Dish Network Corp. today said its fourth-quarter profit rose 24 percent on the back of higher prices and fees, but the satellite-TV provider lost more than 100,000 subscribers and its results missed Wall Street forecasts. Its shares fell almost 11 percent. The nation’s second largest satellite TV provider, which aims to be the low-priced leader […]
Dish Network Corp. today said its fourth-quarter profit rose 24 percent on the back of higher prices and fees, but the satellite-TV provider lost more than 100,000 subscribers and its results missed Wall Street forecasts. Its shares fell almost 11 percent.
The nation’s second largest satellite TV provider, which aims to be the low-priced leader among pay-TV providers, said its position was eroded by discounting at rival cable and phone companies, according to a filing with the Securities and Exchange Commission.
While the economy played a part in the quarter’s results, Dish admitted that many of the problems encountered were specific to the company itself.
“We have not always met our own standards for performing high quality installations, effectively resolving customer issues when they arise, answering customer calls in an acceptable timeframe” among other issues, Dish said in the regulatory filing.
Shares of Dish fell by $1.22, or 10.8 percent, to $10.03 in late morning trading.
Englewood, Colo.-based Dish earned $217 million, or 48 cents per share, for the three months ended Dec. 31, up from $175 million, or 39 cents per share, a year earlier. Sales rose 1 percent to $2.92 billion from $2.89 billion.
Analysts polled by Thomson Reuters expected profit of 49 cents per share on sales of $2.96 billion.
During the quarter, the company says it lost 102,000 net subscribers. In the same quarter a year ago, Dish gained 85,000 subscribers. The company ended the year with 13.68 million subscribers, down 1 percent from the 13.78 million customers it had at the end of 2007.
For the full year, Dish earned $902.9 million, or $1.98 per share, compared with $756.1 million, or $1.68 per share, in 2007. Revenue rose 5 percent to $11.62 billion.
Dish received $69.27 on average per month from each subscriber, up 5 percent from a year ago, mainly driven by higher prices and fees.
Customer turnover increased while the cost to acquire subscibers rose by 10 percent. Free cash flow fell nearly 10 percent to $1.1 billion for the year.
Dish also lost 102,000 subscribers for 2008 compared with additions of 675,000 in 2007.
Collins Stewart analyst Thomas Eagan, said Dish’s “disappointing results highlight the company’s inability to both add customers as well as maintain their existing subscribers.”
He expected Dish to lose 31,000 subscribers, a third of what Dish actually lost. The analyst noted that this is Dish’s third consecutive quarter of subscriber losses.
Eagan contrasted Dish’s subscriber loss in the quarter to DirecTV Group Inc.’s gain of 301,000 net new customers. Unlike Dish, DirecTV targets customers who are less concerned about cost than the quality of their TV – a strategy that seems to be working better.
Dish did not mention Chief Executive Charlie Ergen’s play for control of Sirius XM Radio Inc., buying a bulk of debt that came due in mid-February.