Dish Network net subscribers rise, shares up
NEW YORK (Reuters) - Dish Network Corp added subscribers for the first time in more than a year, sending shares up as much as 11 percent, but its profit fell because of higher marketing expenses to win new customers.
Dish added about 26,000 net new subscribers during the second quarter as it invested more in marketing initiatives and improved customer service. It also benefited from a switchover to digital broadcast signals in the United States last June and less piracy of its signals.
Gross subscriber additions during the quarter fell 3 percent to 731,000, far less than what some analysts expected.
Investors will consider the gross additions especially strong because last year's number included the benefit of a distribution deal with AT&T Inc, Goldman Sachs analyst Ingrid Chung said in a research note.
The AT&T partnership accounted for about 17 percent of gross subscriber additions in 2008, Dish said.
"We think the value message we're driving through advertising had an impact," said Tom Cullen, executive vice president of corporate development, on a call with analysts. "It's no secret we're in a fiercely competitive marketplace."
The Englewood, Colorado company, controlled by satellite entrepreneur Charlie Ergen, has faced intense competition in recent quarters from its larger rival DirecTV Group, 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 weakened.
Dish executives cited its success in fighting a long-running piracy problem as another reason for the improved quarter. Making more efforts to fight piracy could help position it to grow in coming quarters, said Kaufman Bros analyst Todd Mitchell.
"They've reached an inflection point where a number of initiatives that have been in place for a while are beginning to have a positive effect," said Mitchell. "I'm very encouraged by the results and they're still trading at a discount."
PROFIT HURT
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 earlier. 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 by $196 million in expenses related to its patent dispute litigation with TiVo Inc.
Sister company EchoStar Corp, which sells set-top boxes and other equipment to Dish, reported second-quarter earnings on Monday of $1.18 per share on revenue of $383 million.
Dish shares rose 6.79 percent or $1.25, TO $19.67.
(Reporting by S. John Tilak in Bangalore; Anupreeta Das and Yinka Adegoke in New York; Editing by Vinu Pilakkott, Derek Caney and Robert MacMillan)
