Cable Technology Feature Article
DISH Network Misses on Earnings
By Tara Seals, TMCnet Contributor
DISH Network Corp. fell short on Wall Street expectations in its first quarter earnings, with net income plunging 40 percent on higher subscriber acquisition and programming costs. Profits came in at $216 million, down from $360 million a year earlier, while revenue decreased 0.6 percent to $3.56 billion from $3.58 billion.
Meanwhile, subscriber growth slowed a bit: Dish added about 654,000 pay-TV subscribers in the quarter, compared with 673,000 additions a year ago. It’s still maintaining net video subscriber growth however, which sets it apart from its cable rivals. And it’s an improvement from the first quarter of 2013, when DISH gained 36,000 net subscribers. DISH’s total is now around 14.1 million subs.
Dealing with a mature and almost-saturated market, DISH saw subscriber-related expenses increase 8.5 percent year over year, driven by higher programming content costs and expenses related to call center operations. Total subscriber acquisition cost increased 16.1 percent year over year to $463.9 million.
The company has been working on its churn profile however. “DISH Network is slowly transforming itself from a low-priced leader in the U.S. pay-TV industry to a premium service provider in order to reduce its subscribers' churn rate,” said Zacks Equity. “Moreover, the plan to deploy triple-play services coupled with increased rollout of its popular Hopper devices will help the company to not only drive subscriber growth, but at the same time counter stiff competition from Netflix and AT&T (News - Alert) Inc.’s U-Verse pay-TV service.”
The second biggest domestic satellite operator also has a $25.5 billion bid on the table for Sprint (News - Alert), which, if successful in its purchase, will fuel the development of a nationwide, TV-centric 4G mobile network.
Its main satellite competitor fared much better in raw numbers this week, but languished in subscriber additions. DirecTV (News - Alert) beat analyst estimates to come in with $7.58 billion in revenue and profit of $690 million. For Q1, DirecTV added just 21,000 net subscribers domestically.
Edited by Jamie Epstein