Cable Technology Feature Article
DISH Sees Q2 Profit Gain, Subscriber Drain
By Tara Seals, TMCnet Contributor
No. 2 satellite provider DISH Network saw second-quarter revenue that climbed 5.8 percent to $3.69 billion, just missing analyst expectations. However, it saw pay-TV subscriber losses even as broadband sales ramped up.
The company added 36,000 new broadband subscribers, but lost about 44,000 pay-TV customers.
At the end of the second quarter, DISH Network had approximately 14.053 million pay-TV subscribers, up 0.3 percent year over year. Meanwhile, the company had 525,000 broadband subscribers.
Even so, the ARPU for DISH customers rose to $84.15, up from $80.81 a year ago, helping quarterly net income come in at $213.3 million or 46 cents per share compared with a loss of $11.1 million or 1 cent per share in the year-ago quarter. That’s a pricing strategy that’s in line with DISH’s ongoing efforts to focus on the higher end of the market rather than a volume approach.
“DISH Network is steadily transforming itself from a low-priced leader in the U.S. pay-TV industry to a premium service provider in order to check subscriber churn,” said Zack’s Equity Research in an investor note. “Moreover, the company’s plan to deploy triple-play services coupled with the increased rollout of its popular Hopper devices will help it to drive subscriber growth and counter stiff competition from Netflix, Inc., AT&T (News - Alert) Inc.’s U-Verse and Verizon Communication Inc.’s FiOS pay-TV services.”
Its costs reflected this: subscriber-related expenses edged up 9.4 percent year over year to $2,104.2 million, while acquisition costs rose 5.1 percent year over year to $456.5 million.
Depreciation and amortization expenses were $271.9 million, indicating a deterioration of 10.7 percent from the prior-year quarter. General and administrative expenses were down 6.2 percent year over year to $189.7 million. Second-quarter 2014 operating profit was $454.7 million compared with $25.2 million in the prior-year quarter. Accordingly, the quarterly adjusted EBITDA stood at $741.7 million versus $430.6 million in the year-ago quarter.
At the end of the second quarter, DISH Network generated $480.5 million of cash from operations compared with $561.4 million in the prior-year period. Free cash flow (cash flow from operations less capital expenditures) totaled $167.5 million compared with $280.3 million in the year-ago quarter.
Edited by Adam Brandt