DISH Network Corp 2015 Annual Meeting Notes

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Notes of the 2015 DISH Network Corp annual meeting.

These are shorthand notes that I wrote down and are definitely not 100% accurate or complete. But I do believe I copied down the most important questions and answers and the idea that was being conveyed.

Meeting started off with the normal shareholder resolutions and votes for the BOD etc. Then he gave about a 5 minute review of events that happened during the year for DISH Network.

Basically he talked about how the traditional DISH Network business is a mature and likely declining business and they see the world going more towards On-Demand content. Which is why they started Sling to position themselves. They also think that wireless spectrum is a limited resource that will be extremely valuable as consumers watch more video on their mobile devices and want to be connected all the time.

After that, like always, Charlie opened it up to questions from the audience.

Q&A with DISH Network

Question: With Sling do you expect growth in subscribers?

Yes overtime I think that Sling help us to have net subs growth.

Missed the question but it was about if DISH Network is going to participate in the auction coming up.

Yes we think we have a competitive advantage because of the personnel we have that understand spectrum and rules and regulations around the auction. 2015 will be the most complicated auction because a lot of the Spectrum is impaired and the rules are extensive.

Question: So you say you want to participate in the auction, but frankly what capital do you have to bid with? Does that mean it will be with a partner?

I don’t know, there is lots of interference and there is a reverse auction first. We think we can raise the capital but we won’t decide until December

Question: Has the vision changed in the last year?

Nope, people want to be connected and video will be the biggest component.

We are not sure the FCC is as pro-competition as before….we are disappointed with the decision because Verizon was really the only one that was complaining about the DE’s.

And so with that that adds a new element of risk that we didn’t see before. We thought the best thing long term was to compete in the wireless industry. It might be better to lease the spectrum now.

So we have optionality. And we were leaning more towards entering the wireless industry before and now I’d say we are in the middle.

Question: Have you thought about partnering with the Spectrum, capitalizing it and using that capital to grow the business? This would then show the value of leasing the spectrum?

That is a more viable option than last year. There are some tax and valuation implications though.

Question: What is the downside to a spinoff?

The spectrum and video go together strategically. The future will be video and we are 1 of 4 companies that have that combination and the synergies diverge with a spin-off. And once you do that it is hard to put them back together.

Question: With the increased rates of connectivity and different revenue models of Silicon Valley, would you consider using one of them as partners?

Yea if I was Google, Amazon, Facebook, or Microsoft and you don’t own cable, if you are unsure of the future of net neutrality, an investment in wireless could make sense.

What I think will happen is 1 company will move and there will be a reaction to that. And ATT and DirectTV will be a factor in driving that.

But you still need Spectrum & Video. Sling and OTT is how it is going which is why it fits. And people want access on ALL devices.

The DISH Network business tends to skew rural and Sling is more urban.

Question: Can you comment on the Artemis/Nokia deal signed yesterday?

Yea they are using T-Cell technology on some of our spectrum in San Francisco. It is really interesting technology

And the interesting thing about Virgin Spectrum like ours is that it is better in a new technology. So with the next generation of wireless technology, or the one after that, you could REALLY see a leapfrog in terms of performance.

It is very hard for incumbents to adopt a big change like we could. And so we could potentially start with the best technology available in 4 or 5 years. So maybe we could take ours in a new generation of technology and have more capacity than carriers today.

Question: It seems like the Designated Entities not getting the discounts was like a political movement. What is the time frame for fighting legally and could you potentially get some licenses back?

We think we followed the rules and that the legal challenges have merit. The DE’s filed a notice of a challenge but they have not appealed. The time from for the legal challenges is 1-2 years we think until they are resolved.

Question: With your AWS-4 spectrum, what do you think about leasing that spectrum; maybe let some people roam on it and have some interoperability?

The AWS-3/4 is going through 3GPP to allow it to work on all phones. More interoperability has happened and the FCC supports interoperability. The big guys will fight it, but it will be hard to.

The 700 Mhz spectrum is already in all phones. 15-20 Mhz of the lower AWS-4 and lower AWS-3 is too (I missed some other things he said here)

And then you have the types of leases. Artimus wants to lease on a short term basis and the big guys want long term leases because they would likely build out the network and don’t want to lose it. Now we will be entering a quiet period in early 2016 so not much will happen. Everyone will wait to see where they stand after the next auction.

What was your rationale on the specific spectrum that you returned?

So we had a choice to keep it and pay more or return some of it. We had a budget, and the DE’s had one. The timeline for making the decision was short. Once the Letter of Credit was up we had to raise money by December 1st. And at that time (Aug-Sept) the capital markets were bad then too. So we decided to return some of the spectrum.

We can participate in the re-auction too.

Question: What are your views on the broadcast incentive auction?

I have no strong views. There is lots of interference, power, and other issues with the spectrum though. So this auction is fraught with a bunch of unknowns. But we think we will end up with a good feel for how it will go though.

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