DISH Networks (NASDAQ: DISH) is the third largest provider of paid-TV in the United States and has a customer base of approximately 14.133 million. The industry faces challenges from traditional cable companies like Comcast, Cablevision, and Time Warner Cable which are not only much larger than their satellite competitors but also have the capacity to offer bundled services including phone and high speed Internet. As a result, cable companies generally receive significantly more revenue per subscriber per month (ARPU).
Dish customers have access to hundreds of video and audio channels, HD channels, international channels, state-of-the-art interactive TV applications, and award-winning HD and DVR technology. The Company provides programming, which includes more than 280 basic video channels, 60 Sirius Satellite Radio music channels, 30 movie channels, 35 regional and specialty sports channels, 2,500 local channels, 220 Latino and international channels, and 50 channels of pay-per-view content. As of December 31, 2009, the Company provided local channel coverage to markets covering about 97% of United States television households. In addition, it provided high definition (HD) local channels to markets representing approximately 93% of United States television households. 
Dish's programming content is delivered to programming centers by fiber or satellite and processed, compressed, encrypted and then uplinked to satellites for delivery to consumers. Dish subscribers receive programming via in-home equipment that includes a small satellite dish, digital set-top receivers, and remote controls. Some advanced receiver models feature DVRs, HD capability, and dual-tuners which allow independent viewing on two separate televisions. Some receiver models are Internet-protocol compatible which allows consumers to view movies and other content on their televisions via the Internet and a broadband connection.
The entire satellite television market is facing stiff competition from other companies that are able to bundle telephone services, high-speed internet, and entertainment into one package. This coupled with cable companies’ already stronger ability to provide local and other programming in a larger number of geographic areas makes it very difficult for DISH to expand their subscriber base and effectively compete. DISH has not been ignorant of these developments, and they partnered with AT&T to provide high speed internet services in certain markets. AT&T Inc. now offers DISH Network programming bundled with broadband, telephone and other services. However, AT&T and other telephone companies such as Verizon have begun laying high speed optic fiber lines that are capable of transmitting video services bundled with traditional phone and high speed internet directly to millions of homes, making them as much a competitor as a partner.
The first is its purported copyright infringement of TiVo (TIVO) by creating and selling its own digital video recorder (DVR). A Texas jury concluded DISH infringed on certain TiVo patents through the creation and distribution of their own DVR devices.This was appealed and during January 2008, the U.S. Court of Appeals upheld the Texas jury verdict that certain of DISH’s DVRs, infringed a patent held by TiVo. DVR is an increasingly popular device, and if subsequent appeals are overturned, it would be a huge blow to DISH, who has thus far spent $128 million in legal fees. A total of $105 million was also given to TiVo in October 2008, when the Supreme Court denied Dish Network's request for Certiorari.
The second legal issue confronting DISH is the expiration of the Cable Act in 2007. The Cable Act prohibits exclusive contracting practices with cable affiliated programmers, from which DISH purchases a large percentage of their programming. The Cable Act expired in September 2007, but was extended for another five-year period. Cable companies have appealed the FCC’s decision, and this litigation is pending. The expiration of this act could adversely affect DISH’s ability to negotiate and obtain high quality television programming.
Satellites are vulnerable to solar storms, and accidents in space that cannot be repaired. The satellites that DISH launches to broadcast have a 12-year lifespan, and spare solar arrays, but if 8 of the 104 solar arrays malfunction or breakdown then the entire satellite is offline. Launching a replacement is expensive, and has its own risks in takeoff. Certain launch vehicles that may be used by us have either unproven track records or have experienced launch failures in the past. Currently DISH has 12 satellites in orbit, of which 5 are owned by the company itself while the rest are leased from third parties.
DISH faces competitors in the satellite television market and in the home entertainment sector at large. The DirecTV Group (DTV) is its main competitor in the satellite television market, and DirecTV has several advantages over DISH such as larger size and financial resources as well as greater penetration in the United States. DirecTV is sold in more electronic retailing stores than DISH, and as a result DISH must spend more on advertising to spread the word of its existence than DirecTV. DirecTV is also in the process of launching HDTV. DISH is also doing this but is behind DirecTV. However, both of these companies, and the satellite television market in general, face stiff competition from the firmly entrenched cable television providers. The resources, size, and bundling capabilities of these companies pose stiff competition to the satellite television market. However, their key advantage at the moment is their greater HDTV penetration rates, and capabilities. If there is a shift in preferences of consumers to HDTV, then cable television providers are the best position to meet that demand.
Satellite Entertainment Competitors: These companies offer and provide satellite based entertainment to households.
Cable Television Competitors: These companies provide clients with the cable television. These are some of the larger providers of cable entertainment, but there are many local companies as well.