Fewer Cords Cut but Higher Customer Acquisition Costs for Dish

Blames Subscriber Losses on Telecom Rivals, Poor Economy

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Dish Network, the second-largest U.S. satellite-TV provider, reported a surprise third-quarter loss and revenue that trailed analysts' estimates.

The net loss was $158.5 million, compared with a profit of $319.1 million a year earlier, the company said in a regulatory filing today. Analysts had predicted a profit of $251 million, the average estimate compiled by Bloomberg showed.

Advertising the Hopper has been helping Dish slow customer losses.
Advertising the Hopper has been helping Dish slow customer losses.

Dish recorded litigation-related expenses of $730 million in the period, accounting for its subsequent settlement of its long-running battle against AMC Networks over the defunct Voom HD service.

The company lost 19,000 net subscribers in the quarter, a smaller decline than the average analyst estimate of 36 ,000 and a far smaller loss than the 111,000 a year earlier. Subscriber acquisition costs, however, jumped 15% to $453 million as Dish increased its ad spending to promote the Hopper set-top box -- the subject of separate litigation with TV networks angry over its automatic commercial-skipping function.

The pay-TV industry generally views rival services from telecommunications firms and the poor economy as bigger problems than upstart streaming services such as Netflix, Hulu and Amazon Prime. In its filing with the Securities and Exchange Commission, Dish blamed the subscriber loss on "increased competitive pressures, including aggressive marketing and discounted promotional offers," telecom companies' growing services and a weak, uncertain economy.

Some investors have overlooked Dish's failure to gain customers amid the Englewood, Colo., company's plans to get into the wireless business, Craig Moffett, an analyst at Sanford C. Bernstein & Co. in New York, said in an interview before the release. While customer turnover, or churn, has dropped, the lack of growth is worrisome, he said.

"They are still struggling to find their footing," Mr. Moffett said. "Their costs are rising faster than their revenues, with a price-sensitive customer base in many rural areas. They've stabilized their churn rate but not enough to make the business really grow."

Revenue fell 2.2% to $3.52 billion, trailing than the $3.56 billion average analyst estimate.

Dish is awaiting Federal Communications Commission approval to use its airwaves to transmit mobile video and data. The company has said it is searching for a partner that already has a wireless network to avoid spending billions on building a new one.

~Bloomberg News~

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