Satellite television provider Dish Network Corp. (DISH: Quote) on Monday said profit in the first quarter declined over 34 percent from last year amid the absence of last year's litigation-related gain. Revenue increased 11 percent from last year, helped by the purchase of video-rental firm Blockbuster Inc. Net subscriber growth improved significantly and churn fell from last year. The stock is up over 6 percent in pre-market.
Dish CEO and President Joseph Clayton said, "DISH delivered a solid quarter for net subscriber growth and financial performance. I am encouraged by two quarters of net additions, as well as a reduction in churn. The market's reception to the Hopper launch this March was favorable and we think it will be a great platform for the future."
Net income attributable to Dish Network declined to $360.31 million or $0.80 per share from $549.39 million or $1.22 per share.
The latest results was positively impacted by a gain related to the conversion of the DBSD Senior Secured Notes upon the completion of that transaction in March. Last year's net income benefited from the reversal of previously accrued expenses of $340.7 million related to the settlement agreement with TiVo.
On average, 23 analysts polled by Thomson Reuters expected earnings of $0.70 per share for the quarter. Analysts' estimates typically exclude special items.
Revenue increased to $3.58 billion from $3.22 billion for the corresponding period in 2011. Analysts expected revenues of $3.62 billion.
The increase came partly from a $333.99 million contribution from Blockbuster Inc. that was acquired in April 2011.
Costs and expenses climbed 34 percent to $3 billion owing to higher subscriber-related expenses and cost of sales.
Dish Network gained around 104,000 net subscribers during the quarter compared to 58,000 additions in the first quarter of 2011. The company ended the latest quarter with about 14.071 million subscribers.
The increase in net subscribers was due to a decline in average monthly subscriber churn rate to 1.35 percent from 1.47 percent. Churn improved as the firm did not have a programming package price increase in the first quarter of 2012, which it did last year.
Dish Network said its gross new subscriber activations continue to be hurt by increased competitive pressures, including aggressive marketing and discounted promotional offers.
"Going forward, our margins may face pressure if we are unable to renew our long-term programming contracts on favorable pricing and other economic terms. Additionally, our gross new subscriber
activations and subscriber churn rate may be negatively impacted if we are unable to renew our long-term programming contracts before they expire," the company said.
DISH closed on Friday at $31.31, up from the prior close of $32.61, on a volume of 2.59 million shares. The stock is up 6.2 percent in pre-market.
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by RTT Staff Writer
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