UPDATE 2-Dish revenue rises as it adds more subscribers

Thu May 8, 2014 8:44am EDT

* Adds net 40,000 pay-TV subscribers vs est 21,900

* 1st-quarter revenue rises 6 pct to $3.59 bln

* Profit $0.38/shr vs est $0.44 (Adds details, shares)

May 8 (Reuters) - Dish Network Corp, the second-largest U.S. satellite TV company, reported a better-than-expected 6 percent growth in quarterly revenue due to higher net subscriber additions.

The company added a net 40,000 subscribers in the quarter ended March 31. Wall Street analysts had expected the company to add a net 21,900 subscribers in the quarter ended March 31, according to market research firm StreetAccount.

Subscriber additions improved as the rate of cancellations fell to 1.42 percent from 1.47 percent a year earlier. The company ended the quarter with 14.1 million pay-TV subscribers.

Larger rival DirecTV reported a quarterly profit that beat analysts' estimates last week, helped by subscriber growth in Latin America and higher average revenue per user in the United States.

DirecTV is evaluating a possible combination with AT&T Inc , but it also thinks that AT&T could be more interested in buying Dish, Reuters said on Wednesday.

Net income attributable to Dish fell to $175.9 million, or 38 cents per share, from $215.6 million, or 47 cents per share, a year earlier as the company spent more on content and transmission. (r.reuters.com/hyn29v)

Analysts had expected a profit of 44 cents per share, according to Thomson Reuters I/B/E/S.

Total costs and expenses rose about 8 percent.

The company said it expected the expenses to increase especially for acquiring content from local broadcast channels and on sports programming.

Dish added that margins may face pressure if it is unable to renew long-term programming contracts on favorable pricing.

Dish reached a long-term programming deal with Walt Disney Co in March to carry Disney-owned networks such as ABC and ESPN and deliver the content over the Web through smartphones, tablets and computers.

Dish chairman Charlie Ergen has talked about the need to suit viewer's changing habits and acknowledged that a small but growing number of customers are "cutting the cord" or cancelling traditional TV and just subscribing to internet service.

Ergen is expected to reveal more on the company's plans for the roughly $3 billion worth of wireless spectrum it bought in the last few years, on a call scheduled later today.

Revenue rose to $3.59 billion from $3.38 billion a year earlier. Average revenue per pay-TV user rose 5 percent to $82.36.

Analysts had expected revenue of $3.58 billion.

Shares of the company fell 1 percent before the bell on Thursday morning. The stock, which gained 8 percent this year, closed at $62.66 on the Nasdaq on Wednesday. (Reporting by Soham Chatterjee; Editing by Don Sebastian)