(Adds comments from conference call, new analyst comments)
By Liana B. Baker and Sinead Carew
Nov 12 Dish Network Corp is closer to
reaching a large-scale programming deal with Disney that
would help the satellite TV provider avoid a possible blackout
of popular networks such as ABC and ESPN, Chairman Charlie Ergen
said on Tuesday.
He added that he is keeping the company's options open with
regards to possible alliances for use of billions of dollars
worth of wireless spectrum the company has amassed.
Shares rose more than 5 percent after the No. 2 U.S.
satellite TV company reported better-than-expected subscriber
numbers and revenue in the third quarter.
Disney and Dish's programming agreement expired at the end
of September, but they have been in discussions and have so far
averted a blackout of Disney's top networks such as ABC and ESPN
for the satellite provider's 14 million customers.
Ergen said that Disney is seeking a long-term contract
lasting several years and "both sides are trying to look at
where the technology is going...and what the world might look
like in several years," echoing comments from Disney CEO Bob
Iger last week.
Dish may be trying to get more flexibility out of Disney in
a new contract that would include better digital rights and the
ability to put channels on different tiers, said ISI analyst
Ergen also said it was too soon to finalize Dish's strategy
regarding the wireless spectrum the company has spent billions
amassing. He analysts he would likely know more early next year
after upcoming auctions of spectrum controlled by the government
and bankrupt communications firm LightSquared.
Ergen noted that anti-collusion rules will force a pause in
any negotiations between applicants in the government auction
starting from Nov. 15.
The executive, who founded Dish 33 years ago, said he would
look for ways to use wireless spectrum to enhance its video
offerings rather than on areas such as voice, data and texting
services which traditional wireless operators already "do pretty
"We have to make our video ubiquitous so that's our focus,"
he said. "It doesn't mean that we would do other things but
ideally it would be video-centric."
Otherwise Ergen said that he is keeping all options open,
from the possibility for a purchase of No. 4 U.S. mobile
operator T-Mobile US, to forging a partnership,
building a wireless network or even selling Dish's spectrum.
Ergen also said that the news today that US Airways and AMR
had reached a government antitrust settlement on their merger
could bode well for a deal one day with DirecTV because it means
the government is willing to "negotiate things." The two
satellite companies attempted a merger that was blocked by
regulators in 2001.
"There's obviously a business case that makes a lot of sense
for consolidation in the satellite industry," Ergen said.
Dish added a surprise 35,000 video customers in the quarter.
Wall Street analysts, on average, had looked for Dish to lose
39,000 subscribers, according to market research firm
StreetAccount. Revenue also topped analysts' estimates.
The gains underlined how satellite services are gaining
customers by undercutting cable rivals on price. DirecTV
also added more customers than expected in the quarter, while
cable providers Time Warner Cable Inc, Comcast Corp
and Charter Communications Inc all lost video
subscribers. Dish also got a bit of a boost from Time Warner
Cable's protracted fight with CBS Corp.
"Dish's Q3 operating results were surprisingly good, as were
DirecTV's, boosted perhaps by the travails at Time Warner Cable,
which got smoked in its programming dispute with CBS," said
Craig Moffett, a research analyst at MoffettNathanson.
Revenue generated per subscriber rose to $81.05 from $76.99.
Dish reported net income of $315 million, or 68 cents per
share, in the quarter, compared with a net loss of $158 million,
or 35 cents per share, a year earlier. Revenue rose 2 percent to
$3.60 billion, compared with expectations of $3.58 billion,
according to Thomson Reuters I/B/E/S.
(Additonal reporting by Jennifer Saba in New York and Chandni
Doulatramani in Bangalore; Editing by Savio D'Souza, Jeffrey
Benkoe and David Gregorio)