* Third-quarter revenue $3.52 bln vs last yr $3.60 bln
* Dish said it is considering price increase next year
* Chairman says Dish-DirecTV should consider merger
* Dish lost about 19,000 subscribers
* Dish shares rise, DirecTV shares fall
By Liana B. Baker and Sruthi Ramakrishnan
Nov 6 Dish Network Corp, the
second-largest U.S. satellite TV company after DirecTV,
reported a third-quarter loss due to high litigation costs and
said it was prepared to raise prices next year after a one-year
Dish shares rose 2.7 percent on Tuesday.
Chairman Charlie Ergen said on a conference call that the
company is on a "pretty good path to increasing our margins"
next year with a price increase, even if it would cause some
customers to quit. He added that "we have to be prepared for the
fact that any time you raise prices, you give customers a reason
to look elsewhere."
Dish reported a net loss of $158.5 million, or 35 cents per
share for the quarter ended Sept. 30, compared with net income
of $319.1 million, or 71 cents per share, a year earlier.
The company attributed its loss to litigation
expenses of $730 million, higher programming costs and increased
advertising costs related to its Hopper set-top box in the
Revenue fell about 2 percent to $3.52 billion. The company
also said it lost about 19,000 subscribers. Wall Street analysts
on average were expecting a net loss of 38,600 subscribers,
according to StreetAccount consensus data.
Macquarie analyst Amy Yong said that "Dish metrics were
better than people were thinking." Dish fared better with
investors on Tuesday than its bigger rival, DirecTV,
whose shares fall 1.5 percent after it said it added 67,000
subscribers in the quarter.
Yong said that Wall Street was reacting to DirecTV's slowing
growth in Latin America. The region, which is seen as the
biggest growth engine of DirecTV's business, added 543,000
subscribers, which missed analysts' estimates of 575,000
subscribers. (For more, see: )
Bernstein analyst Craig Moffett said in a research note on
Tuesday that Dish could make a case to regulators for a merger
"Dish and DirecTV are collectively barely growing and
without a broadband offering of their own, their ability to
offer a competitive counter-balance to cable is becoming more
limited," Moffett said.
When asked about a potential merger with its larger rival,
Dish's Ergen called it something that "probably both companies
have to consider." But he said Dish has not been in discussions
with DirecTV, which declined to comment on his remarks.
Dish, which bought the failed Blockbuster video rental chain
in a bankruptcy auction last year, has been looking to diversify
beyond pay TV.
The company wants to enter the wireless business and has
spent billions of dollars along with sister company EchoStar
Corp o n acquiring wireless s p ectrum.
But it still needs approval from the U.S. Federal
Communications Commission to build a wireless network. Dish
executives have said the FCC chairman will make a decision by
the end of the year.
Dish said its four-year-old lawsuit with Voom HD Holdings
reduced net income by $453 million. Except for that one-time
cost, third-quarter net income would have been $295 million.
Voom was a unit of Cablevision Systems Corp when the
lawsuit was filed in 2008, and is now a part of AMC Networks
, which Cablevision spun off last year.
Subscriber acquisition advertising costs rose 35.7 percent
to $123.9 million in the quarter.
Average monthly subscriber churn, or the rate of
cancellations, fell to 1.8 percent from 1.83 percent a year
earlier. Average monthly revenue per subscriber rose slightly,
to $77.57 in the third quarter from $76.99 a year earlier.
Dish shares rose 94 cents, or 2.7 percent to $35.77 while
DirecTV shares fell 72 cents, or 1.4 percent to 49.92 on