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Cable Technology Feature Article

November 08, 2012

It's a Third Quarter Loss for Dish Network, News Not All Bad

By Steve Anderson, Contributing TMCnet Writer

Dish Network had some ups and downs in the third quarter, as gains and declines both emerged following the recent announcement of their third quarter earnings. The numbers didn't look good, with a third quarter loss, but there were a few bright spots in the report.

This was a bad quarter for Dish Network, as 19,000 subscribers left in the wake of a four-channel blackout thanks to a dispute with AMC over fees and the transmission rights of a now-defunct service known as Voom. The dispute cost Dish Network not only subscribers, but also $700 million in a settlement payment in late October that brought AMC shows back to Dish Network. This in turn led to a net loss of $158 million, which would have been earnings of $295 million, reportedly, if not for the settlement. There was also fall-off in revenue from the Blockbuster video chain, which Dish Network bought back last April, driving revenue from $3.59 billion a year prior to $3.52 billion this year. Analysts expected slightly better figures than that at $3.56 billion.

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However, these bleak figures were underscored by some notes of hope. The loss of 19,000 subscribers was substantially less than the lost from the same quarter a year prior, in which Dish Network lost 111,000 customers. Additionally, Dish share prices saw some gains in trading, closing in on the four-year high of $36.68, which they hit about two weeks ago. If Dish Network hadn't had to settle with AMC, it would have had a net gain.

The differences in the year-to-year subscriber counts are certainly telling. The levels of Dish subscribers appear to be leveling off, even as cable cutting becomes more popular as a movement and the economy overall remains tight. Home entertainment is still a major part of spending, and that's got a lot of people turning to Dish, who remains not only the number two U.S. satellite broadcaster after DirecTV (News - Alert), but also the third-largest in pay-TV service. Dish Network even announced plans to hire, which may well be the best measure of health a company can put out these days.

What remains quite clear is that pay-TV is still going to be a very strong part of the market for some time to come. Even though analyst expectations aren't being met, firms in the market are still profitable. While the wide array of competitors like Netflix and Hulu (News - Alert) Plus will continue to eat away at Dish and DirecTV's bottom line, it's clear that they're not out of the game yet, and if they can shore up their own value proposition with more and better channels, they'll likely get the results they want in quarters to come.

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