Dish 3Q Earnings Fall on Higher Spending, Fewer Subscribers

Nov 10, 2008  •  Post A Comment

Dish Network said today that its third-quarter earnings fell 54%. The No. 2 U.S. satellite television service behind DirecTV lost customers for the second straight quarter despite spending more to keep them.
Net income dropped to $91.9 million, or 20 cents a share, from $199.7 million, or 44 cents, a year earlier as revenue rose 5.1% to $2.94 billion. The company, which cited “weak economic conditions,” “aggressive promotional offerings by our competition” and “the growth of fiber-based TV providers” in a regulatory filing today as reasons for the results, was expected to earn 59 cents a share on sales of $2.9 billion. The stock was down 15% as of about 3 p.m. EST today.
Dish, whose 13.8 million subscribers trail only DirecTV’s 17.3 million among U.S. satellite TV services, lost 10,000 subscribers during the third quarter, following a drop of 25,000 subscribers during the second quarter. The loss, combined with higher customer-related expenses, caused the average subscriber-acquisition cost to jump 14% from a year earlier to $735 per customer, the company said.
“Despite heavy advertising and the tailwind of a marketing relationship with AT&T, Dish lost subscribers,” wrote Sanford C. Bernstein analyst Craig Moffett in a note to clients today. “Heavy spending to right the ship not only had little impact on negative subscriber momentum, but also left earnings at a fraction of expectations.”
The U.S. economic slowdown and slumping real estate market have contributed to multichannel service operators’ Q3 subscriber loss and slowing growth compared with a year earlier. Last week, Comcast and Time Warner Cable, the largest two U.S. cable companies, each reported a loss in cable subscribers, though they made up for it by enticing customers to use their telephone and high-speed Internet services through bundling promotions.
DirecTV, meanwhile, said third-quarter earnings lagged analysts’ estimates after subscriber growth slowed to 156,000 from 313,000 in the second quarter.


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