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[MikeD-C05]

In some sense, he is right. I am an accountant. We have several clients who will buy equipment they don't need yet and basically do anything they can to shrink their profit. If they can shrink their profit they can shrink the amount of taxes they owe at the end of the year. If Dish is having a good year they can pour more money into R&D and try to come up with new technology. Showing $5 per customer in profit doesn't mean that's all they are making off each customer. It means that is all that is left over after executive bonuses and whatever investments they choose to make with their excess revenues. Operating income gives a better idea of how much money they make per subscriber before all the tax shelter moves are made.

Now a lot of that money they spend on R&D and things like that is necessary if they want to keep moving forward. Plus, a low net profit might be good for tax purposes but that doesn't mean that it's the best move for your shareholders. Corporations have to do a balancing act between keeping taxes down and keeping profits high enough to keep the shareholders happy. Shareholders want dividends and you need profit to pay those out.

Edit: Their operating income for the 12 month period ending September 2013 was $1.32 Billion. Now, I'm not saying that Dish is doing anything wrong here or that they are trying to hide excess income in those periods listed. If you look at the website I listed you will see that their operating income is lower than most of their competitors too. My point is that Mike is right in that companies have some wiggle room to change what their net income looks like. Saying they only make $5 per customer so they can't discount probably isn't accurate. For one thing, that average includes new customer promo pricing and other customers who are getting discounts.

http://www.wikinvest.com/stock/Dish_Network_(DISH)/Data/Operating_Income

Thank you for understanding my point and for explaining this better than I could. I had two semesters of accounting back about 24 years ago in college and we talked about a lot of companies and their creative accounting . The professor said pretty much what you have said about many companies ,but it has been so long since I had to explain it.

 

[MikeD-C05]

Mike, I give up. Believe what you want since clear factual explanations do nothing to sway you. In fact, this thread is feeling a lot like PIT threads in that respect.

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I am sorry that a different opinion than your own threatens you. I do not like the Pitt and stopped going there over a year and a half ago because of the in-fighting and endless arguments. You are of course free to believe the official DISH reports and interpret them the way you see fit, AND of course so am I.

 

[dangue]

I am sorry that a different opinion than your own threatens you. I do not like the Pitt and stopped going there over a year and a half ago because of the in-fighting and endless arguments. You are of course free to believe the official DISH reports and interpret them the way you see fit, AND of course so am I.

You're very much mistaken if you actually think I feel threatened by your opinion. However, the "I believe what I believe no matter what facts I'm presented with" position is aggravating.

And sure there's a difference between operating income and net profits. That's part of running a business. They use income to make strategic investments to grow the business (like say acquisition of wireless spectrum to hopefully compete with cable bundles or acquisitions of companies like Slingbox to improve their core product). Companies can spend money in lots of different ways, but it's still accounted for in the filings. But let's go with the higher operating income number and round up: $8/sub/per month. Rest assured that all your "made up fees because they can" are in that number. Please tell me where the operating income would be if Dish eliminated the "made up" DVR fee. It certainly would make the company much less profitable; and, seeing as how it's a business, it won't be around for long if it's not generating a reasonable rate of return on capital. It's not like 1/2 or even 1/4 of our monthly bills is filling Dish's coffers (on average- there may be some power users here that are offsetting the profits from a single box welcome pack sub that may approach such numbers). If the profit ratio were that high, I'd agree with you that the "made up" fees are all pure profit for Dish. That's simply not the case. But keep believing whatever it is that you believe.

The reality is that Dish needs a certain amount of average income per sub to operate profitably. You don't like the made up fees, and that new subs get credits when loyal subs don't, that's fine. But the reality is that Dish could get rid of all the "made up" fees overnight, but they'd still need to generate revenue. So the fees would just be rolled into the base package prices that everyone pays. So power users would likely see their bills drop while the users on the lower end of the usage scale would likely see prices rise. But this I'd Charlie's company and not yours and he has decided that that is not the way to go. He'd rather make subs that want more features to pay a higher share of the costs and use teaser rates to attract new subs. Good or bad (that would be another debate altogether), that's the way it is.

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[mike123abc]

Time and time again it has been proven that a low base price is what most consumers look at and they do not consider the fees when choosing something. Dish had to convert to this business model to compete and profit.

 

[king3pj]

king3pj: A few of the boys from the AICPA will be paying you a visit. Best to go quietly......

Haha. Everything we do is legal. If someone wants to buy a $600,000 piece of equipment to avoid paying a little tax that's their decision. It doesn't matter to them that they are paying much more for that equipment than if they just paid the tax.

We have shot down plenty of clients as soon as they start talking about doing something illegal to hide their income. We have told the ones who insist on it that we don't want their business. With all the penalties and even jail time accountants can get that type of client isn't even worth talking to.

 

[lakebum431]

Haha. Everything we do is legal. If someone wants to buy a $600,000 piece of equipment to avoid paying a little tax that's their decision. It doesn't matter to them that they are paying much more for that equipment than if they just paid the tax.

We have shot down plenty of clients as soon as they start talking about doing something illegal to hide their income. We have told the ones who insist on it that we don't want their business. With all the penalties and even jail time accountants can get that type of client isn't even worth talking to.

Wouldn't that likely be a capital asset so that wouldn't actually impact their taxes for that year (other than a deduction for a partial year of depreciation)? They would have to spend money on O&M items to get the full impact in the current year.

 

[king3pj]

Wouldn't that likely be a capital asset so that wouldn't actually impact their taxes for that year (other than a deduction for a partial year of depreciation)? They would have to spend money on O&M items to get the full impact in the current year.

They wouldn't get the full impact in the year of purchase but things like section 179 and bonus depreciation allow a business to take more of the benefit in the year purchased up to a limit. Even if they can't get all of the benefit in that year whatever benefit they do get will still reduce their tax liability. The amount left over would be a benefit for future years.

 

[Scherrman]

Time and time again it has been proven that a low base price is what most consumers look at and they do not consider the fees when choosing something. Dish had to convert to this business model to compete and profit.

I don't completely agree with this. Years ago Dish had a promotion that had a $9.99 price point. The lowest promo price anyone has had and it did not increase sales the way you would think. Dish has continually had the lowest package prices of any provider yet they still are not the number one TV company. DirecTV and Comcast have always been ahead of them even though they were offering more expensive programming and inferior equipment.

This goes to show that it's not just a cheap price that gets people. It's branding that does. All those funny commercials you see Direct put out there and pushing Sunday Ticket. Direct has gone after a different type of customer than Dish had been going after and it favored Direct. Direct was getting more business accounts, sports fans and high end customers.

Dish has since changed their strategy and is focusing more on features and technology instead of just the price. They changed their marketing team and the names of their products. They have funny commercials now that promote their products instead of price. The change has actually helped as their brand recognition has gone up a ton. The only problem is that subs have not gone up the same. This isn't Dish's fault though, this is more of an industry wide problem.

 

[MikeD-C05]

You're very much mistaken if you actually think I feel threatened by your opinion. However, the "I believe what I believe no matter what facts I'm presented with" position is aggravating.

And sure there's a difference between operating income and net profits. That's part of running a business. They use income to make strategic investments to grow the business (like say acquisition of wireless spectrum to hopefully compete with cable bundles or acquisitions of companies like Slingbox to improve their core product). Companies can spend money in lots of different ways, but it's still accounted for in the filings. But let's go with the higher operating income number and round up: $8/sub/per month. Rest assured that all your "made up fees because they can" are in that number. Please tell me where the operating income would be if Dish eliminated the "made up" DVR fee. It certainly would make the company much less profitable; and, seeing as how it's a business, it won't be around for long if it's not generating a reasonable rate of return on capital. It's not like 1/2 or even 1/4 of our monthly bills is filling Dish's coffers (on average- there may be some power users here that are offsetting the profits from a single box welcome pack sub that may approach such numbers). If the profit ratio were that high, I'd agree with you that the "made up" fees are all pure profit for Dish. That's simply not the case. But keep believing whatever it is that you believe.

The reality is that Dish needs a certain amount of average income per sub to operate profitably. You don't like the made up fees, and that new subs get credits when loyal subs don't, that's fine. But the reality is that Dish could get rid of all the "made up" fees overnight, but they'd still need to generate revenue. So the fees would just be rolled into the base package prices that everyone pays. So power users would likely see their bills drop while the users on the lower end of the usage scale would likely see prices rise. But this I'd Charlie's company and not yours and he has decided that that is not the way to go. He'd rather make subs that want more features to pay a higher share of the costs and use teaser rates to attract new subs. Good or bad (that would be another debate altogether), that's the way it is.

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In your opinion. And as I stated before you are free to believe in anything you like and so am I. IF DISH wants to make more profits and cut the amount of total subs that they have to their company , keep on hiking the price of their made up because you can charge it FEES. Add to that the ever increasing price of programming and the consumer loses all the way around. In the end they both will kill the goose that laid the golden eggs. That is all I will say on the subject to you, because we will not agree on this topic. Lets just agree to disagree.

 

[navychop]

Wouldn't that likely be a capital asset so that wouldn't actually impact their taxes for that year (other than a deduction for a partial year of depreciation)? They would have to spend money on O&M items to get the full impact in the current year.

Absolutely. And they no doubt aren't buying just to avoid taxes. They are most likely thinking that in the coming years they may be able to use that equipment to increase sales or productivity. And cash flow allows for paying all or a good chunk up front.

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[navychop]

I don't completely agree with this. Years ago Dish had a promotion that had a $9.99 price point. The lowest promo price anyone has had and it did not increase sales the way you would think...,,.

That promo is why I went with Dish. Glad it worked out that way.

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[Scherrman]

Sometimes I wish people would try running a business themselves and tell me what they think they would do in order to make a profit. Tell me what fees are "charge because you can" and what fees are needed. You tell me how you can get people to send you their hard earned money and still be happy while you profit from it. It's much harder than most people make it seem.

I always have two different opinions on this site, one as a customer and one as a business owner. I find myself voicing both opinions and sometimes can contradict myself but it's only because my opinion changes the more I think it over. My irrational thoughts are coming from my customer point of view and my more rational thoughts come from running a business and understanding how things need to be done.

 

[dare2be]

Mike, what would you have, drop all fees and absorb them into the programming packs? It has already been made abundantly clear that the profit margins with Dish are some of the lowest of its competitors. And, their fees are also in line or lower than many others as well. And don't give me the cable card crap, not a fair comparison.

 

[Scherrman]

That promo is why I went with Dish. Glad it worked out that way.

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It got people's attention but people didn't like being mislead since it was only for the family pack. Dish found that they got better results when they advertised a $29.99 price point because people saw it as more of a value. People knew they wouldn't get much for only $9.99.

 

[nelson61]

Sometimes I wish people would try running a business themselves and tell me what they think they would do in order to make a profit. Tell me what fees are "charge because you can" and what fees are needed. You tell me how you can get people to send you their hard earned money and still be happy while you profit from it. It's much harder than most people make it seem.

Correct! The sat /cable(tv) companies are just transporters contracting to haul programming for others. It has turned into a cutthroat business with little growth opportunities.

If one wants to bitch, bitch at the content providers. That is where the money is going.

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[navychop]

It got people's attention but people didn't like being mislead since it was only for the family pack. Dish found that they got better results when they advertised a $29.99 price point because people saw it as more of a value. People knew they wouldn't get much for only $9.99.

We're talking December 2001. I think at that time we got plenty of channels for the money.

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[Ziptied]

We're talking December 2001. I think at that time we got plenty of channels for the money.

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Yep. It was the AT40 or 50 at the time and was priced at 9.99 for 12 mos. It was a very effective promo. I was real busy for a while as a result.

 

[Scherrman]

The promotion I'm thinking of was in 2009 and they offered the Classic Bronze 100 for $9.99 for 6 months.

 

[navychop]

Yep. It was the AT40 or 50 at the time and was priced at 9.99 for 12 mos. It was a very effective promo. I was real busy for a while as a result.

I think I sold/gave my two 301s later to a relative when I moved to a 721. Got him into Dish, never got the credits. Later added a 508. Then a ViP622. Then a couple of ViP722s. Then 2HWS/1 owned Joey. Next stop: Holosuite!

First few years, I got at least 6 people into Dish. Got credits for 1, IIRC. Stopped pushing it. Later, got two credits, basically thru this site. I'd gladly get people to move to Dish, especially for the Hopper.

I'm so heavily into Dish Anywhere, iPad transfers and EHDs, I'd have a HARD time leaving. Might have to downgrade, though. If I ever left, I'd have to take a few months and record to DVD/BD much of what I've saved. That'd hold us for YEARS!

 

[king3pj]

Correct! The sat /cable(tv) companies are just transporters contracting to haul programming for others. It has turned into a cutthroat business with little growth opportunities.

If one wants to bitch, bitch at the content providers. That is where the money is going.

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The problem is that we don't do business with the content providers. We pay Dish so we can ask them for a discount. Calling ESPN and asking for a discount probably wouldn't work out to well.