Dish Network adds subscribers, beats Street
(Reuters) - Dish Network Corp, the second-largest satellite TV company behind DirecTV, added more subscribers than expected in the first quarter after holding the line on prices for its programming packages.
It also posted a profit that beat Wall Street estimates.
Dish, whose shares rose 0.5 pct, added a net 104,000 subscribers during the quarter, topping analysts' average estimate of 62,000, according to StreetAccount data. It was Dish's second quarter in a row of subscriber growth, after shedding about 250,000 subscribers during the second and third quarters of 2011.
The company's churn rate, or rate of cancellations, decreased to 1.35 percent compared to 1.47 percent for the same period in 2011, when it raised prices, Dish said on Monday.
"It's a challenging environment with increased pricing pressure but you are seeing Dish execute better than last year," said Brean Murray analyst Todd Mitchell.
But while it attracted new subscribers, Dish made less money per subscriber than expected. It generated $76.71 per subscriber, up $1.32 from a year ago, which missed analysts' estimates of $77.31. Bernstein analyst Craig Moffett called the figure "anemic" in a research note.
Dish's first-quarter net income fell to $360 million, or 80 cents a share, from $549 million, or $1.22 a share, a year earlier. A year ago, it had the benefit of $340 million in a reversal of expenses related to its legal settlement with TiVo. Its EPS beat Wall Street estimates by 10 cents.
Revenue rose 11 percent to $3.58 billion, narrowly missing analysts' expectations of $3.6 billion, according to Thomson Reuters I/B/E/S.
On the wireless front, Dish executives provided few details to investors on Monday about its plans to use its spectrum. It has spent nearly $3 billion on wireless spectrum and assets in the last year as it seeks to diversify its business beyond satellite television.
Dish said it cannot go forward with its plans to build a wireless network until it gains approval from the U.S. Federal Communications Commission. Reuters reported in March that the FCC is aiming to make a decision by the end of the year.
Dish said it may need to make "significant additional investments" or find a partner to help it build and commercialize its wireless assets.
Dish's executives gave no hint of a resolution to the dispute with AMC Networks Inc that could leave Dish's 14 million subscribers blacked out from TV shows "Mad Men" and "the Walking Dead" at the end of June when Dish's contract with AMC expires. The two companies are fighting over programming fees and a four-year-old lawsuit.
Dish is being sued in a breach-of-contract lawsuit by AMC Networks, which is seeking $2.5 billion in damages against Dish for improperly terminating a 15-year contract with one of AMC's subsidiaries called VOOM HD.
Dish said in a filing on Monday that it "could be required to pay substantial damages" as part of the lawsuit, which would impact its financial results.
Dish's chairman Charlie Ergen also said on the conference call that he does not want to pay more for AMC Networks programs, because they have been "devalued" by being available on multiple outlets such as iTunes, Amazon.com and Netflix.
"They're saying we want more flexibility in our programming and we don't want to pay more," Ergen said.
Cable operator Suddenlink Communications pushed back this month, warning customers AMC was demanding up to a 100 percent increase in fees over the length of its current contract.
AMC said last Friday that its TV show "The Walking Dead" was the No. 1 scripted TV show for Dish subscribers, according to Nielsen. Dish responded on Monday by saying its data is more accurate than Nielsen and that viewership for AMC Network channels is low.
As for the Blockbuster video rental chain, which it acquired in a bankruptcy auction last year, the company said it closed 500 Blockbuster stores in the United States during the first quarter and plans to close 100 more during the current quarter.
(Reporting By Liana B. Baker, editing by Dave Zimmerman)
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