Dish earnings miss estimates as user losses cut into profits
Dish Network Corp.'s earnings missed analysts' estimates as satellite-TV customers declined and broadband growth slowed.
Third-quarter net income dropped to $146 million, or 31 cents a share, from $315 million, or 68 cents, a year earlier. Analysts were expecting earnings of 39 cents a share. The Englewood, Colorado-based company signed up only 28,000 new Internet subscribers and lost 12,000 pay-TV customers, according to a statement.
The bigger question for Dish may be less about its operating results and more about Chairman Charlie Ergen's next move. Ergen has touted plans for an upcoming Internet-TV service and discussed interest in acquiring more assets, such as wireless spectrum or potentially T-Mobile US Inc.
"The slow but steady erosion of Dish's core business makes it clear why Dish Network is so eager to transform their model," Craig Moffett, an analyst at MoffettNathanson LLC, wrote in a research note today. "The picture is of a company treading water at best or slipping into irreversible decline at worst."
The shares fell less than 1 percent to $63.26 at the close in New York, giving it a 9.2 percent gain for the year.
Dish's loss of 12,000 video customers was worse than 20,000 additions estimated by Philip Cusick, an analyst at JPMorgan Chase & Co. Broadband sign-ups also fell short of his projection for 35,000 new customers. A year ago, Dish added 75,000 broadband and 35,000 TV accounts.
Higher Costs
The company's revenue rose 4.8 percent to $3.68 billion, compared with the $3.69 billion average of analysts' estimates. The average cost to lure a new TV subscriber rose 2.3 percent to $861, which was above an estimate of $808 by Jefferies LLC.
Dish is struggling to keep pay-TV subscribers as more streaming services such as Netflix Inc. and Amazon.com Inc. lure younger viewers. In response, Dish has been preparing to offer a smaller selection of live TV channels over the Internet at a cheaper price than traditional pay-TV.
The online-TV package will sell for about $30 a month and is still on track for the end of the year, Ergen told analysts on an earnings conference call today.
Ergen also said that Dish has considered forming a separate business unit for its extensive spectrum holdings that are worth an estimated $26 billion.
T-Mobile Interest
Ergen contacted Deutsche Telekom AG two months ago to say he was interested in a future acquisition of its T-Mobile US unit after a deal to merge T-Mobile with Sprint Corp. fell apart, people with knowledge of the matter said at the time. Since then, Iliad SA also scrapped an offer to buy T-Mobile, the fourth-largest U.S. wireless carrier.
Dish had told Deutsche Telekom, which owns about two-thirds of T-Mobile, that it may be interested in a deal after a November auction for wireless airwaves is completed, said the people. The company has said it's interested in acquiring more mobile airwaves, including holdings of LightSquared Inc. and a new allocation of AWS-3 airwaves being auctioned by the Federal Communications Commission later this month.
Meanwhile, satellite-TV rival DirecTV is awaiting regulatory approval for its $48.5 billion sale to AT&T Inc.
Dish is trying to control programming costs and extend video distribution rights for its online-TV package. After a renewal with Walt Disney Co. earlier this year, Dish has had difficulty with other negotiations. Last month, Time Warner Inc.'s Turner Broadcasting channels, including CNN and Cartoon Network, were blacked out.