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Rising price of streaming alternatives to cable could be boon for Sling

As competing streaming services add channels and raise their base prices, customers could be lured back to Dish Network's Sling TV.

As competing streaming services add channels and raise their base prices, customers could be lured back to Dish Network's Sling TV.

(Image: Dish Network/Handout)

When Dish Network entered the streaming television market with Sling TV in 2015, it was an ambitious experiment to bring low-cost cable programming to the masses in a form that resembled nothing like cable or satellite.

Five years later, that experiment has been replicated by other entrants into the streaming TV market, including Google (YouTube TV), AT&T (AT&T TV Now), Disney (Hulu with Live TV) and even Comcast (Instant TV), all of whom initially offered their own low-cost service packed with more channels and more features than Sling TV.

For a while, Sling’s days appeared numbered, with the service reporting its first positive churn rate earlier this year. But then, the pay television industry economy caught up with Sling’s competitors, forcing them to raise rates and creating angst among so-called cord cutters who saw streaming television as costing about the same or more as traditional cable or satellite.

That last part could work in Sling’s favor: Over the last five years, the company has raised its base subscription only twice. Currently, that price is $30 a month for a handful of Turner, and with competing services costing between $55 a month and $80 a month, Sling could start to lure cord-cutters again to its service.

Sling has managed to keep its base price low thanks to a couple of things. First, Sling’s parent company, Dish Network, has managed to negotiate digital streaming rights for Sling in tandem with broadcast rights for the Dish Network satellite service, which has allowed Sling TV to add more programmers to its lineup over the last five years.

Second, the company offers multiple tiers of programming to its customers. Customers have the choice between two $30 base packages: The 30-channel Sling Orange package and the 50-channel Sling Blue package. Both packages contain a handful of the same networks — AMC, CNN, Lifetime, Vice and Comedy Central, to name a few — with the biggest difference between the two packages being the availability of Disney networks (ESPN, Disney Channel, Freeform) in Sling Orange and the availability of NBC and Fox networks (NBC Sports, MSNBC, Fox News, FS1, USA, Bravo) in Sling Blue. Subscribers who want both can combine Sling Orange and Sling Blue for $45 a month.

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Customers who want extra channels can opt for add-on packages that contain more news, sports, entertainment and rural living networks for between $5 and $20 a month, depending on the package. Premium movie networks from Showtime, Epix and Starz (but not HBO) are also available for monthly fees.

Sling TV also doesn’t carry local broadcast stations (except for a handful of Fox and NBC stations in markets where the network owns the channel), telling users to watch via Locast or install an antenna if they want to receive those channels. That strategy saves Dish Network the headache of negotiating separate agreements with dozens of local broadcast station owners while giving customers the option to receive those local stations for free with an antenna or through a third-party service.

By offering a base tier that resembles something similar to basic cable while moving lesser-watched cable networks into separate add-on packages, Sling has managed to find the cord-cutter sweet spot: Give customers access to a handful of top-tier cable networks for one low price with no contract, and offer them the choice to add and remove add-on packages whenever they want.

That isn’t to say Sling TV and Dish Network aren’t insulated from the trend of increasing subscription prices, and a few things could spell trouble for the service in the coming months. Certain cable networks that are offered in Sling Blue — FX and National Geographic — are technically owned by Disney, but they remain available to Sling Blue subscribers under a contractual agreement that predates Disney’s acquisition of 21st Century Fox.

It isn’t clear when Dish will have to renegotiate things with Disney — the last known negotiation occurred four years ago when Dish agreed to add a handful of ABC local stations to Sling — but carriage agreements tend to have a lifespan of 2-5 years, so it’s reasonable to assume the situation involving the old 21st Century Fox networks now owned by Disney could be coming up soon.

That could mean either a fee increase of Sling’s two base packages, a combination of Sling Blue and Sling Orange or the transfer of FX and National Geographic from Sling Blue to Sling Orange — or a little bit of all three. With carriage agreements often being done in secret and details only leaking out when there’s a dispute, it’s hard to know how things between Dish Network and Disney will shake out over those channels and others when it’s time for both companies to return to the negotiating table.

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Another thing to watch for is the same issue that led to YouTube TV‘s recent fee increase: The blockbuster merger between CBS and Viacom. It’s widely believed that YouTube TV opted to keep CBS local channels and a handful of CBS-owned cable and premium networks on their service by agreeing to add Viacom’s MTV Networks to its lineup, which resulted in YouTube TV ‘s announcement that it would soon charge customers $65 a month, an increase of more than 30 percent from its old rate.

Dish Network will likely find itself in a similar situation soon: The service offers subscribers Viacom channels in its base and add-on packages, but with the exception Showtime, it’s never offered subscribers access to CBS broadcast or cable channels (instead, it tells subscribers to install an antenna or sign up for CBS All Access if they want to watch CBS programming). With Viacom and CBS becoming one, it’s more than plausible that Viacom will force Dish Network to carry CBS channels as well — and likely in one or both of Sling’s basic packages. If that winds up being the case, it will almost certainly lead to a fee increase. (Update: Hours after this article was published, Dish Network announced it had reached a multi-year deal to keep ViacomCBS channels on Sling TV. Terms were not disclosed, and it’s unclear if the renewed agreement will lead to new channels or a fee increase.)

One thing working in favor of subscribers from a price point is Dish Network’s unwillingness to raise subscription fees on its satellite and streaming services — over the years, Dish Network has gained a reputation of playing hardball with programmers during contract negotiations. Two years ago, Dish Network pulled HBO and Cinemax from its satellite service and Sling TV over a dispute with parent company AT&T. Last year, it did the same thing to regional sports networks acquired by Sinclair Broadcasting Group. And just last month, Dish pulled the NFL Network and NFL RedZone off its services.

The company’s timing couldn’t be better — in the middle of a global pandemic, there’s less sports being played and televised than ever before. That has reduced the demand for sports channels among television viewers while increasing the demand for budget streaming options from cash-strapped households. With other services adding channels while raising prices, Sling emerges as a no-frills, budget-friendly alternative to cable where everyone is likely to find something to watch.

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About the Author:

Matthew Keys

Matthew Keys is a nationally-recognized, award-winning journalist who has covered the business of media, technology, radio and television for more than 11 years. He is the publisher of The Desk and contributes to Know Techie, Digital Content Next and StreamTV Insider. He previously worked for Thomson Reuters, the Walt Disney Company, McNaughton Newspapers and Tribune Broadcasting.
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