Sort of.

Chip away at some of the opposition that you felt like what you fail to pull off in your and your home state.

Well I mean, obviously, Colorado I think gives us.

Okay.

All right on knows US right. We've been here, we started 39 years ago, and Colorado, where we've been a large them, it's not the largest private employer in Colorado, we pay our taxes here. So obviously that we'd like to stay here and we wanted our corporate headquarters to be here and.

I think that was.

I think that Colorado has state attorney General looks out for Colorado and obviously this deal is good the transaction is great for Colorado, It's now grade for everybody I got it you have to give T mobile credit.

It is not going to be.

Without.

Paying for them to do what the what they've suggested in their uncarrier move today and I haven't read all I, just got kind of some of the highlights before I jumped on this call, but but.

The if that goes along way to some disadvantaged people certainly they started doing things that I think are important wood, which are closing the homeware gap, which is which is which is imperative for this country to move forward.

And and.

No you're in a situation now work, where sprint actually get stronger as part of T. Mobile sprint, we looked at device forensics and half years ago. Today I can tell Ya objective Lee that what I saw six the deck today is and it hasnt been.

It hasn't improved.

Much of any over six and a half years and probably less certainly less competitive in the marketplace and they were six and half years ago, when we looked at it.

That company now get stronger T mobile get stronger against the two bit large and compensate teen Verizon and as part of the transaction dish builds a greenfield network that will be the envy of the world. So.

And what you will bring not only competition to the marketplace, but we'll bring innovation in a way that you just can't do with incumbent networks.

You got to give you got to give the FCC and just as a lot of credit for that.

They were maybe a little skeptical of dish going end they started to see.

What we're doing that I think they I think if you have private conversations.

They are probably less skeptical if I'm not saying that there.

They told I understand what we're doing we have to do a better job with a couple of commissioners on.

That opposed this merger so we let them know little bit how that affects everything so we'll certainly do that because we haven't spent as much time with them.

And then you got to get State Attorney General's letter State Attorney General's credit.

For encouraging.

The mobile to be aggressive to parts of our parts of our society. So.

I think.

Boy that I.

I don't I don't know how I would everything we're doing here is assuming this merger is going to go through.

We don't we're not work plan B. I'm, we're totally focused.

John as years during the transition with here. If you have any questions, but are you doing the transition with the swing bugs and.

In two doses to a company, whose folks and.

You know weve.

It's the same way I felt that the same way I felt when we when we knew forget if we could get or satellite launch that 1995 I knew that if we could get the satellite launch just launch the execution part we can handle and that we could be disruptive in the video business and that kind of feel like this is this transaction goes through with T mobile and spreads we can do the same thing.

Thanks, everyone.

Okay.

Thank you will know take our next question from Mike Mccormack of Guggenheim Partners.

Hi, guys. Thanks, Eric maybe just a quick comment on the sling side you guys have had a pretty aggressive I guess, one month promotion in the marketplace for a while now.

I guess you have some view on the 10 year. This those customers, but as you go forward.

Is there risk as we look over the next quarter or two that we have your churn spike up again, we've seen some of these promotional offers by your peers that tend to blow up after the fact, just some thoughts around that perhaps and then maybe Charlie just on the H.B. aside how does it feel back sort of change the dynamic or any sort of discussion with agency on them.

So Mike maybe also if you work and then I'll turn it over slaying I mean, obviously.

Such that the opening remarks.

Q3 has a bit more of a seasonal approach to.

Folks, especially with our.

The way our packaging.

Works to bring value to the customer with our with our Orange package, we we definitely or try to have disciplined and focused around attracting customers that can be profitable whether or not they may be more seasonal that linear TV.

Long term so.

Or do you have at other insight that you want to provide too Mike Yeah, I would you say that we've actually very.

Measured way started to.

Bring some as promotional offers backend real and back end in terms of value I mean and that the business itself is more susceptible to churn for sure.

We don't have contracts.

Wait traditional pay TV does.

But we don't see anything extraordinary happening in the next few months, it's business as usual on we continue to take steps forward to attract and retain good subs and I think for a little bit better at targeting.

Good subs can be.

Thank you want to cover things feel backs atrium axa.

Okay.

You know, it's interesting because I don't know everything they're going to what they feel Max but I think it's going to be a good product.

I think that it it will be tougher for linear distributors because.

Well HBIO at least HBIO was required at least from us guaranteed contracts certain number subs and obviously that's difficult to do when you're competing against H.B. Fuller themselves, particularly if they stick a lot of the programming.

On H.B. Emax. It certainly will it certainly will give leveraged to distributors.

In future negotiations as as you might be able to get some product from TNT or DBS or CNN or cartoon on H.B.M. on H.B. IMAX and so.

It's going be really interesting to see how.

Content providers navigate.

Because.

Before I got to watch more TV I mean.

Materially more and Theres lots of great programming out there and they're going to spend about the same amount of money.

And it's going to be a lot of mouse and the best product in the in the country. Today is Netflix and I think you heard Reed Hastings talk a little bit about engagement and that's the key metric and he did you just and it's not just Netflix the content is the fact that they're kind of a virtualized network as we've learned about it.

They've actually got most of their stuff in the cloud so there.

Actually more flexible and they deliver content cheaper than anybody can do it so.

You got to follow them and where it goes I don't know but.

I think is can take a couple of years to settle out in the meantime, Eric and his team.

Focused on where we know we can be strong.

Do you have an RV you can't take a cable and hauled around behind you you know if your tailgated again at football game.

Dishes with HDTV dishes, the best option there if you're in rural America were parts of the community and were there with the small business person taking care of those customers have for 39 years and our customers appreciate it.

And our relationship with customers is strong and their relationship with programmers is not.

And that's one of things you see reflect in our numbers and and so.

Well see where it goes but but.

You know us.

We've put a lot of things together to have a solid business I think I think that hopefully will continue and I think we're well positioned for the next.

Generation of Communications I.

I mean, if you could just.

If you're if you're looking at Fiveg, if you're looking at if you're looking at energy you might look at 100 customers. The everybody on this call might look at a hot it might be looking at 5100 different kind of things, but all of you should be looking at this company.

All of you can try that could just.

Indulgent in one market on buying because you did bring up the the sports viewing and potential for people to find that content elsewhere, perhaps in the not so nice way but.

Just your thoughts around that will issue and what you guys are doing it sling to ensure that you're not having your content stolen sure I guess maybe.

Well, we're policemen on the block and were pretty ever present placement slung is one of the few companies you may read the press were in litigation with any number of companies, who stood still not only slang but.

They still HBIO and they still regional sports and.

Quite frankly, it's pretty easy pretty inexpensive and we're not a comp in the block for regional sports Hbr right now and you know it when the copper in the block is not there crime goes up so.

There's no executives who understand that.

In other companies.

Probably because they.

Don't have the kind of.

Kids and my friends F.

[laughter].

But I do Charles anyway, but it but.

It's going to happen, it's unfortunately going to be a problem for for Disney and and Hbr Holdings and you know there's certain price. If you can stay at $10. It's not a big factor you start getting to $15.

Starts creeping up on yen.

Can't get something American public since.

Scrambling happened in the wireless business 1988, if you're going to be meantime, you're going to get hard to get.

They're going to find a way to get it and.

But what we're finding out there doing the wireless business too.

Right right John that's true so we're finding out that is.

It can be there. So you have to really be on top of and you have to really be really make things available in a in a nice way most people are honest and.

As long as the successful though.

Okay, and affordable anyway, which is one of those things that the did analysts don't really concentrate is out there I think Tom Rutledge talks about about it at charter and probably chartered dish or they won't do companies talk about it.

So operator, we'd probably have time for one more before we go to the media.

Thank you, we'll now take our final question from the I know this community members of the media on the call. Please press star one no to enter to Q to ask your question.

Beginning the media portion of this call following the answer to this I know that's question I find a lot on this question comes from Marci Ryvicker of Wolfe Research. Please go ahead. Your line is open. Thank you I have to kill and.

Keep extent that you know how much of that subscriber strain is coming from 18 tea and there's a perception that that there is a direct value transfer from that deal and then secondly can you remind us what the catalyst to wants to take Univision back online and maybe wide that line is different than the Irish and each be out.

Thanks.

Okay.

You take that even though again.

So a good marci.

Got it to it at our opening comments some ethic.

We we happen.

Focused and disciplined on really.

The decide and sling side now trying to attract profitable long term customers, where we feel we can to make an investment right be Directv at 18 to you're going through a little bit of maybe what we went through.

There are five years ago.

I can tell you that the customers.

That we're bringing on our of the highest credit quality, we've ever had as a business since we started tracking it so.

Obviously the quarter, there were tailwinds and headwinds for you know all pay TV providers, depending on the market. Your end, we probably had a few more headwinds and tailwinds as it does it sort of the sorts itself out and so yeah sure we were the beneficiary.

From CBS or Nexstar customers.

From a Directv perspective, and obviously, we had meredith down along with.

You know RSM and at Fox during the quarter and continue with HDL and so you know if there's a little bit of Ah theres, the definitely puts and takes there.

But you know the thing that we're focused on it to continue with our strategy.

That is really to look at.

Where we're targeting customers, who they are and how how will they.

You know be attracted to our service and will there be profitable for us long term and that that that philosophy didn't really change in Q3.

Yes, Mark Mark on Univision as they.

The reason Univision went back up because one of the more unusual things that I've seen in programming, but we actually were able to structure programming contract with Univision were where both parties are incentivized for the same thing which is to get more customers to dish and.

As a result of that we're kind of rolling in the same direction with Univision and absent that that would that wouldn't make any sense. So.

But but you know that and that's taken a while to rebuild that that.

Base and they and we feel we have a feel for the value that people see in Univision and as long as.

Contractually, we can we can provide univision for that make a profit on it we will continue to do that but we're rolling in the same direction with Univision, which is not always the case with with other programmers. Once you sign a burgamy deal you know there that you'd next time you seem is three years later on that.

They don't really focused on your but they just get from everywhere. In fact now most of them are competing with you. So.

That's a different with Univision do add to our he's going to say marches worn on this thing front, it's little bit different because the.

Directv now or 80 18 TV now.

Subs were really our full full bundle and include.

Affiliates in our sand and so we probably saw a little bit of a gain from that but.

That's not a.

Directly comparable product is slang and so.

Well in your regional sports customers were gone in the week, Yes, we saw a quick churn I mean, it's almost no switching costs whatsoever. So we actually saw a headwind.

Yes.

And.

As I mentioned it I'm sure some direct TV subs came out but I would say many just because we don't have a.

Comparable product.

Thank you very much.

We will know take questions from members of the media again, if you're a member of the media and would like to ask your question. Please press Star then one on your.

Key to enter the Q.

Our first question from the media comes from Scott Morris of Bloomberg. Please go ahead. Your line is open.

Great. Thanks. Good afternoon. These were a surprisingly strong subscriber numbers.

Interesting to hear that these are quality subscribers coming on credit wise.

What do you attribute this to and as it is that a sustainable with the demographic of the people you're seeing coming on.

Yeah sure Scott. This is a Zurich I mean, it's really are our continued disciplined focus on.

Targeting customers on the decided the right geography that.

That can be profitable.

We think lot with this long term.

Based on the based on their profile you know the other piece that you heard me speak about earlier was we continue to invest and the customer experience and the the product.

So the idea that customer can come home and just.

Literally pick up the remote.

I'd say, what they wanted at dawn.

Has been really really great for the dish platform and only got better what do we added.

Google assistant to the remote and so when you think about our mission to connecting people and things.

You know, we're starting to really realize that through the hopper platform and so whether it's getting commercials or voice remote or our demand or you know two subscriptions really kind of two subscriptions for price one with.

Our ability to take TV anywhere on the I pad.

More deliberate to an RV or somebody a the tailgate.

Customers are looking for.

Our product that differentiate in the market that can provide good service technology value.

Our Q2, you philosophy has been around are we to consistent so just kind of consistent drumbeat of March.

Really I strategy, the playbook that we put in place.

Continue with it.

Yes.

Thanks.

Thank you.

Take our next question from Jimmy Schaeffler of the Camel group.

For Charlie in the spectrum.

What happens to your satellite delivered Kt band spectrum as more and more users every kind of definition fall off the network. So I guess my question is what are your reuse plans for any part of that satellite.

Or mobile bands.

Well I mean, I think I think year, maybe where Jim I'm sure you are no anew.

We also into auction and bought the terrestrial rights to the.

After that we used today.

And.

It's only a little bit.

Surprised that the FCC has been a little bit more time looking at that because I've certainly a place for fiveg.

Perspective, it's only license for one way today that needs to be.

Restructure for two way, but we've done a lot of testing we've built out.

The only about.

35 around the country.

There's other people involved in it.

As well, but weve built out our our part and without interference data Directv ourselves. So we.

We think that Theres a.

The real chance that to take what I would call centimeter waves as much lower than 28 gig.

12 gig in to propagate 345 times farther lower cost to deploy as 500 megahertz a continuous spectrum. So we think theres a play for that long term, we bought that adoption I think 10 or 15 years ago. So.

We have long term. This company. Thanks long term, that's all I can tell Ya and.

Hopefully at some point, we can convince the.

The FCC to take a look at it.

Thank you.

All right operator with that were at the top of the hours. So thank you all for joining us and we'll talk to the next quarter.

Ladies and gentlemen, just confused today's conference call. Thank you for your participation you may now disconnect.