Wunderlich Reiterates On Dish Network Following Agreement With CBS

Dish Network Corp (NASDAQ: DISH) and CBS Corporation (NYSE: CBS) agreed to a multi-year distribution agreement over the weekend, following a brief blackout in 18 markets on Friday.

Matthew Harrigan of Wunderlich Securities stated in a note on Monday that the agreement does not affect a revision to the Sell rating Harrigan placed on Dish Network shares last Wednesday.

“The most important element of the agreement is likely Dish Network agreeing to disable AutoHop ad skipping functionality on its Hopper DVR for seven days after initial airing,” Harrigan wrote. The analyst adds that this aspect of the agreement is even more than the company previously conceded to Walt Disney Co (NYSE: DIS) when it agreed to disable AutoHop for three days for Disney's broadcast programming.

Harrigan notes that the agreement's economic terms were not disclosed but the analyst believes that CBS's brinkmanship enable the company to emerge as the “majority winner” relating to the direct re-transmission economics as well as strategic elements revolving around AutoHop.

Harrigan also states that a Sell rating is justified on the premise of spectrum valuation, rather than disruption from lost programming. The analyst adds that Dish could have “capital capacity issues” if it is excessive AWS-3 auction winner as winning $10 billion or more in new spectrum could “induce concerns” on nearer-term monetization.

Shares of Dish Network are Sell rated with a $67 price target.