Dish Network Corp. (DISH: Quote), a provider of satellite television through its unit Dish Network L.L.C., reported Wednesday a 32.6 percent decline in second-quarter profit reflecting the loss of an orbital slot license, higher costs and lower revenues. Quarterly earnings per share and top line missed Wall Street estimates.
Higher gross new subscriber activations and a reduced churn rate helped to record higher net subscribers, the company said.
According to the company, the gross new subscriber activations continue to be negatively impacted by increased competitive pressures, including aggressive marketing and discounted promotional offers. It also gets affected by sustained economic weakness and uncertainty, including, the weak housing market and lower discretionary spending.
Second-quarter net income attributable to the company was $226 million or $0.50 per share, sharply lower than last year's $335 million or $0.75 per share. On average, 24 analysts polled by Thomson Reuters expected earnings per share of $0.68 for the quarter. Analysts' estimates typically exclude one-time items.
The results reflected a $43 million negative impact due to the loss of the 148-degree orbital slot license in the quarter. Higher subscriber-related expenses from higher programming costs and increased subscriber acquisition costs, including increased brand advertising associated with Hopper set-top box, added to the woes.
Quarterly total revenue fell to $3.57 billion from prior year's $3.59 billion and were below analysts' estimated revenues of $3.64 billion.
In the quarter, Dish lost approximately 10,000 net subscribers, compared to a loss of about 135,000 net subscribers last year.
Dish added approximately 665,000 gross new subscribers, a 16.3 percent increase from last year. The company ended the period with some 14.061 million subscribers.
Average monthly subscriber churn rate was 1.60 percent, compared to 1.67 percent a year ago. Increased competitive pressures could increase churn in the future, the company noted.
Dish CEO and President Joseph Clayton said, "In the face of a difficult economy and stiff competition, a disciplined approach to subscriber acquisition and retention is paying off. Our focus has overcome the seasonality of the second quarter with year-over-year growth in gross activations and a reduction in churn. Additionally, the launch of the Hopper Whole-Home HD DVR has improved subscriber quality by adding more DVR and broadband-connected customers to our base."
Looking ahead, Dish stated that the company and its competitors increasingly must seek to attract a greater proportion of new subscribers from each other's existing subscriber bases, as the pay-TV industry matures, rather than from first-time purchasers of pay-TV services.
The company further warned that significant changes in consumer behavior with regard to the means by which they obtain video entertainment and information in response to digital media competition could adversely affect its business, results of operations and financial condition or otherwise disrupt its business.
DISH shares closed Tuesday's trading at $30.67, up $0.17 or 0.56 percent.
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by RTT Staff Writer
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