DISH
#A couple of quick comments on our subscribers
During September, Hurricane Maria caused extraordinary damage in Puerto Rico and the U.S
Virgin Islands, which resulted in widespread loss of power and infrastructure
Given the devastation and loss of power, substantially all customers in those areas were unable to receive our service as of September 30. In an effort to ensure customers would not be charged for our services, we have proactively paused service for those customers
Accordingly, we removed approximately 145,000 subscribers from our third quarter ending Pay-TV count
This adjustment represents all of our subscribers in Puerto Rico and the Virgin Islands
In the 50 states, net Pay-TV subscribers grew approximately 16,000 in the third quarter
This growth included the impacts of hurricanes Harvey and Irma
Combining the onetime removal of 145,000 subscribers in Puerto Rico and the Virgin Islands with the 16000 net additions in the 50 states, Pay-TV subscribers declined approximately 129,000. Please note, in order to reflect the underlying trends in the business other metrics including gross new Pay-TV subscriber activations, net Pay-TV subscriber additions or losses and Pay-TV churn rate were not adjusted for the impact of Hurricane Maria
In the week following Hurricane Maria, we have been focused on disaster recovery efforts such as setting up satellite Internet at hospitals and FEMA registration sites
Over the next year, it is our goal to economically reconnect to the majority of our subscribers in Puerto Rico and the Virgin Islands
However, we cannot predict when customers will be able to receive our service or how many may return to active subscriber status
In light of the situation, we expect to incur certain installation expenses in connection with reactivating our returning customers
For that reason, any returning customers will be recorded as gross new Pay-TV subscriber activations for the period in which they return
Lastly, while we expect to have lost revenue and additional expenses as a result of Hurricane Maria, we do not expect them to have a material effect on our financial position or operating results
With that I will open up the call to Q&A
Operator? Question-and-Answer Session
Yeah
On the first question, because the hurricane was on the 19th and 20th of September, we did have a slight revenue adjustment in the third quarter, both to us as well as the customers
And then, you're right
If we don't have paying customers, we don't pay programmers
So that's just the way that works
All right
So, <UNK>, the – your first question on D<UNK>S pressure, leverage, free cash flow, it's all kind of combined
We do look at fundamentals
As Charlie mentioned, with the backdrop of traditional Pay-TV distribution maturing and now declining, we're laser-focused on cash flow
I'll go through the different products that we have, satellite, Sling TV and dishNET, and how we look at it 2017 and going forward
For D<UNK>S, as <UNK> and Charlie already mentioned, we're acquiring and retaining higher quality subscribers in rural geographies where we see less bundling pressure
And we are more disciplined on retention core credits, as well as we are executing on several cost initiatives to offset some of the programming price increases
We're also right-sizing our customers into skinnier packages
<UNK> already mentioned Flex Pack
And we're also – we've also introduced the Hopper and antenna solution, where customers can drop locals and save
Lastly, to partially offset some of the E<UNK>ITDA pressure that we see on D<UNK>S, we're spending less on PP&E CapEx by using more remanufactured boxes versus buying new
Looking at Sling TV, we are seeing ARPU and margin expansion
For example, Charlie already mentioned this, we're seeing ARPU tailwinds from increasing addressable advertising revenue, as we have more and more channels available for sale for addressable advertising, as well as incremental products like DVR
And as you would expect, Sling TV is certainly gaining scale as it grows
dishNET, we've pivoted from the wholesale model where we are now seeing a very modest P&L favorability due to lower acquisition costs
Looking at beyond operations into interest payments and taxes with incremental debt year-over-year primarily from low coupon convertible bonds, cash interest expense is up on a year-over-year basis
<UNK>ut cash tax, without a sizable taxable gain from derivatives, like we had last year, with lower 2017 pre-tax income, higher cash interest, and planning for the incremental tax deduction from amortizing our newly acquired 600 megahertz licenses, we are expecting to pay significantly less cash tax in 2017. So because we're focused on cash, we are comfortable that we'll have the flexibility as we hit maturities, which are spaced out nicely over the next several years, that we'll have the flexibility to pay those maturities off or have flexibility in the market
Obviously, we have uplink, but we'll – we're not sharing the configuration
So operator I think we have time for one more question from the analyst community
Okay, operator
Let's move to the press
Okay
I think there are no other – are there other media questions in queue, operator?
All right
Well thank you, everyone
We'll talk to you the next time
