Television services provider DISH Network Corp. (DISH: Quote) Monday said profit in the first quarter declined from the prior-year period as costs increased, despite a rise in revenues. Earnings per share, however, topped Wall Street expectation. DISH Network added 237,000 net subscribers during the quarter.
The Englewood, Colorado-based company's net income attributable to common shareholders in the quarter totaled $230.95 million or $0.52 per share, lower than $312.68 million or $0.70 per share reported in the corresponding period in 2009. On average, 19 analysts polled by Thomson Reuters expected the company to earn $0.50 per share in the quarter. Analysts' estimates typically exclude special items.
In the fourth quarter, net income attributable to common shareholders was $179 million or $0.40 per share.
Total revenue increased 5.2% to $3.057 billion from $2.905 billion for the corresponding period in 2009. Analysts expected revenues of $3.05 billion. Revenue in the fourth quarter totaled $2.96 billion.
While subscription-related revenue increased to $3.036 billion from $2.865 billion, equipment sales and other revenue declined to $13.83 million from $32.35 million in the prior year.
Equipment sales — EchoStar dropped to $912 million from $2.683 billion. EchoStar Corp. (SATS: Quote), which was spun off from DISH in 2008, has a right to purchase remanufactured receivers and accessories from DISH at cost plus a fixed margin.
EchoStar also had entered into a transition services agreement with DISH, according to which it has the right to purchase certain services from DISH. In the first quarter, Services and other revenue — EchoStar grew to $6.52 billion from $5.353 billion.
Operating income for the quarter declined to $456.98 million from $574.56 million in the previous year.
Total costs and expenses increased to $2.600 billion from $2.331 billion as total subscriber acquisition costs increased significantly owing mainly to higher other subscriber promotion subsidies as well as increases in subscriber-related expenses and Satellite and transmission expenses. The company recorded a Tivo litigation expense of $30.19 million in the just concluded quarter.
DISH Network gained about 237,000 net subscribers during the first quarter, ending the period with nearly 14.337 million subscribers. This was due to higher gross subscriber additions and reduced churn.
Average Revenue Per User, or ARPU, rose to $71.18 from $ 70.03, partially due to the positive impact of a price increase in February, and average monthly subscriber churn rate reduced to 1.40 % from 1.83% . Subscriber Acquisition Costs, or SAC, rose to $741 from $659.
Larger rival DirecTV Group, Inc. (DTV: Quote) last week reported a sharp rise in first-quarter profit, helped by strong subscriber and ARPU growth at DIRECTV U.S. and DIRECTV Latin America. First-quarter net income attributable to the company increased to $558 million or $0.59 per share from $201 million or $0.20 per share in the same quarter last year. Revenues for the quarter grew 14% to $5.61 billion.
Meanwhile, DISH's former unit EchoStar today reported first-quarter net income of $72 million, compared to a net loss of $1 million in the year ago quarter. Basic earnings per share was $0.85, compared to basic loss per share of $0.01 during the corresponding period in 2009. Total revenues increased to $627 million from $480 million in the year ago quarter.
DISH closed Friday's regular trade at $21.30, up from the prior close of $21.20, on 5.58 million shares.
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by RTT Staff Writer
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