UPDATE 2-DISH posts profit rise, but adds fewer subscribers

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By Yinka Adegoke

NEW YORK, May 12 (Reuters) - U.S. satellite television operator DISH Network Corp (DISH.O: Quote, Profile, Research, Stock Buzz) posted on Monday a 90 percent drop in subscriber growth in the first quarter, blaming competition and the weak U.S. economy.

While lower expenses following the spin-off of set-top box business EchoStar Corp (SATS.O: Quote, Profile, Research, Stock Buzz) helped DISH report a higher quarterly profit, it added just 35,000 net new subscribers during the period compared with 310,000 additions a year ago.

Six analysts polled by Reuters had expected DISH to add 120,000 subscribers.

The weak numbers come after a strong quarter of subscriber growth at other pay-television providers, including the largest U.S. satellite TV provider, DirecTV Group Inc (DTV.O: Quote, Profile, Research, Stock Buzz), as well as cable and phone companies.

"It answers the burning question of where are all the subscribers coming from -- it's clearly DISH," said Craig Moffett, analyst at Sanford Bernstein.

DISH, the second-largest U.S. satellite TV operator with 13.8 million subscribers, said gross subscriber additions dropped to 730,000 from 890,000 a year ago.

The company said it believed gross net additions would likely continue to be negatively impacted by competitive factors including the expansion of fiber-based pay TV providers such as Verizon Communications Inc's (VZ.N: Quote, Profile, Research, Stock Buzz) FiOS TV.