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Dish Network Sees 21 Percent Profit Increase In Q1

May 12, 2009

Dish Network Corp surprised investors on Monday by releasing first-quarter results that were not as bad as originally feared.

The second largest satellite TV provider saw its earnings rise 21 percent in the first quarter thanks to price increases, and cost decreases.

Englewood, Colorado-based Dish Network then saw its shares rise 18 percent in afternoon trading.

The company has been regarded as one of the weaker players in the pay-TV industry, which includes cable, satellite TV, and phone companies that provide TV services.

Dish focuses on being a low-cost provider.  Unfortunately, the strategy has not led to growth.

Wall Street analysts had predicted a loss of 128,000 subscribers for Dish during the first quarter.  Instead, the company did better than expected, limiting cancellations to 94,000 subscribers.

“I think hopefully we’re on a path to start getting better,” said Charlie Ergen, Dish’s chief executive. “Once you get better, then you’ve got to get to be best-in-class and so we’ve got a lot of work to do to get there.”

Dish must also overcome poor customer service, losses from a cross-selling deal with a major phone company, and a court battle with TiVo Inc. (TIVO) that could force the company to pull its digital video recorders over patent claims.

The company saw an increase in earnings, from $258.6 million to $312.7 million, when compared to the same period last year.

The earnings beat the 56-cent per share mark expected by analysts.

Revenue also rose by 2 percent to $2.91 billion from $2.84 billion, keeping in line with the $2.9 billion forecast by Thomson Reuters.

Monthly revenue rose 3 percent per subscriber, from $67.93 to $70.03, thanks to increased prices, and high-definition upgrades.

The marketing cost in acquiring new customers also fell 7 percent.

Craig Moffett, analyst for Sanford Berstein, called the results “better than awful,” but also added that “risks are high; Dish Network has still shown few signs that it can actually get better any time soon.”

Though the company had a net loss of 94,000 subscribers, the company did add 653,000 subscribers in the quarter.

DirecTV Group, the company’s main competitor, gained 460,000 net subscribers.

Other cable providers, like Time Warner Cable Inc, AT&T Inc, and Verizon Communications Inc also gained video customers.

Dish Network is also working to fight signal theft, by replacing security-access cards in set-top boxes of legitimate subscribers.  The upgrades are expected to be completed within the first half of the year.

The company also stated that it is suffering from the end of a cross-selling partnership with AT&T, which accounted for 17 percent of the company’s new subscribers last year.

AT&T is now working with DirecTV.

Dish is looking for a new partner.

On Monday, Dish Network also made a filing with the Securities and Exchange Commission, acknowledging that the company has fallen short on it’s “our own standards for performing high quality installations,” and in quickly resolving customer problems.

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