NOVEMBER 9, 2009, 12:05 P.M. ET Dish Network Profit Drops 12%
By ROGER CHENG Wall Street Journal http://online.wsj.com/article/SB10001424052748704402404574525601111492822.html Dish Network Corp.'s third-quarter profit fell 12%, but the satellite-television provider's subscriber growth accelerated thanks to aggressive promotions. Dish, Englewood, Colo., had broken a string of quarterly customer defections by returning to growth in the prior quarter, and saw a nearly tenfold increase in new subscribers in the most recently reported period. The company was helped by DirecTV Group Inc., which let some of its lower-end customers leave the service after cutting back on its retention programs. Dish was able to pick up some of those customers, as well as cable subscribers through discounted services and promotional pricing, but the growth came at a cost: The company's revenue fell shy of Wall Street expectations. The company also issued a one-time dividend of $2 a share, a surprising sign of strength because the company tends to avoid shareholder payouts. The move, however, is seen as a temporary positive signal, according to analysts. "The net net of this Rorschach test of positives and negatives is more good than bad, but much more narrowly so than it first appears," said Craig Moffett, an analyst at Sanford C. Bernstein & Co. LLC. Dish had been hit hard over the past year because its lower-end base of customers were more susceptible to the economic downturn. But the company has since positioned itself as a lower-priced alternative to more expensive service offered by the cable providers, telephone companies and DirecTV. DirecTV on Thursday reported a slowdown in new customers and a rise in turnover during the same period. Dish posted a profit of $81 million, or 18 cents per basic share, down from $92 million, or 20 cents a share, a year earlier. The previous year's results included a $106 million loss on marketable investment securities. The company didn't provide details on items in the most recent period. Revenue decreased 1.5% to $2.89 billion. The company gained 241,000 net subscribers during the third-quarter, its second consecutive period of growth after a year of declines, bringing its base to 13.9 million. The staggering growth took Wall Street by surprise; in the second quarter, Dish added 26,000 customers. The rate of customer defections also moderated, falling to 1.6% from 2% a year earlier. "Dish proved that the company is capable of adding subs, something investors had questioned, and that it can do so at a reasonable cost," said Vijay Jiyant, an analyst at Barclays Capital. But average revenue per user was $69.51, a slight decline from a year earlier. Investors had been looking for an uptick in the metric. Sister company EchoStar Corp., which spun off from Dish at the start of 2008 and still relies on the company for most of its business, reported a profit of $293.9 million, or $3.45 a share, compared with a year-earlier loss of $307.9 million, or $3.43 a share. The most recent period saw $338.2 million in gains from investments and fair-value accounting, while the previous year included $261 million in unrealized losses from the same. Revenue decreased 22% to $483 million. -- ================================ George Antunes, Political Science Dept University of Houston; Houston, TX 77204 Voice: 713-743-3923 Fax: 713-743-3927 Mail: antunes at uh dot edu *********************************** * POST TO [email protected] * *********************************** Medianews mailing list [email protected] http://lists.etskywarn.net/mailman/listinfo/medianews
