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Dish Network (NASDAQ:DISH) was rebounding Tuesday, +6.7%, in something of a bounce off the stock’s worst decline on record.
Dish slid 37.4% Monday as its third-quarter earnings disappointed observers looking for better revenues and marked a much bigger drop in wireless subscribers than forecast. The closing price was its lowest point in 25 years.
The earnings showed the challenges for Dish’s competitive position even as the company heads toward a merger with satellite networking company EchoStar (NASDAQ:SATS). Dish CEO W. Erik Carlson is headed for the exit in the coming week, and the company plans to place that role with EchoStar CEO Hamid Akhavan.
Dish noted in earnings that subscriber declines in its pay TV segment accelerated, with a net drop of 64,000 vs. a decline of 30,000 in the year-ago period. Meanwhile, in its burgeoning wireless business — Dish was meant to become a fourth national wireless carrier after T-Mobile absorbed Sprint — the company noted retail wireless net subs dropped by 225,000, whereas it had gained a net 1,000 a year ago.
In Dish’s earnings call (which dropped prepared remarks in favor of a question-and-answer session with analysts), questions almost entirely focused on the wireless business challenges. But a pointed discussion came up on what could be sharply higher capital needs, even as the EchoStar merger would provide some new funding.
“Obviously, 2026 is a pretty big wall in terms of assuming you didn’t refinance anything,” Chairman Charles Ergen said.
“From an operations point of view, we’ve got to generate as much internal cash from our operations as we can. And the way I would say it is we have a narrow path but there is a path for us to achieve financial stability and make sure we meet our commitments.”
The company has had narrow paths before, though, he added, and and “necessity is sometimes the mother of invention.”
It was that commentary more than the results that led to the stock “implosion,” said Barclays analyst Kannan Venkateshwar, who had pressed specifically about the capital needs and said the lack of a plan was “scarier” than the numbers.
“Management commentary about a narrow path to financial stability and implicit acknowledgment that it had no deliberate plan to fund its maturities, specially its 2026 cliff, obviously doesn’t provide a lot of confidence about survivability for a company with 10.7x net leverage and negative [free cash flow],” Venkateshwar said.
“The stock’s tumble has made the funding path even more difficult, since one option had been to refinance convertible bond maturities with new hybrid instruments, he added. “Therefore, now the purpose of the EchoStar deal will be just to deal with near-term maturities.”