Dish Network profit falls; net subscribers rise

NEW YORK (Reuters) - Shares of Dish Network Corp (DISH.O) rose sharply on Monday after the No.2 U.S. satellite TV operator posted a lower quarterly profit but added subscribers for the first time in over a year.

Dish added about 26,000 net new subscribers during the second quarter, helped in part by the June 12 U.S. digital broadcast transition.

Gross subscriber additions during the quarter fell 3 percent to 731,000, far less than what some analysts were expecting.

Investors will consider the gross additions especially strong compared to the year-ago period because last year's number included the benefit of a distribution deal with AT&T Inc (T.N), Goldman Sachs analyst Ingrid Chung said in a note.

The AT&T partnership accounted for about 17 percent of gross subscriber additions in 2008, Dish said.

These improvements helped boost shares by as much as 9 percent in early Nasdaq trading.

Net income fell 81 percent to $63.4 million, or 14 cents a share, from $335.9 million, or 73 cents a share, a year ago. Revenue was largely flat at $2.9 billion.

Analysts had on average forecast revenue of $2.91 billion, according to Reuters Estimates.

Dish's profit was hurt partly by $196 million in espenses related to a litigation with TiVo Inc (TIVO.O).

The Englewood, Colorado company, controlled by satellite entrepreneur Charlie Ergen, has been under extensive competitive pressure in recent quarters from its larger rival DirecTV Group (DTV.O) as well as phone and cable operators.

The company's previous focus on the low-income end of the pay-TV market had hurt its operations as the economy turned weak.

Sister company EchoStar Corp (SATS.O), which sells set-top boxes and other equipment to Dish, also reported second-quarter earnings on Monday of $1.18 per share on revenue of $383 million.

Dish shares rose 5.8 percent, or $1.09, to $19.50.

(Reporting by S. John Tilak and Anupreeta Das in New York; Editing by Ratul Ray Chaudhuri, Vinu Pilakkott)